We should uphold the True Spirit of Islamic Finance

This blog was written by Dr Ajaz Ahmed Khan, Senior Microfinance Advisor at Lendwithcare, CARE International UK. It was first published in the True Banking online magazine, and has been reproduced here with their permission.

Islamic microfinance: Shari’ah compliant and sustainable?

Together with a colleague, Professor Malcolm Harper, I have just spent the past 18 months researching and editing a book on Islamic microfinanceⁱ - which is defined as Shari'ah compliant financial services for poor people. The volume examines the experiences of 15 Islamic microfinance institutions (IMFIs) from 11 countries in Asia, Africa, the Middle East and Eastern Europe. The institutions ranged from relatively small non-governmental organisations with a few hundred borrowers to large commercial institutions, such as the Islami Bank in Bangladesh which has almost one million clients. The book focuses specficially on the operating methodologies they employ, the challenges they face and their levels of financially self-sustainability. For a full description of the analysis and conclusions, I would of course, urge readers to buy the book as soon as it is published. However, I can share a few of the interesting findings.

Impressions from a first time visit to Pakistan

Most cities have them ... In fact most towns, villages and neighbourhoods do too. The lofty saying that marks that particular place out from all the rest. London’s is the famous Samuel Johnson quote that says "those that are tired of London are tired of life." So it was not surprising when I visited the cultural heart of Pakistan a couple of weeks ago, Lahore, that I was informed by many proud Lahoris that I could now count myself amongst the ranks of those lucky enough to say they have truly lived. As the famous Punjabi quote goes, those who have not seen Lahore have not been born.

Shakeel, Joana and I outside the Lahore Cultural Museum

Tackling gender inequality in Pakistan | The Akhuwat clothes bank initiative

Following his recent trip to Pakistan, Dr Ajaz Ahmed Khan tells us about a very interesting project implemented by our MFI partner AKHUWAT.

Guriya, who works in the Clothes Bank

Transgender persons, or khwaja siras as they are often referred to in Pakistan, routinely face a high level of discrimination in access to health, housing, education and employment as well as ridicule, intimidation and the threat of physical violence. Most khwaja siras are forced to live at the margins of society and earn an income by dancing at ceremonies such as weddings and births, and most commonly from begging. In an almost unprecedented example of positive discrimination Dr Amjad Saqib, the founder and executive director of Akhuwat, Lendwithcare’s partner in Pakistan, decided when he established a clothes bank in May of last year to only employ khwaja siras to sort, repair, clean and pack the clothes. Such regular employment opportunities are almost unheard of for transgender persons. Akhuwat now employs six full-time khwaja siras, namely Naghma, Naina, Guriya, Faisal, Moshin Deedar and Guru Taj, in the clothes bank which is based in Akhuwat’s head office in Lahore.

More than just microfinance - How Pakistan’s largest Islamic Microfinance Institution supports one of the country’s most stigmatized communities

© Akhuwat 2014

Despite positive measures such as the landmark legal judgement in 2009 that granted transgender people  their own gender category on national identification cards and the Supreme Court recommending that they benefit from affirmative action for civil service jobs, transgender people remain among the most disadvantaged groups in Pakistan.  Often referred to as hijras or khwaja siras (the latter is the term used to describe the transgender courtesans who danced in the courts of the Mughal Emperors during the seventeenth and eighteenth centuries) they routinely face discrimination in health, housing, education and employment as well as ridicule, intimidation and the threat of physical violence. Most khwaja siras are forced to live at the margins of society and earn an income from performing at ceremonies such as weddings and births; extorting payment by disrupting people’s work and most commonly begging - they are, for example, a relatively common sight at traffic lights in many large Pakistani cities such as Karachi and Lahore.

Eid Mubarak | Celebrations & Charity from Pakistan

© Akhuwat 2014

عيد مبارك, Eid Mubarak and blessed celebration to all of Lendwithcare’s entrepreneurs, partners and lenders across the world this Eid al-Fitr. For those of you who didn’t know Eid al-Fitr, the festival of the breaking of the fast, occurred on Monday (or yesterday for some countries) and marked the end of the Islamic holy month of Ramadan with a day of celebrations held across the Muslim world. The festival, which is viewed much like Christmas for Christians or Holi for Hindus, is one of the largest in the Islamic calendar and comes as the culmination to a month spent fasting, praying and giving gifts to fellow Muslims and non-Muslims alike. This year’s Eid al-Fitr is also of special significance to those of us here at Lendwithcare as it marks the end of our first year offering Islamic loans to entrepreneurs in Pakistan through our partner Akhuwat. To commemorate this year’s Eid al-Fitr and the amazing work Akhuwat preforms across Pakistan we asked their Chief Credit Officer Shahzad Akram to tell us how our entrepreneurs in Pakistan normally spend Eid al-Fitr and just what Akhuwat will be doing themselves to celebrate the day.

"Liberation loans" offered by our partner in Pakistan to free poor people from spiralling debt

After the 2014 Oscars ceremony, Steve McQueen's film “12 Years A Slave” deservedly took home the big prize of best picture. However, it is important to remind ourselves that the barbaric practice of slavery is not something we can consign to the history books. It is still a contemporary issue in many countries around the world.

The epic 1957 Bollywood film ‘Mother India’ movingly portrays the story of a family struggling to survive against the machinations of a local moneylender. Many decades later this is still one of the rare examples of Indian cinema vividly reflecting the reality faced by millions on the Indian sub-continent, and instances of local moneylenders charging usurious rates of interest remain as prevalent as ever throughout much of South Asia.

As well as providing loans to people wanting to establish or develop their microenterprises, lendwithcare’s partner in Pakistan, Akhuwat, provides ‘liberation loans’ to people who are struggling to repay debt that has been taken from local moneylenders. In most instances, borrowers took out small loans at interest rates of up to 20% per month and the debt has spiralled out of control. Sometimes borrowers have already sold what few assets they own, yet still struggle to keep up with repayments. Shahzad Akram, Akhuwat’s Chief Credit Officer, recalls instances where young borrowers have even committed suicide and some moneylenders demanded that borrowers sell their daughters to repay the debt. In parts of southern Punjab and Sindh it is not uncommon to find borrowers and their children who have been forced to become indentured labourers for feudal landlords as they struggle to repay debts that were often taken out many years ago.