By Ali Imran
Dr Amjad Saqib was acutely aware of difficulty of the job at hand, when he launched “Akhuwat” microfinance in 2001 to help the poor pull themselves out of poverty trap with dignity. As public administration expert, he had seen benefits that loans could bring to the poor but also the trappings that high interest rates would entail.
So, he set about his quest for a model that would spur material well being of the poor with self-respect and without having them to live under the threat of exorbitant interest payments.
The answer, he believed, lay in an interest-free loan program, something that initiatlly appeared to be some kind of fleeting on-paper idealism in this era of unbridled capitalism, when the cost of living keeps soaring and loan interests hang like Damocles sword over the vulnerable.
Where will the money come from to run and make the ambitious plan sustainable since local and international creditors would suspect and question the viability of a microfinance plan that guarantees no returns for them and does not tax the indebted.
It did not take Saqib long to conclude that taditions of generous donations, familial bonds and charity in the Pakistani society – as later witnessed in the face of 2005 earthquake, 2009 Swat displacement of three million people in anti-militancy drive and 2010 epic floods – offered the capital, which if used institutionally, would become a constant source of funding. However well-intentioned, alms, charity, social safety nets or occasional programs would not help the poor generate a durable source of income.
An immense wealth of ‘caring and sharing’ values in the Pakistani society needed to be tapped and pursued under a well-defined, transparent and effective mechanism.
“We did not want to trade with the poor over loans — we had these concepts of Akhuwat (brotherhood) introduced by Holy Prophet Muhammad, Peace Be Upon Him, and Qarz-e-Hasna, which is still practiced in some Islamic countries —we had these examples before us — what we needed was to institutionalize the working of our organization from devising criteria for disbursement of loans to collections, from oversight to keeping the operational costs to minimal levels,” Amjad Saqib told a gathering in Maryland last week.
Today, after a decade of dedication, Akhuwat – having disbursed around Rs 1.8 billion with a recovery percentage of 99.85 – has evolved into a golden hope for thousands of downtrodden in Pakistan. But how does he do that? The founder of the organization was asked repeatedly by a well-meaning but still-suspecting audience of Pakistani-Americanand inquisitive journalsits during his visit to Washington metro area.
Saqib, in a sign of growing international recognition of Akhuwat’s work, was invited by Harvard last week for a lecture on the best way to finance the poverty-stricken people out of backwaters.
Akhuwat’s operational strategy has undergone revisions and refinements overthe years and it is not that Saqib and his supporters had conceived a perfect way forward rightaway at the time of its inception, the medical doctor with entrepreneural spirit told journalists.
The core principles guiding Akhuwat’s work include giving interest-free loans after a thorough assessment of borrowers’ eligibility ; using places of worship like churches and mosques for interaction with the downtrodden and the needy, primarily to avoid expenditure that could drain on the resources ; harnessing the spirit of volunteerism, particularly among the youth; and finally inspiring borrowers to become donors, but without any coercion.
Of the four principles listed by Saqib, the last one drew most probing debate during his interactions. Doesn’t asking the borrowers to donate money – upon conclusion of their debt payements – amount to charging some kind of interest?
“No, not at all. That has never been the intent from the start. “There is no compulsion. Anyone who feels and wishes to contribute is welcomed to do so. “In fact, we added it as our our principle later. It began with the story of a man, who was living in privation but with the help of Akhuwat loan, he was able to stand up on his feet. One day he turned up at my office and asked if there was anything he could do, in return, for the organization which changed his life,” explained Saqib, who as career civil servant got valuable insight into the workings of poverty alleviation programs.
Saqib recalled how he felt a pleasant surprise when he listened to the borrower. The lender responded the best thing the borrower could do was to save some paltry amount from his daily expenses and contribute it to the Akhuwat fund.That way, others would benefit from his generosity just as the downtrodden man had made use of the donated money in his hour of trial. That, Saqib says, set in motion a kind of snowball effect chain, which he calls “virtuous cycle.” It means, answering a good gesture with an even greater good, which leads to collective good deeds of all.
At societal level, Akhuwat’s work brings to the fore another quality of human beings. The efficient disbursement of loans and the high percentage of returns bespeak of two things : the integrity of the poor and inherent vibrancy of the Pakistani civil society.
“The have-nots in our society are really a responsible people. They may be a vlunerable segment but they take great care of the money and have a high degree of satisfaction when they return the debt they owe, This is real Pakistan which is fighting darkness and lighting a way out of troubles,” says Saqib. The work by the organization and half a dozen other more prominent and internationally-aided microfinance institutions and many more in other areas offers a classic example of how the civil society steps in across Pakistan to fill the gap left by woeful governance at local and national levels.
In Saqib’s words, another feature that distinguishes Akhuwat from other microfinance organizations like for instance Grameen Bank of Bangladesh is that it gives loans to both men and women and more than just one member of the same family.
That keeps the family fabric intact and adds strength to its bonds, he contends. He says family is the key unit of Pakistani society, which shields the vulnerable in hard times and in the face of disasters. Pakistani and international experts including Harvard academics note with appreciation that Akhuwat has done well to post its accounts transparently, update its website regularly and maintain simplicity in its operations. According to Dr Saqib, the organization has no vehicles, no air-conditioned facilities but modest working places, where volunteers and some senior employees do their work.
Indeed, assessed against the backdrop of what Pakistanis have gone through at the hands of militancy, price hike, and blowback effect of the Afghan war in the last decade, Akhuwat has emerged as a metaphor of hope for thousands of unemployed men and women. Headquartered in Lahore, the organization has already assisted more than 140,000 families with loans to make them financially advance in more than 100 small and medium businesses.
In an acknowledgment of Akhuwat’s success, the Punjab government and the federal Pakistani government have both approached the organization to seek its advice on running their own poverty alleviation programs. Afghanistan and India, the two South Asian neighbours, with which Pakistan shares long borders and historical links, have also shown interest in learning from Akhuwat’s model.
For Saqib, who intersperses his talk on Akhuwat with couplets of famous Urdu poets, one of the most treasured recognitions came from celebrated poet Munir Niazi, who described Akhuwat as being closest to his ideals of what Pakistan should be.
Akhuwat’s work over the last decade and the philanthropic spirit of the Pakistani society underscore the forgotten fact that a society that preserves human values, minimizes both the scale and intensity of poverty and privation among its people.
Source: MGCT, Akhuwat
- The Role of Rural Micro-Finance in Poverty Reduction (ivythesis.typepad.com)
- What Went Wrong with Microfinance? (business.time.com)