It all began in 2001 when a woman approached Dr. Amjad Saqib for a loan of 100 dollars. She was going through financial trouble and wanted to help supplement her husband's income. She bought a sewing machine from that loan and started producing finished garment products. Soon she was able to not just repay her loan but also donated to help another struggling women in her area.
This experience gave Dr. Saqib the idea of an interest-free microloan program and thereby Akhuwat, a donation based micro-finance institution was born. Poor people were given micro-loans to study how interest-free loans would work. The hard work soon paid off and within two years the donations rose to $26,000 equivalent to 1.5 million rupees with a loan recovery rate of 100%
The astounding response inspired Dr. Saqib to an extent that in 2003, he resigned from civil service to formally establish Akhuwat, envisioning a poverty-free society based on social equality. Right away, Akhuwat started providing interest-free microloans to a broad-based community targeting multiple regions without any financial collateral. To keep operating costs within acceptable levels, loans were generally handed out to people through religious places like mosques and churches therefore, mitigating the need for maintaining an office.
Akhuwat’s mission is to provide interest-free micro-loans envisioning a society built on compassion and equality. The principle behind Akhuwat’s model is that it gives loan to borrowers without any profit/extra amount or interest and debtor is supposed to repay the loan by a pre-decided date but the lender will not put pressure to repay quickly. Akhuwat business model working is same as other conventional MFIs but there are some differences like no interest will be charged and there will be no fine or charges in case of default or delay of the payment. The rules regarding Akhuwat’s model, are outlined as follows:
● There should be a proper contract between lender and borrowers in which all terms and conditions will be written
● Date of payment must be specified
● Loan contract should be written
● Handing out the loan in the presence of at least two witnesses
● Charging membership or administrative fee
Fast forward to 2018, 17 years after its inception, Akhuwat has helped more than 2.7 million families across Pakistan - one family every 4 minutes. More than $6oo million worth of interest-free microloans have been distributed with an astounding recovery rate of 99.6%. Akhuwat's positive impact on society today has earned it an immense appreciation and recognition across the world. Universities in the US and UK have taken up Akhuwat’s sustainable model and teach it as case study for their students. In an interview with Dr. Saqib, he said that while he is humbled by all the recognition Akhuwat has received, the success lies in the process of the borrowers becoming its donors. Akhuwat is now the largest interest-free micro-finance institution in the world. It created a world record when on its 15th years of inception, it handed out microloans to more than more than a hundred thousand people in a grand event held at Badshahi Mosque in 2016.
The unprecedented success in the microfinance sector has prompted Akhuwat to step up and play its part in the betterment of society through various other domains. It has established two colleges that are providing quality education to more than 600 talented students belonging to less fortunate families. Concurrently, Akhuwat is in the process of building Pakistan's first fee-free university that would provide a world-class academic facility to its students for absolutely no cost whatsoever. Akhuwat University’s model is to provide world-class undergraduate and post-graduate programs to students at no cost, with the expectation from graduates to donate back to the University once they are employed.
Building such state-of-the-art facilities, maintaining them and providing interest-free loans to those less fortunate costs a fortune. Dr. Saqib’s model’s success would not have been possible if he did not have the relentless support of the donors who believed in him and backed him. Akhuwat is ever thankful to its donors for their generosity and continues to look towards them for their unwavering support.