esaar microfinance a community based model arshad mehmood head of program helping hand for relief...
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ESAAR MICROFINANCEA Community Based Model
Arshad MehmoodHead of Program
Helping Hand for Relief & Development
“4th Global Islamic Microfinance Forum” 1-2 November 2014, Dubai UAE
Foundation of Esaar MicrofinanceThose who spend (in the cause of Allah) privately or publicly, by night and day, have their reward with their Lord. And (on the Day
of Resurrection) they shall neither fear nor grieve. (Al-
Baqarah 2:274)
Abu Musa reported Allah’s Messenger (May peace be upon him) as saying: A believer is like a building for another, the one
part supporting the other. (Sahih Bokhari Sharif Vol.3, Pg 440)
Whereas Allah has permitted trading and forbidden Riba (usury). (Al-Baqarah 2:275)
Charity
Prohibition of Riba Brotherhood & Scarify
Cont.
Charity
Prohibition of Riba
Brotherhood & Sacrifice
Source of funding
Riba is not just Haram, harmful for economy
Social networking: mobilization &
organization lead to social collateral
Mission Statement
•To facilitate and support livelihood opportunities and microenterprise development for poverty alleviation on brotherhood and solidarity bases through provision of Islamic Microfinance
Poverty Level & Esaar MF’s Approach
At the Poverty
Line
Below the Poverty
Line
Abject Poor
Growth
Livelihood
Safety Net
Mudarbah
Murabah
Qarad e Hasan
MED
IGAs
Survival
Classification Objective ApproachMode of
Financing
Murabah & Mudarbah Model: Background
• In Pakistan, 63% population living in Rural areas• High Poverty Ratio in Rural areas as of Urban• Agriculture is major sector of Rural Economy• Agriculture contributes 21.4% of GDP• Livestock contributes 55.4% and Crops 37.6% of
Agricultural Production• Crops sector is, mostly, financed through Murabah• Livestock sector is financed through Mudarbah
Murabah Model
• Conventional Practice• Money lender or Arti system• Delivery of Seed & Fertilizer on
delay payment• Price not declared at delivery
time (not permissible in Shariah)• Quality of delivered goods not
up to mark• Farmers are bounded to sale
out their crop to same Arti • Exploitation of farmers
• Esaar’s Murabah Model• Sharia based Murabah• Participatory approach• Price and profit declared at
delivery time• Quality up to mark, purchase by
producer/importer• Low rates compared to market• Farmers are free to sale out their
crop in open market• Farmers has extra income – due
to low cost inputs and relatively high price of crop in open market.
Mudarbah Model
• Conventional Practice• Livestock rearing on partnership
bases• Owner purchased and handed
over to shepherd/herdsmen• Purchasing price not declared• Shepherd/herdsmen
responsible for fodder, medicines etc.
• No written contract • At the time of selling profit
sharing 50-50 • No proper mechanism of loss
sharing
• Esaar’s Mudarbah Model• Livestock rearing on partnership
bases• Purchasing is done in presence of
Mudarib and handed over• Written contract as per Shariah
rules• Fodder and medicines are
responsibility of Rub-ul-Mal (Esaar MF)
• Sale is done in presence of Mudarib
• 60% profit goes to Mudarib• Loss sharing as per Shariah rules
◘ Mansehra
◘ Rawalpindi◘ Mianwali
◘ Muzaffargarh
◘ Rajanpur
◘ Dir
◘ Bahawalpur
◘ Ziarat
◘ Jaffarabad◘ Jacobabad
◘ Kashmoor◘ Shikarpur
◘ Chitral
◘ Kotli◘ Rawalakot◘ Hattianbala
◘ Gilgit
◘ Thatta
◘ Swat
◘ MalakandCharsada ◘Nowshera ◘
◘ Benazir Abad◘ Matiari
◘ Tando Allah Yar
Our Coverage
◘ Mirpur Khas
Implementation Strategy
Area Identification
HR Selection & Facilitation
Base Line Survey
Target Group Identification
Community Mobilization & Organization
Disbursement
Recovery & Follow up
Esaar MF
Interest Free:
Shariah Compliant
Cluster & Community
Based Approach
Online System
Capacity Building
Component
Sustainable &
Universally Replicable
Integrated Approach
Esaar Microfinance Model
Summary
No. of Clusters 26Geographic Coverage (District and Union Councils - UCs)
24 Districts, 26 UCs
Accumulative Beneficiaries 13,968Accumulative Disbursement USD 3.86 MillionOperating Cost Ratio 15%Recovery Ratio 99.5%Upper limit of Financing USD 600
Targeted Income Generating Activities
Fertilizer, Seeds & Pesticides
Agriculture
Calves, Goats, Fodder, Hens
Livestock & Poultry
Motor Cycles, Fridges etc.
Household Items
Sugar, Flour, Medicines,
Stationery, Keryana Store Items etc.
Small Enterprise
Sewing Machines, Tools, Raw Material
etc.
Services
Practice Issues• Qualified and Trained Human Resource• Community Awareness• Local Religious Leaders• Tax Procedures• Natural disasters• Shariah based funding source
Abdul Majid from Batakundi, Naran Valley – earthquake affected area and Pea farmer
Received seed and fertilizer from money lender.
The price was very high.
Delivery not timely.
Bounded to sale out the production to same money lender.
Sale price low compared to market price.
Problem
Financial assistance with out exploitation
Got seed and fertilizer from Esaar Microfinance on Murabah bases having amount USD 550
Solution
Got required inputs at low price and timely
Sale out the production in open market
Got USD 700 additional benefit
Purchased some household items
Result
A Case Study