In 2001 the idea of Akhuwat was presented before a group of friends at the Lahore Gymkhana. During the conversation, charging of exorbitant interest rates on microfinance programs aimed at poverty alleviation was being criticized. The idea of initiating an interest free successful microfinance program was brought forth as a challenge and at that point, no one present foresaw the shape this experiment would eventually take. One of the friends pledged a donation of ten thousand rupees, while another friend, Dr. Amjad Saqib, took it upon himself to utilize that donation as an interest free loan.
The first loan of ten thousand rupees was given to a widow who was striving to earn a decent living through honorable means. She was neither a beggar nor was she looking for charity; she was only seeking a helping hand. By utilizing and returning that loan within a period of six months, she reinforced the belief in the integrity exhibited by the poor when they are helped with trust and respect. The success of the first loan brought in more donations and the group of friends became convinced of the viability of their venture into interest free microfinance. Herein Akhuwat was born, with these friends forming the first Board of Governors and Dr. Amjad Saqib serving as the first Executive Director. This marked the beginning of a new chapter in microfinance, one that found its inspiration not in economic logic but in the spirit of compassion and generosity of mankind.
Akhuwat derives its name from ‘mwakhaat’ or brotherhood, the earliest example of which was seen in the fraternity formed by the Ansars (citizens of Medina) and the Muhajireen (or Meccans) who had migrated to Medina to escape religious persecution. Inspired by the spirit which induced the Medinites to share half of their wealth with the migrants, Akhuwat seeks to invoke this very concept of brotherhood through its operations. For Akhuwat, the metaphor of brotherhood entails the creation of a system based on mutual support in society. To this end microfinance is only one of the tools, albeit a powerful one, being employed by Akhuwat.
One of Akhuwat’s primary deviations from conventional microfinance is that it charges no interest rates. Akhuwat has sought to base its movement on the principles of Qarz-e-Hassn found in the Islamic tradition which entails helping someone in need with interest free loans, a practice favored over charity and doles. While drawing on the tradition of Qarz-e-Hassn, Akhuwat has over time incorporated many of the best practices and lessons learnt from conventional microfinance movements from across the globe as well.
In the initial years, Akhuwat was simply a philanthropic exercise to see how interest free microfinance would fare. Over time however donations increased manifold with the momentum of the movement accelerating far beyond the expectations of its founders. By 2003 donations to Akhuwat had reached rupees 1.5 million with the loan recovery rate remaining a steadfast 100%. Consequently it was decided to formalize the organization and ‘Akhuwat’ was registered under the Societies Registration Act of 1860. The first branch was opened at Township, Lahore and subsequently operations began to expand.
With the passage of time Akhuwat’s branches were opened outside Lahore, loan products were diversified, the clientele was expanded and the message of Akhuwat began to rapidly spread. The movement was being spearheaded by the generosity of the Civil Society as Akhuwat’s reliance on philanthropy entailed tapping into the spirit of giving and volunteerism in the society. It was important that society took ownership of the cause thus in the initial years, Akhuwat did not seek or receive any assistance from a foreign donor. At the same time, as Akhuwat was rapidly growing, it became pertinent to revise and refine the operational methodology of the organization.
In the absence of interest rates and minimal registration fee (in 2011, the registration fee was Rs. 100/ 1.14 USD), every effort was made to ensure operation costs were kept very low. Extreme simplicity in operational activities, plain offices, use of religious places, high levels of volunteerism in the workforce ensured that Akhuwat realized its aim of minimal operational costs. To complement the efficient operational strategies of the organization, four core principles were identified; interest free loans, use of religious places, spirit of volunteerism and transforming borrowers into donors. These principles in time became the defining features of the Akhuwat Model.
As the demand for Akhuwat’s products grew, Akhuwat adopted a dual track approach to growth; one that is not driven by the need to maximize earnings but rather focuses on spreading the message of Akhuwat to as many people as possible. On one hand, Akhuwat continues to expand its operation in a traditional manner; by opening up new branches in different cities and towns across Pakistan. On the other hand, it invites others to replicate the Akhuwat model, with Akhuwat training the staff and assisting in the initial setup. These replications are urged to strive to become local successes as opposed to emerging as branded clones of Akhuwat.
With the success of the Akhuwat Model, it began to feature into the curriculum of renowned international and national universities. Guided by the four core principles, operational methodologies were further refined and documented. International microfinance institutions and philanthropists also began to show interest in introducing Akhuwat in their own countries and it is envisioned that the message of Akhuwat will spread beyond the borders of Pakistan in the coming years. From its modest beginnings as a philanthropic experiment, Akhuwat has now emerged as a movement that continues to make a difference in the lives of all those it touches.
As a philosophy, Akhuwat cannot fail; if the movement does not succeed, it will not be a failure of the principles and ideals that guide the organization. Failure could only stem from the waning strength of men and the weakness of their resolve but never from the lack of strength in the idea of Akhuwat itself.