Promoting solar power in Pakistan

The city of Lahore is renowned as the literary, educational and cultural heart of Pakistan and has a long history of beautiful architecture dating in particular from the Mughal period with buildings such as the Badshahi Masjid and the Shahi Qila or Lahore Fort.

Shakeel and Rehan from Akhuwat on the roof  where the solar panels are located

Although on a much more modest scale the new, purpose built headquarters of Akhuwat, Lendwithcare’s partner in Pakistan, continues this custom of bold, innovative design while respecting historical tradition.  The seven storey offices, completed in 2014, is the first large building in Lahore that can be run exclusively on solar power as up to 48 kilowatts of electricity can be generated from the 160 large solar panels located on the roof of the building. The energy is stored in 136 batteries all housed in a special control room on the top floor. When fully charged the batteries can power the entire building, which houses almost 70 staff, for almost eight hours or the whole of the working day. 

Furthermore, rather than install air conditioning units that are expensive and use lots of electricity, the narrow, open plan design of the building incorporates natural ventilation systems to simultaneously cool and channel fresh air throughout the building. Even during the hot summer months in Lahore when the average daily temperature routinely exceeds 40 degrees centigrade, the temperature inside the building remains much lower at around 25-30 degrees centigrade.

Shakeel  from Akhuwat in the control room

Dr Amjad Saqib, Akhuwat’s Founder and Executive Director, explains that the motivation to install solar power was not only an attempt to reduce carbon emissions and promote the use of renewable energy, but also in fact a response to the daily reality of frequent and often prolonged electricity cuts in Pakistan or ‘load shedding’ as it is referred to locally. Load shedding means that households and businesses alike receive electricity continuously only for a few hours each day, with power outages longer in rural areas. Whereas larger buildings and businesses can afford to rely on generators for power when there is no network electricity, small businesses are often forced to simply down tools and wait for the power to return. The costs to the economy in terms of lost production are staggering; one estimate is that annual gross national product has been reduced by 7%. Arguably nothing causes as much frustration and inconvenience for ordinary Pakistanis as load shedding.

Dr Amjad explains “I am convinced that solar energy can offer a practical and affordable solution to the thousands of microentrepreneurs that Akhuwat supports”. Therefore, to enable them to continue working during the frequent bouts of load shedding, Akhuwat intends in 2015 to start providing loans of between 20,000 and 100,000 rupees (approximately £130-£650) for small businesses to purchase and install solar power systems.  Since monthly electricity bills are often in the range of 2,000 to 3,000 rupees a month, Akhuwat estimates that the investment in solar power for most borrowers will actually pay for itself after a couple of years as their electricity bills will be much lower.

Such loans should soon be featured on the Lendwithcare website.

By Dr Ajaz Ahmed Khan, Microfinance Advisor at CARE International UK

Guest blog | You don’t have to wait for Christmas!!

This blog was originally posted on Richard Kemp's blog and has been re-posted here with his permission.

Pictured above is Ghulam Qadir who has a recycling business in Pakistan

I have to admit that I am not an easy person to buy things for at Christmas and birthdays. I am lucky that I can afford to buy things that I need and have very few things that I want to buy on top of that except for stamps (I am a stamp collector).

So I always present a challenge. However my ever resourceful younger daughter Rachel, currently the Lady Mayoress of Liverpool, knows my foibles and my interests and is a dab hand at whizzing around on her computer looking for things.

In the past she has bought me things like goats from Oxfam which I have appreciated but it felt a bit sterile. I like being involved with things. This year she found a perfect present when she gave me a voucher for Lendwithcare. In this she combined two of my interests.

Professionally I used to be a regeneration adviser helping people set up programmes to help small business in some of the most deprived parts of England and in places like Turkey.

Politically I represent the UK on a number of international local government bodies and have had the opportunity to visit villages and towns in Africa to see at first hand the hand to mouth existence that so many of the people of Africa and similar areas face.

From the start I was delighted with the gift and within a couple of days invested most of it. I have since put two more small amounts in and intend to give small amounts on a regular basis.

I like thinking about which countries and people to invest in. I don’t put money into retail businesses but prefer to put them into things like recycling, food production and farming. I like the feedback that I get from Lendwithcare and to see the relatively small amounts dribbling in monthly. This means that I know that Lendwithcare is investing well although I do expect that sometimes it will not work out and the investment will disappear.

I have currently made two investments in Pakistan and one each in Benin and Cambodia. Two of the investments are with men and two with women.

To me this is what Christmas is all about. I don’t need another tie and although I will always eventually eat another bar of chocolate doing some small things for people in far greater need than I have ever experienced gives me a small glow of satisfaction. So thanks Rachel for leading me to Lendwithcare. You know what Santa can bring me next year don’t you!?

But you don’t have to wait for Christmas. If you go onto their website you can sign up and start lending straight away  http://www.careinternational.org. Alternatively ring them on 0207 091 6014. Lend some money, do some good and have a pleasurable learning time as well. You could even become a Lendwithcare angel – probably the only chance that I will ever get of acquiring a pair of wings! If you come from Greater Liverpool you can also join a group and see what other members (there are currently four of us) are doing and investing in. I don’t want to urge you on too much but Manchester has a bigger group than Liverpool – a situation I would really like to see rectified!!

More than just microfinance - How Pakistan’s largest Islamic Microfinance Institution supports one of the country’s most stigmatized communities

© Akhuwat 2014

Despite positive measures such as the landmark legal judgement in 2009 that granted transgender people  their own gender category on national identification cards and the Supreme Court recommending that they benefit from affirmative action for civil service jobs, transgender people remain among the most disadvantaged groups in Pakistan.  Often referred to as hijras or khwaja siras (the latter is the term used to describe the transgender courtesans who danced in the courts of the Mughal Emperors during the seventeenth and eighteenth centuries) they routinely face discrimination in health, housing, education and employment as well as ridicule, intimidation and the threat of physical violence. Most khwaja siras are forced to live at the margins of society and earn an income from performing at ceremonies such as weddings and births; extorting payment by disrupting people’s work and most commonly begging - they are, for example, a relatively common sight at traffic lights in many large Pakistani cities such as Karachi and Lahore.

In 2011 Lendwithcare’s microfinance partner in Pakistan, Akhuwat, started a programme to reduce the social exclusion of khwaja siras.  In the words of Akhuwat’s Founder and Director, Dr Amjad Saqib, the aim was to work towards ‘creating a society in which the transgendered are treated as equal citizens without prejudice or discrimination’. While the programme has included a wide variety of activities such as painting workshops, quiz competitions and even sports events, the core of the programme has focused on granting participants a small monthly grant of 1,200 rupees (approximately £7) and, since the health of khwaja siras is generally at greater risk of infectious diseases, the increased provision of health services - particularly focused on the prevention and treatment of diabetes, HIV/AIDS, and hepatitis. More recently Akhuwat has started to focus on improving the economic well-being of the transgender community and now provides vocational training and loans to start businesses. In no way has Akhuwat attempted to reform or reshape the identity or behaviour of khwaja siras.

Akhuwat’s programme was devised following lengthy interviews with more than 600 khwaja siras and their representatives to better understand the issues they face and concerns they have. So far, more than 500 people have benefited from the programme that has concentrated on the large north eastern city of Lahore which has traditionally had a relatively large transgender community, although Akhuwat has plans to expand its pioneering work to other areas of Pakistan as well. While the direct impact of the programme itself has so far been  limited to just a few hundred people, in a very conservative society the indirect impact of one of Pakistan’s largest Islamic development institutions working closely with one of the most stigmatised communities should not be underestimated – setting an example to other organisations Akhuwat employs seven khwaja siras directly.

Like many khwaja siras Ashi, who is 60, was born male but identifies as a woman and her experiences are typical of many in the transgender community. Ostracised by her family when she was still a teenager she became homeless and struggled for many years to both feed and clothe herself. What little money she received she earned from dancing at parties with other khwaja siras.  She suffered from high blood pressure and is now a diabetic. Ashi considers that participating in Akhuwat’s programme has proved a turning point in her life. While attending the workshops that promote better self-hygiene, diet and health, Ashi became aware that Akhuwat also provided interest free loans. She therefore requested a loan, repayable over 15 months, of 15,000 rupees in June 2012 (the equivalent of about £90) to establish a business selling the fabrics used in making women’s clothing as well as readymade clothes as an itinerant trader to people in her local community. For the first time in her life she started earning a regular income. Ashi repaid her loan on time; in fact most of her monthly instalments were repaid a few days early. Once she had fully repaid the first loan she applied in November 2013 for a second larger loan of 30,000 rupees (about £180) to significantly expand her business by purchasing in bulk many of the garments she sells. Buying a greater quantity of items from the wholesalers entitled her to discount and increased her profit margin and she was also able to offer customers greater variety.  She is now living with her married sister and her children and for the first time in her life Ashi feels she has some level of stability, economic independence and security.

Dr Ajaz Ahmed Khan

Eid Mubarak | Celebrations & Charity from Pakistan

© Akhuwat 2014

عيد مبارك, Eid Mubarak and blessed celebration to all of Lendwithcare’s entrepreneurs, partners and lenders across the world this Eid al-Fitr. For those of you who didn’t know Eid al-Fitr, the festival of the breaking of the fast, occurred on Monday (or yesterday for some countries) and marked the end of the Islamic holy month of Ramadan with a day of celebrations held across the Muslim world. The festival, which is viewed much like Christmas for Christians or Holi for Hindus, is one of the largest in the Islamic calendar and comes as the culmination to a month spent fasting, praying and giving gifts to fellow Muslims and non-Muslims alike. This year’s Eid al-Fitr is also of special significance to those of us here at Lendwithcare as it marks the end of our first year offering Islamic loans to entrepreneurs in Pakistan through our partner Akhuwat. To commemorate this year’s Eid al-Fitr and the amazing work Akhuwat preforms across Pakistan we asked their Chief Credit Officer Shahzad Akram to tell us how our entrepreneurs in Pakistan normally spend Eid al-Fitr and just what Akhuwat will be doing themselves to celebrate the day.
Shahzad told us that “Eid al-Fitr is celebrated in Pakistan with great religious harmony and enthusiastically and is treated as the second biggest event for all Muslims around the world. In Pakistan many days before Eid, people start to think and buy special dresses for the occasion as everybody wants to be look nice, beautiful and handsome on Eid day (Especially my wife who looks very awesome & pretty on Eid day)”. After attending morning prayers alongside their family people will greet “each other with embraces just to share their happiness” as well as give gifts of money to children and share sweet noodles in milk, a traditional Eid dish, with their neighbours, friends & relatives. Later in the day the children will spend the money they have been given in market stalls on sweets and ice creams while others will visit the graves of loved ones or go to the cinema or carnival with friends.

Shahzad also tells us that one of the most interesting dimensions of the day is the acts of charity that are incorporated into the Eid festivities and the Month of Ramadan as a whole. Many people will commemorate the occasion by donating a great deal towards helping the poor in their communities, either by arranging lunches and dinners, providing grocery items or simply in the form of money so that they too can afford new clothes for their families at Eid. Shahzad explains that for people in Pakistan “a special occasion [like Eid] is an opportunity to try to share their happiness with others rather than just celebrating it within [their immediate] family”. Indeed the Eid celebrations are especially important for entrepreneurs like Fozia Fatima, a mother of four from Lahore who received an interest-free loan from Akhuwat to start a beauticians business to help pay for her children’s education after her husband was injured at work. The desire of people in her local area to look their best on Eid means increased demand for Fozia’s beauty treatments and provides a great opportunity for entrepreneurs like her to gain new customers and grow their businesses. The small loan (£102) Fozia requested to adequately stock her beauty parlour was covered by Lendwithcare lenders, enabling our partner in Pakistan, Akhuwat, to issue more loans to small business owners like Fozia.

In the spirit of the occasion Akhuwat also distributed around 500 family clothes gift packs to their entrepreneurs and other needy people ensuring the poor also celebrate Eid even if they don’t have the capacity to buy clothes. In addition Akhuwat and a full team of volunteers arranged a carnival and a meal for their entrepreneur’s families in recognition of the hard work and achievements they have made in the past year. On behalf of Akhuwat and all of our partners and entrepreneurs across the world we would like to wish all our lenders a blessed celebration Eid al-Fitr and thank them for their continued generosity in allowing people like Fozia Fatima to take advantage of opportunities to improve their lives for the better.

© Akhuwat 2014

"Liberation loans" offered by our partner in Pakistan to free poor people from spiralling debt

After the 2014 Oscars ceremony, Steve McQueen's film “12 Years A Slave” deservedly took home the big prize of best picture. However, it is important to remind ourselves that the barbaric practice of slavery is not something we can consign to the history books. It is still a contemporary issue in many countries around the world.

The epic 1957 Bollywood film ‘Mother India’ movingly portrays the story of a family struggling to survive against the machinations of a local moneylender. Many decades later this is still one of the rare examples of Indian cinema vividly reflecting the reality faced by millions on the Indian sub-continent, and instances of local moneylenders charging usurious rates of interest remain as prevalent as ever throughout much of South Asia.

As well as providing loans to people wanting to establish or develop their microenterprises, lendwithcare’s partner in Pakistan, Akhuwat, provides ‘liberation loans’ to people who are struggling to repay debt that has been taken from local moneylenders. In most instances, borrowers took out small loans at interest rates of up to 20% per month and the debt has spiralled out of control. Sometimes borrowers have already sold what few assets they own, yet still struggle to keep up with repayments. Shahzad Akram, Akhuwat’s Chief Credit Officer, recalls instances where young borrowers have even committed suicide and some moneylenders demanded that borrowers sell their daughters to repay the debt. In parts of southern Punjab and Sindh it is not uncommon to find borrowers and their children who have been forced to become indentured labourers for feudal landlords as they struggle to repay debts that were often taken out many years ago.

Akhuwat calls them liberation loans because they free the borrower from the seemingly never-ending cycle of increasing debt. Each request is carefully considered on an individual basis to ensure that the application is genuine. There is a maximum loan size of 100,000 rupees or about $1000, although most loans are smaller, typically around 35,000 rupees or $350. Akhuwat does not charge any interest and borrowers are asked to simply repay the loan in monthly instalments over a period of up to 18 months. Each year Akhuwat makes several thousand liberation loans to clear the debts of heavily indebted borrowers.

Rather than providing the borrower with the cash, Akhuwat instead directly repays the whole amount owing to the moneylender in the presence of the borrower and often other witnesses as well. It then asks the moneylender to sign a contract stating that loan has been settled in full and that he/she will not demand anything further from the borrower. The organisation also educates borrowers on the dangers associated with taking out short-term high interest loans to ensure that they do not fall into the same debt traps again.

[The first example of a liberation loan to be uploaded on lendwithcare can be found here. Ilyas Maseeh found himself in spiralling debt after one of his relatives got him involved in a court case. He took out a loan from a private money lender who imposed harsh conditions on this loan. Akhuwat is now helping him clear his debt and resume a normal life.]

Akhuwat, which was established in 2001 by Dr Amjad Saqib, has grown quickly to become one of the largest specialist providers of microloans in Pakistan – it now has almost two hundred thousand active clients, including many non-Muslims, served by more than 250 branches located throughout the country. Akhuwat provides interest free, referred to as Qard Hasan, loans to the working poor. Qard Hasan loans are promoted in Islamic teachings as one of the mechanisms to assist poor people; indeed they are preferred to providing the poor with outright charity. With an average loan size the equivalent of just US$144, Akhuwat lends to some of the poorest people in Pakistan without any formal collateral and has a remarkable on-time repayment rate of 99.83%.

By Dr. Ajaz Ahmed Khan

Does faith matter? A blogpost by Dr. Ajaz Ahmed Khan

Does an association with faith encourage more prompt repayment of microloans and are the staff of faith-inspired microfinance institutions more motivated?

After recently returning from a visit to Pakistan, where I was analysing the operations of an Islamic microfinance institution, I am tempted to answer yes to both questions. The microfinance institution in question is Akhuwat, a lendwithcare partner. The organisation derives its name from the Arabic word Mwakhwaat or brotherhood and was established in 2001 by Dr Amjad Saqib. It has grown quickly to become one of the largest specialist providers of microloans in Pakistan – it now has almost two hundred thousand active clients, including many non-Muslims, served by more than 250 branches located throughout the country.

Akhuwat provides interest free, referred to as Qard Hasan, loans to the working poor. Qard Hasan loans are promoted in Islamic teachings as one of the mechanisms to assist poor people; indeed they are preferred to providing the poor with outright charity. With an average loan size the equivalent of just US$144, Akhuwat lends to some of the poorest people in Pakistan without any formal collateral and has a remarkable on-time repayment rate of 99.33%.  This can partly be explained by the fact that loans are made to small groups of friends and neighbours who appraise each other’s loans. While most of Akhuwat’s loans are to help low income people start or develop their businesses, they also provide ‘liberation’ loans to those people who have taken loans at high rates of interest from moneylenders and the debt has spiralled beyond control. The organisation repays the whole amount owing to the moneylender in the presence of the borrower and then requests the borrower to repay Akhuwat in interest free instalments.

Through speaking directly with Akhuwat’s clients in and around the city of Lahore it was noticeable how many stressed that it was precisely the fact that the loans conformed to Islamic teachings, particularly regarding the prohibition on charging or receiving interest, that most attracted them to Akhuwat and the fact that the funds may be from others fulfilling their religious obligations that motivated them to repay. Some borrowers confessed that it was the first time that they had ever received a loan from a microfinance institution – they had in the past refrained from accessing interest-based microfinance because of their religious beliefs.

No doubt borrowers were also attracted to Akhuwat’s loans because they were much cheaper than the alternatives available since borrowers paid no interest and Akhuwat’s loan officers would even visit borrowers at their homes or places of work to collect repayment instalments making their service very convenient. However, there did seem to be a genuine desire from clients to see the organisation develop and succeed. All the clients that I spoke with or observed visiting the organisation voluntarily made donations to Akhuwat - the organisation covers its operating costs through donations from borrowers and well-wishers – and the ubiquitous donation boxes in the branch offices were stuffed full with small denomination rupee notes.

It also became apparent that Akhuwat’s staff were also extremely committed and routinely worked extra hours. While this is common in many social development organisations, some had come to the institution from better paid jobs elsewhere and others had continued to work for Akhuwat for many years eschewing opportunities elsewhere. Many confessed that they were motivated by spiritual reasons and a sense of fulfilling a duty – something that I have also observed with staff working with faith-based microfinance institutions in Africa and Latin America.

I am certain that faith does have some influence on the way borrowers perceive Akhuwat and also on their behaviour and it has a motivational impact on programme staff. No doubt this has partly contributed to Akhuwat’s success but, as Dr Amjad Saqib emphasised to me, it is not a substitute for a conducive macroeconomic environment, qualified and experienced staff, and proper policies and procedures.

Loans can be given as a gift voucher to a friend or family member, who can choose which entrepreneur they would like to support. The entrepreneur uses the loan to help grow their business, and later pays the lender back. The lender can either withdraw the money and keep it, or lend the same money to another entrepreneur.

By Ajaz Ahmed Khan, Microfinance Advisor at CARE International

Making loans and transforming lives in Pakistan

Safiya and her husband, Khuda

Picture: © CARE

It is quite fitting that as the holiest month in the Muslim calendar, Ramadan, draws to a close this week and Muslims around the world celebrate the arrival of the new moon, we at lendwithcare.orgwill be celebrating the successful inclusion of our first Islamic Microfinance partner, Akhuwat in Pakistan.

Originally posted on the Department for International Development UK website, reposted here.

Like ‘traditional’ microfinance, Islamic microfinance is the provision of basic financial services to the poor or those on low incomes. However, what differentiates Islamic microfinance from its more ‘traditional’ form is that these basic services, be it loans, savings or insurance, must conform to Islamic financing principles. More specifically these principles include, financial support for socially productive activities only, no speculation or excessive uncertainty, prohibition of Riba or unjust gains, which includes, but is not limited to, interest and no exploitation by the stronger party against the weaker

And although lendwithcare.org, as part of international development charity CARE International UK, has been supporting microfinance institutions across the developing world since September 2010, our partnership with Akhuwat now lets people in the UK lend their money to an organisation that specifically complies with these principles.

Since April 2013, people in the UK have been lending small sums of money to micro-entrepreneurs in the Punjab region through our peer-to-peer lending website and so far the partnership is proving to be a great success and incredibly popular with the UK public. In fact, in just four months lendwithcare lenders have supported 230 self-starting entrepreneurs in Pakistan to grow or start a small business, providing them with the opportunity to lift themselves, and their families, out of poverty.

Naseem Akhtar is an example of one of the entrepreneurs supported by lendwithcare lenders over the last four months.

Tailor, Naseem

Naseem has faced many personal and financial difficulties in her life. Her husband had substance abuse issues and frequently sold valuable domestic household items cheaply in order to finance his addiction. Eventually her husband abandoned the family and has never returned. With help from two daughters Naseem now runs a tailoring business from her home. She earns around 28,000 rupees per month (around £200). However, there are 10 members in her family and Naseem finds it difficult to adequately clothe and feed everyone. She wants to expand her business and requested a loan of 15,000 Rupees (approximately £150) in order to buy an additional sewing machine.

For Naseem, like most of the micro-entrepreneurs supported through lendwithcare, small and reliable sources of credit can create a virtuous cycle of investment and increased income and thereby break the cycle of poverty in which many poor people like Naseem, are trapped.

With 2.5 billion adults, predominantly in developing countries, currently considered ‘financially excluded’ we at CARE are working very hard to create access to basic financial services more readily available. However, in addition to this forced exclusion from the formal financial sector due to social or economic conditions, there is an additional aspect to this exclusion that is not being addressed with perhaps quite the same gusto and this is that many Muslims (estimates vary from one-fifth to half the population) refrain from accessing interest based finance for fear of breaching their religious beliefs. And when we consider 650 million Muslims live on less than $2 a day, it is reasonable to conclude that the unavailability of Islamic microfinance constrains the development of many Muslim owned micro-businesses and therefore the creation of sustainable livelihoods.

In a context like Pakistan, where we have recently started working with Akhuwat, these figures become all the more significant when we consider a third of the population live on less than 30p a day and the majority of the population (95-97%) are Muslim.   

Since teaming up with Akhuwat(meaning brotherhood), an organisation in Lahore, to offer Islamic, or Shariah-compliant loans, our lenders have been able to support some of the poorest people in Pakistan with their businesses by providing loans that comply with their religious beliefs. Through our partnership with Akhuwat we are able to target the poorest and most marginalised people living in Pakistan, who traditionally have the most difficulty getting money for their business – especially women. The World Bank recently found that access to finance remains one of the biggest challenges to Pakistani women who want to grow a business, with less than 25 per cent of Pakistan’s businesswomen being microfinance borrowers. Whilst offered on Islamic principles, the loans are not limited to Muslim borrowers and many Christians (a minority group in Pakistan) are also able to take up these loans.

Expanding lendwithcare’s reach to Pakistan, and our first Islamic microfinance organisation, has been a great addition to our microloan initiative and definitely a cause for celebration for us at CARE. In the words of one of our lenders ‘Lend with care is one of THE BEST practical ways to do something worthwhile with our money. Find out more!!’

Eid Mubarak everyone!

 

By Nancy Thomas, Lendwithcare Executive