Impact of Islamic Micro finance on Women’s Financial Education Their Economic Activities & Contribution to Budget By Sana Fayyaz PhD Scholar (Economics) University Utara Malaysia

Introduction Microfinance “It is one of the financial service that targets small borrowers especially women”. Islamic Microfinance “Provision of financial services that conform to Islamic financing principles”

Need of Islamic Microfinance Why ...... For the reason that a large number is a matter of pride for Muslims who comprise almost 24% of the global population, they should also be concerned as more than half of the world’s poor reside in the Muslim world.  It is estimated that 72% of the population living in predominantly Muslim countries do not use financial services, because they do not follow the precepts of Islam. Muslims use conventional financial products, but various surveys show that if they had the choice they would use sharia-compliance financial products.

A Brief Introduction Of Islamic Microfinance Products Mudaraba - Silent partnership Musharaka - Joint venture partnership Murabaha - Cost plus mark-up Qard hasan - Benevolent loan Ijarah - Leasing Sukuk - Bonds Bay Salam - Forward sale Istisna - Forward sale Takaful - Insurance (mutual guarantee)

The growth of Islamic finance Annual growth rate of 23.3% over past 3 years, number of clients(estimated at 1.28 million). Islamic Microfinance would help the 650 million Muslims living in the six countries with the largest Muslim populations (Indonesia, India, Pakistan, Bangladesh, Egypt and Nigeria) half a billion people live on less than US $2 per day and give them access to financial services. Today, the Islamic microfinance is concentrated in three countries: Indonesia, Bangladesh and Sudan. Greatest volume of assets held in Iran, Saudi Arabia and Malaysia.

Continue….Growth According to Consultative Group to Assist the Poor (CGAP) study, 300,000 customers were concerned by the Islamic microfinance through 126 institutions operating in 14 countries and approximately 80,000 customers are linked to a network of Indonesian cooperatives. Pakistan is a country with huge potential for the growth of Islamic microfinance, as about 70% of the total population of the country is unbanked. As in Pakistan, in 2007, by the government support where guidelines were developed to promote growth.

Major Islamic Microfinance Players In Pakistan There are around 15 major organizations in private sector endeavoring to bring the Shari’a compliant modes of financing in the market, including: Akhuwat, Kashf Foundation, Naymet Trust, Muslim Aid Pakistan, Islamic Relief Pakistan, Kawish Welfare Trust, Esaar Foundation and Sungi Development Foundation.

MFPs Experience With Islamic Microfinance In Pakistan Pakistan is one of the most promising markets for Islamic Microfinance, with nearly 98% of the 180 million population being Muslim. However, even globally, Islamic Microfinance constitutes only 0.5% of the microfinance sector and therefore, is considered to be in its embryonic stage. Steps have been taken in Pakistan that can take Islamic Microfinance to the next level. Although a number of MFIs now offer Shariah compliant financial products in the sector, the following two MFIs provide a fully Islamic financial product line. 1- Akhuwat 2- Wasil or Centre for Women Co-operative Development (CWCD)

Continue…. One of the key factors that should be considered by the major stakeholders and the government is to enhance Islamic microfinance penetration in rural sector. At present, the urban region in the country constitute 96% of the industry Gross Loan Portfolio (GLP) whereas the rural areas account for only 4% of the GLP. While the active loan portfolio of the sector currently stands at about 7% in the rural areas. For a country like Pakistan where over 67% of the population lives in rural areas.

Akhuwat Akhuwat Founded in 2001, its model is based on donations and philanthropy. Akhuwat claims to have more than 300,000 active borrowers, with total beneficiaries to date of around 830,000. About 40% of them are women. They have extended their network in all four provinces along with Gilgit-Baltistan and Azad Jamu Kashmir (AJK) . Their total branches have crossed 300 in more than 200 cities and towns. One of the reasons that Akhuwat has been successful in microfinance is their flagship product based on interest-free loans. There is a need to further develop this concept and more players are introduced in the market. 

Wasil or Centre for Women Co-operative Development (CWCD) Centre for Women Co-operative Development began the provision of microfinance in 1992. It has since grown in size and scale. CWCD’s Gross Loan Portfolio stood at Rs. 128 million in December 2011 with total active borrowers of 7,2144. Of these, 2,525 borrowers have been given loans in groups while the rest have borrowed on an individual basis.

Financial Education & Training The Systemized Financial Education program helps clients understand cash flows, discern between business and household cash-flows, make simple budgets, and monitor progress against savings goals. It provides clients with pictorial representations of major expenses through a simple workbook, so that clients who cannot read can still undertake book-keeping, given the presence of basic numeracy skills amongst the client base. Create a supportive environment that helps inculcate solidarity among members of the group.

Economic Activities Economic Activities After having assets, the women may explore several economic activities & business ventures. There is a wide scope in small enterprises such as handicrafts, pottery, vocational schools, embroidery centers, spinning, ginning and garments factories. Retail shop is also a business, which women can easily run, provided they are given financial support and training.

Contribution to Budget There are two types of budgets: House hold budget Business budget Training will help them how to manage their budget for house hold and business. Let suppose 5000 Rs/- is saving from her business so it is their financial training that will guide them how much amount she has to spend on household budget and as well as micro economic activities.

Pictorial View Basket Waving Bricks Making

Continue…. Embroidery Stitching Dresses

Continue… Carpet Waving Crop cutting Business

Continue… Jewelry & Ornaments Color Dying

Continue… Handlooms Handlooms

Continue… Handy Crafts Furniture Polish

Continue… Bed sheet Making Handy Crafting

Continue… Mates Weaving Pottery Making

Continue… School Canteen Small shop Inside House

Continue… Small Scale Beauty Saloon Thread Making

Cattle Farming Cattle Farming Cattle Farming

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Education & Training Education & Training Education & Training

Staff Dealing with Group

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AlHuda Center of Islamic Banking & Economics - Pakistan AlHuda CIBE FZ LLE - U.A.E P: + 971 56 9286664, + 971 55 938 99 00 AlHuda Center of Islamic Banking & Economics - Pakistan Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056 Email: info@alhudacibe.com Website: www.alhudacibe.com