2. INCLUSIVE FINANCE & Muakhat Paradigm
Dr. Muhammad Amjad Saqib

3. Financial Inclusion
Financial inclusion refers to a process that ensures the ease of access, availability and usage of the formal financial services including savings, loans, insurance and leasing for all members of the society.
Major hurdle in achieving financial inclusion is the diversity of the clientele
Similar or uniform financial instruments cannot meet the needs of the entire population
Market principles alone are insufficient to achieve financial inclusion

4. Akhuwat’s Model of Financial Inclusion
The underlying aim of the model is to alleviate poverty through an equitable distribution of resources. In doing so, the model addresses both the needs and reciprocal responsibilities of each member of the society. To achieve this, the model has been closely aligned with the spirit of volunteerism, moral principles and the Sharia.
The model derives inspiration from Muakhat-a-Medina.

5. Begins with the story of a poor widow
Story of Akhuwat
Begins with the story of a poor widow

6. Rest is history

7. Fundamental Principles
Creation of a Credit Pool
Interest free loans from this pool to the poor and needy
Use of mosque and church for social and financial intermediation
Resource generation through philanthropy and donations
Spirit of volunteerism
Converting borrowers into donors

8. Progress PROGRESS INDICATOR TOTAL Total Benefiting Families 380,000
Loans Utilized by Males Entrepreneurs
240,000
Loans Utilized by Females Entrepreneurs
140,000
Amount Disbursed
PKR 5.8Billion
Percentage Recovery
99.87%
Active Loans
190,844
Outstanding Loan Portfolio
PKR 2,174,695,023
Number of Branches
255
Number of Cities and Towns
140

9. Salient Features of Akhuwat’s Model of Inclusive Finance
Moral Principles complementing Financial Logic as dictated in the Sharia
Extensive and wide spread use of Qarz-e-Hassan; interest free loans which will be used to support the poor to become self-reliant
Institutionalizing the circulation of wealth
Reliance on philanthropy for social investment and primary sources of funds 
Transforming borrowers into donors through the promotion of a spirit of self-reliance, volunteerism and a system based on mutual support

10. Salient Features of Akhuwat’s Model of Inclusive Finance
Eradication of interest from the financial system
State to play a proactive part in facilitating and complementing the resources of the society
Sharia complaint microfinance to be used to support those who are above the poverty line
Promotion of Islamic Banking services amongst those who are already being catered by conventional and Islamic banks

11. Classification of Groups
Financial Services
Reasons
 Poorest and Destitute
Zakat and Sadqat
These individuals are unable to support themselves or their families due to circumstances or ailments which prevent them from being economically active thus can only be supported directly through Zakat and Sadqa 
 Poor
Qarz-e-Hassan
This group must be empowered through Qarz-e-Hassan as they have the potential and ability to become self- reliant and contribute to the local economy as opposed to burdening it
Vulnerable Poor
Sharia Compliant Microfinance
To diffuse the effects of shocks which may push these individuals further down the economic ladder and to enable them to enhance their potential and livelihood, a host of sharia compliant microfinance services will be offered.
Average, Well-to-do, Rich
Islamic Banking
As the members are already economically secure, they will be catered through Islamic Banks. Revenue may be generated from the provision of financial services.
The nature, mode and delivery for each financial instrument will differ depending on the needs and capacities of the clientele they are intended to serve. Consequently the Akhuwat Model draws four broad categories within society and identifies corresponding financial instruments they may require.

12. The 30% at the top to support the 30% at the bottom
Average, Well-to-do, Rich
40%
Vulnerable Poor
25%
Poor
5% Poorest & Destitute
Overview of Resource Allocation
Islamic Banking
Sharia Compliant Microfinance
Qarz-e-Hassan
Zakat and Sadqat
Group IV provides resources to support Group I and II.
The 30% at the top to support the 30% at the bottom
Group I and II supported through philanthropy and generosity

13. Role Of State
Poverty Alleviation is joint responsibility of Civil Society, Private Sector and State
Experience of Pakistan
Government of Punjab
Government of Gilgit-Baltistan
Government of Pakistan

14. International Agencies
Sources of Funds
FUNDS
Philanthropy
Public Authorities
International Agencies
Commercial Funding

15. Conclusion Inclusive Finance Segmentation
Separate need for every segment
Sharia Compliant solutions
Collaboration between State, Private Sector and Civil Society
Developing a sustainable mechanism by converting borrows into partners and donors

16. LOAN DISBURSEMENT METHODOLGY

17. A Loan Disbursement Event in a Mosque

18. A Loan Disbursement Event in a Mosque

19. Akhuwat Event in a Mosque (Chiniot)

20. Akhuwat Event in a Mosque (Lahore)

21. Akhuwat Event in a Mosque (Lahore)

22. Akhuwat Event in a Mosque (Mithan Kot)

23. Akhuwat Event in a Mosque (Rajan Pur)

24. Akhuwat Event in a Mosque (Choti – D.G Khan)

25. Awareness Event in a Mosque

26. A Loan Disbursement Event in a Mosque

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