Inspired by Islamic values and teachings; HHRD build up its microfinance program on Shariah principles. HHRD believes that poor people need variety of services and access of financial services together with capacity building is indeed one of the important components to help them to come out of poverty cycle. In addition, it is also significantly desirable that these services should be in compliance to religious norms of majority of poor people.
  Esaar Microfinance – Interest Free
Sadaqa-e-Jaariya

Esaar Microfinance – Interest Free

Country Profile
Poverty continues to be one of the Pakistan’s most pressing and chronic problems due to which not only those living below poverty line but middle & upper middle class are struggling to meet both ends. According to a survey conducted by UN and Government of Pakistan in 2008, revealed that poorest households now need to spend at least 70% of their income on food and their ability to meet expenditures for health and education is severely undermined.

In recent years, escalating food and petroleum prices have affected urban and rural households at various levels due to difference in their income, food sources, expenditure patterns as well as coping strategies. The problems of poverty get even worse when people don’t have access to any financial services (through formal or informal sector). Women and children are particularly the most affected by this situation with no or less access to quality food, shelter, education etc. Under present circumstances there is big demand for micro-financing services so that people not only have sustainable source of income but can also spend on basic necessities of life.

State Bank of Pakistan’s 2008 annual report highlights huge demand for financial services at grass root level. Specifically in microfinance, there is huge untapped market. The recent medium-term outreach target set by the Government of Pakistan is ten million active borrowers by 2015. Current estimates suggest that 5% of them will be covered by Islamic Microfinance institutions. Further, this trend is increasing with the availability of choice in the market due to rising number of Islamic Microfinance Institutions (IMFIs).


Esaar Microfinance – Interest Free
Inspired by Islamic values and teachings; HHRD build up its microfinance program on Shariah principles. HHRD believes that poor people need variety of services and access of financial services together with capacity building is indeed one of the important components to help them to come out of poverty cycle. In addition, it is also significantly desirable that these services should be in compliance to religious norms of majority of poor people.

HHRD’s Esaar Microfinance program directly contributes in achieving third strategic goal of HHRD i.e. “assist and empower the people in need.” It also addresses the thematic priority of poverty alleviation as outlined in MDGs goals and contributes in achieving MDGs goal 1 and 3 . It does so by focusing on capacity building and sustainable financing modes. Together with capacity building and skill enhancement it provides financial services in terms of micro financing so that poor have their own sustainable source of income or strengthen their enterprises so that they can sustain unpredictable economic shocks

Qard Hasana (قرض حسنہ)-Financing (Interest-Free Loans)
Based on Islamic teachings, which encourages people to support needy and poor through different means and one of the dignified means is providing them with QARD e HASNA. Many Quranic verses suggested Qard e Hasna as a noble act and Allah Subhan wa Tallah has promised to give the reward many folds of giving it. Therefore, HHRDs based its Microfinance programme upon qard e hasan. Under this category, poor people avail this financial service for establishing or expanding their income generating activities, purchase of productive assets, improving their living conditions through repairing of their shops, business places, or houses. Another important usage of this category is paying the loan of money lenders. It is a safety net, which is provided to the poor.

Murabahah (مرابحہ)-Financing:
HRD believes that once poor people recover from economic, social and natural shocks with the help of safety net-Qard e Hasan, Poor people are in position to enter into more formal and true financing such as Murabahah and Mudarabah

MURABAHAH is trade based mode of finance based on “cost plus” pricing. Under this category HHRD fulfill working capital requirements of enterprises through sale of goods/ commodities. The beneficiaries pay the cost plus profit in installment over the period of time. It benefits the poor with necessary goods for earnings. HHRD provides agriculture inputs like seed, fertilizer, feed & fodder and livestock as well as handicrafts & cottage industries for purchase of equipment & machines etc. through Murabahah.

Mudarbah (مضاربہ)-Financing:
MUDARBAH is more formal financing mode. In Mudarabah, HHRD acts as investor (rab ul mal) and the client as (mudarib) uses the money in lawful Islamic business activities. Profits are shared on agreed ratios whereas in case of failure of business activity, lost is borne by HHRD and client loses his labor or time spend of business activity. HHRD through Mudarabah supports for microenterprise development. Working capital is provided to the beneficiaries on mutually agreed/signed memorandum of understanding (MOU) envisaging ration of sharing profit. It is also used in Livestock for fatting/breeding and milking etc.
 

Success Stories

 
 
Amna Mushtaq, age 30 living with her husband, trying to move her family upward on the rung of socio-economic development. Her family suffered the calamity of land sliding due to earthquake 2005. The recent monsoon rains also caused damage to her house.
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Sir Injamis the only bread earner for the livelihood of his 07 member's family. In an accident he lost his one leg and arm Consequently he also lost his job. Despite of this tragedy, he has not lost his hope. With some help from friends, he started a small tuck shop in a room of his house.
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Telling the story and getting our message out. A network of public information officers, supported by other staff, sends material to HHRD Communications Group for processing and dissemination.
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