Esaar%20microfinance

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Esaar microfinance

• A Community Based Model

Arshad Mehmood Head of Program Helping Hand for
Relief Development 4th Global Islamic
Microfinance Forum 1-2 November 2014, Dubai UAE
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Foundation of Esaar Microfinance
Those 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
2274)
Charity
Prohibition of Riba
Brotherhood Scarify
Abu Musa reported Allahs 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 2275)
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Cont.
Source of funding
Charity
Riba is not just Haram, harmful for economy
Prohibition of Riba
Social networking mobilization organization
lead to social collateral
Brotherhood Sacrifice
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Mission Statement

• To facilitate and support livelihood
  opportunities and microenterprise development for
  poverty alleviation on brotherhood and solidarity
  bases through provision of Islamic Microfinance

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Working Model
Donation
Recycle
Disbursement
Recovery
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Poverty Level Esaar MFs Approach
Classification Objective Approach Mode of Financing
MED
Growth
Mudarbah
IGAs
Livelihood
Murabah
Safety Net
Survival
Qarad e Hasan
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Modes of Financing
Qarad e Hasan
Murabah
Mudarbah
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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

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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

• Esaars 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.
  

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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

• Esaars 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

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? Mirpur Khas
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Implementation Strategy
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Esaar Microfinance Model
Interest Free Shariah Compliant
Cluster Community Based Approach
Integrated Approach
Esaar MF
Online System
Sustainable Universally Replicable
Capacity Building Component
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Summary
No. of Clusters 26
Geographic Coverage (District and Union Councils - UCs) 24 Districts, 26 UCs
Accumulative Beneficiaries 13,968
Accumulative Disbursement USD 3.86 Million
Operating Cost Ratio 15
Recovery Ratio 99.5
Upper limit of Financing USD 600
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Targeted Income Generating Activities
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Practice Issues

• Qualified and Trained Human Resource
• Community Awareness
• Local Religious Leaders
• Tax Procedures
• Natural disasters
• Shariah based funding source

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A Case Study
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