Akhuwat Foundation is a Microfinance Institution (MFI), which provides loans to the poor people
for makingsmall business initiatives.
Unlike other Microfinance Institutions, which provide loans at an exploitive interest rate, Akhuwat Foundation works on Islamic principle of providing interest free loans (Qarz e Hasana).
Dr. AmjadSaqib, a retired bureaucrat of Pakistan civil services, established the foundation in 2001 with an intent of poverty alleviation based on religious and humanitarian impulses.
The idea proved as a success and the organization is sustainably growing. The more interesting fact about the foundation is that it has a recovery rate of 99.85%.
“Akhuwat” is an Arabic term the literal meaning of which is ‘brotherhood’; italludes to the fourteen-century earlier concept of Islamic Brotherhood between Ansar and Muhajireenwho sacrificed their wealth for each other. AmjadSaqib started his journey by lending an old woman an amount of 10,000 for starting clothes sewing business.
From there the idea developed and now the foundation is the leading MFI in Pakistan having hundreds of branches throughout the country. Along with providing loans, the organization has ventured in promoting educational, health and other social activities.
The Akhuwat Foundation takes loan and donations from the privileged charitable segment of the society and disburse it among the unprivileged poor business entrepreneurs.
It just not provide the financial help but the expert team of the organization also helps the borrower to make their business ideas turn into reality. The organization has managed to sustain itself because its operational costs are bare minimum. Instead of building lucrative offices, as other MFIs have, Akhuwat works in simple offices and worship centers, where, there is no facility of furniture and air conditioning.
Instead of maintaining a vehicle pool, its operational officer use motorcycles. Most of its employs works voluntarily and it takes donations from the borrowers to whom it has lend the money. In some cases, these donations are as small as one rupee per day.
The guiding principle of the organization is to help the needy people indiscriminately. Until yet, the organization has given 4.5 million loans, amounting to 128 billion rupees, to 3 million families.
In order to get loan from the Akhuwat Foundation an individual needs to go through following stages:
- Contacting the nearest Unit Manager and submitting an application along with the required documents.
- After submitting an application, the Unit Manager will visit the neighborhood of the borrower to collect information and perform social appraisal of the applicant.
- The loan providing team will then appraise the business idea of the applicant and check its feasibility.
- The application will be forwarded to the Area Manager who will perform another round of social and business appraisals.
- In case of individual lending, the applicant needs to provide two guarantors, while in case of group lending the applicant will act as guarantors of each other.
- The application will be appraised by the Loan Approval Committee, which is headed by Area Manager.
- If the loan is approved, the Loan Approval Committee will request the head office for release of funds.
- The loan is disbursed among the borrowers in Mosques or Churches in the presence of guarantors. This whole process takes six to seven weeks.
- In order to repay the loan the borrower needs to deposit the monthly installments by 07th of each month. If the borrower failed in depositing the installment by 10th of the month, the Unit Manager will remind him of the commitment or he will ask the guarantor for influencing the borrower.