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Faith-based Solution to Poverty Alleviation
20th May 2011 by Naufil Shahrukh


Dr Amjad Saqib, the founder of Akhuwat Foundation, has been in the civil service of Pakistan and is the pioneer of Islamic microfinance in the country. His model is quite unconventional and interesting as it is based on philanthropy instead of banking principles and so far his organization has distributed loans worth more than a billion rupees during the ten years of its existence. The most exciting part of Akhuwat model is that the recipients of the microloans eventually become donors themselves and last year their donation was around 140 million rupees, which itself is a big success story.

Akhuwat is gradually becoming a cooperative movement. There is no other organization where the beneficiaries are the donors as well. There is a tremendous amount of willingness among the borrowers to become donors of this program. They are committed to making it better, through supporting the program and ensuring that it is sustainable. Akhuwat is providing them services that are aligned to their faith. This has cultivated their ownership, which is critical for the success of a development program. This voluntary donation is also indicative of the fact that they are coming out of poverty. It proves the success of interest-free credit methodology.

It was just another day, recalls Dr. Amjad Saqib. A day when a poor widow came for a loan of Rs.10,000 and that too interest free. With a collective effort of a few like-minded friends – who later became the founding fathers of the Akhuwat movement – she was given the money on her terms. This gesture not only touched her but also gave her the strength to return the loan back within six months and that too after getting one of her daughters married. This is how Akhuwat originated and made us come up with our strategy of giving out loans.

After getting our first loan back, a pool was created by us through donations, all from well-to-do people and friends. That pool of money became our capital, which we started distributing to the poor without any loan charges or interest. The initial loan by us was Rs.10,000 and by December 2010, almost Rs.1 billion loaned money had become our pride..Today the pool of money is Rs.250 million and it is a revolving fund – money which is in constant circulation amongst the poor. The recovery rate of 99.7% itself speaks for how trustworthy poor people are.

Akhuwat in Arabic means ‘fraternity’ and the entire concept was based on it. The Prophet, peace be upon him, said that the best way to end poverty is not through charity but through sacrifice and adoption. He suggested that a wealthy person should adopt a poor person and help that person. To be more precise, a wealthy person should enter into a relationship of brotherhood with a poor person and then help that person through a bond of association instead of giving dissociated charity.

Dr.Saqib is of the view that the total population of the world at present stands at six billion. Two billion of these are below poverty line. If the top two billion who are not poor adopt the bottom two billion who are poor, i.e. one person adopting only one, then the bottom two billion may be lifted from the quagmire of poverty. It looks very idealistic but it is simple. Akhuwat’s four guiding principles are derived from this one basic concept.

Elaborating upon the Akhuwat principles Dr Saqib said, “The first principle of our organization is that we do not charge interest on our loans. Interest is forbidden in Islam, Judaism, Christianity, and all major religions of the world, and we think that interest is one of the basic reasons for poverty and exploitation of the poor. After we decided not to charge any interest, we suddenly ran into the problem of sustainability. If we are not charging interest, how are we going to cover operational expenses? We brainstormed solutions and finally got an idea. The idea was that we could work at local religious centers such as mosques and churches and link our offices to these instead of having an office in an expensive building. That way, we could be in touch with people and the local imams and priests that are providing services to the people of Allah. This would also enable us to be in touch with the community and not only help raise funds but also help identify people in need and distress.

“This innovation developed into the second principle that guides our organization, i.e. we operate from local religious centers. We researched the history of religious institutions and found that they had been centers of community participation in the past. They provided services to the poor and were the platform for community action. In the city of Lahore there are more than 17,000 mosques and a good number of churches and unfortunately these are all underutilized, only used during prayer time. During other periods of time they are mostly empty. So we linked our office with a mosque and started doing most of our activities in the mosque. We received immediate support and trust of the community and were able to also reduce our operating costs.

“The third principle integral to our organization is volunteerism. A civil society organization is different from a private sector organization because it has in-built volunteerism. If any civil society organization is devoid of the volunteer spirit, it runs the risk of becoming a business. In Akhuwat, we expect people to give their time and their abilities; the spirit of the entire organization is based on volunteerism. This is also derived from our faith, in which the principle of volunteerism is the most important part of every tradition. Every prophet is a volunteer, right from Abraham, Moses, Jesus, and the Holy Prophet, peace be upon him. The Prophets always looked beyond themselves to help the community socially, morally, economically, and politically. We wanted to follow the footsteps of these great prophets and adopt their methods of bringing change to the community through participation.

“The fourth principle for our organization is that we do not want to make people dependent. We want the people who borrow from us to stand on their own feet and one day become donors themselves for others in need. We are not charging any interest or profit, but we are supporting people and hopefully instilling a value to help others after their own needs are fulfilled.”

Dr Saqib's belief is that these four principles are relevant in any society including Pakistan. Irrespective of a person being a secular or a religion follower, these principles are not only important but also appeals all.

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