For the poor, whatever money they earn is just enough for survival, and saving is impossible. With no chance to save, these people can never afford to make changes in their lives to lift themselves out of poverty. And because they are irregular or low-earners, they can’t access loans from financial institutions. The cycle of poverty perpetuates. Over time as their needs grow, their already dire situation worsens.
NGOs and charitable organisations step in where government interventions are inadequate or non-existent. But even with charities coming to the rescue, it’s still not enough. There are as many as 1,54 million registered non-profit organisations in the world, but we are still not reaching all the people that need assistance. This begs the questions: Are we doing something wrong? How can we assist people in the long term? How do we ensure our interventions become sustainable?
Ensuring projects are sustainable is a no-brainer. If organisations just keep giving without a long-term plan, resources will eventually dry up. To effectively address this challenge the ‘giving’ model of most charity organisations has to be reconsidered. This isn’t to devalue the incredible work charities and NGOs do. They raise billions of pounds annually to help millions of people all over the world. They provide help to the people who need it most. And, to their credit, many are looking at innovative ways to make their projects more sustainable.
Many organisations are now investing in empowerment projects. They train local communities, groups of women, youth, etc. to help them find jobs or start businesses. Others provide employment opportunities and invest in entrepreneurship and mentorship programmes. All with the aim of making programme recipients less reliant on aid, and hopefully, eventually completely independent.
At Akhuwat, our work has been about sustainable development from the get-go. For more than 20 years, we’ve been working to eradicate poverty, by giving people a hand up to help themselves. Our mission is to help people become self-sufficient and independent through interest-free microfinance loans.
Akhuwat adopts the Quranic concept of “Qarz-a-Hasan” (a beautiful loan) as its core strategy for microfinance. Microfinance is a banking service provided to unemployed or low-income individuals or groups who would otherwise have no other access to financial services.
The idea is based on an experiment conducted in the 1960s by a professor who lent women in the poverty-stricken village of Jobra (Bangladesh) the sum of $27 each. This sum was lent without interest. The women invested the money in farming (purchasing seeds and implements) or in the small enterprises they ran. The results were more than encouraging. All these women were able to improve their individual earning capacity and, most importantly, the loans were returned in full.
Akhuwat has several different loan products, including Family Enterprise Loans, Agricultural Loans, Housing, Education, Health and Marriage Loans. The loan amounts are small: between Rs10 000 to Rs50 000 or Rs100 000. But they extend a lifeline to thousands of people who cannot get traditional bank loans.
Independent studies have indicated that the interest-free microlending model has made a difference in addressing poverty. But the most heart-warming testimonials come from the recipients themselves. In 2017, we conducted a household survey asking loan recipients whether the loans had made an impact and how. The results were extremely promising. Overall, clients reported positive changes. Seventy-seven percent of clients stated that their living standards had improved; one-third mentioned an increase in income; and 26% reported increased consumption. This survey was conducted for clients who borrowed funds only two years previously, but the impact has already been significant.
At Akhuwat, we see the difference our loans make. And our repayment rate at 99.9%, is testament to this. Because of the success of our microlending projects, our model has been studied by international universities, and we have received several awards and recognitions. Read more about Akhuwat and the difference it is making to thousands. We continue to expand our reach and welcome partnerships with individuals, governments, and other organisations. See how you can get involved and help. Together, we can positively impact more lives.
Akhuwat
Akhuwat provides collateral- and interest-free loans to underprivileged families so they can help themselves out of poverty. With one of the highest loan return rates in the world, Akhuwat continues to transform lives one loan at a time. Akhuwat is registered in the UK with the charities commission (registered charity number 1136317)
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