RATHER than handing out money one Pakistani charity is aiming to make a difference by lending funds to small businesses and families.

Two representatives of the international renowned charity ‘Akhuwat’ were in Blackburn recently as part of a UK visit and spoke to Asian Image about how the charity is helping to change lives.

The organisation is one of the leading exponents of micro-finance in South Asia and has grown to become the biggest interest free model in Pakistan. Since beginning in Lahore the charity now services large parts of the country.

It is presently working alongside British charity Lendwithcare.org in establishing new bases in the country.

The overriding aim is to encourage people to get out the cycle of debt they may be in explains Shahzad Akram, Chief Credit Officer. “The charity works on several guiding principles. There is no interest charged on loans. Work is based and conducted from local religious buildings.

“The team is made-up largely of volunteers and Akhuwat has employed a credit plus approach by introducing the idea of social guidance for its credit beneficiaries.

“The loans are of particular assistance to those poor families who end-up having to pay interest to loan sharks. They work all their lives simply paying back the interest.

“We help by paying off the initial debt and then settle the interest owed with the creditor.

“Many people’s lives have been ruined by these huge interest payments. They find no way out.”

Akhuwat derives its name from ‘mwakhaat’ or brotherhood. It has sought to base its movement on the principles of ‘Qarz-e-Hassn’ found in the Islamic tradition which entails helping someone in need with interest free loans, a practice favoured over charity.

Syed Rehan Hussain added, “Over the past ten years we have supported over 500,000 people and presently have 215,000 active clients.

“A total of 7.5 billion rupees has been lent. An average loan is 18,000 rupees and it can be paid back within 12-18 months.”

The recovery rate for the loans is remarkably 99.82% - an astounding figure for a nation like Pakistan.

Shahzad said, “I think there has been a lot said and written about the nation of Pakistan. But I think this is a fine example about how the country and the people are quite unique.

“The loan is essentially given out on trust and paid back through trust. Where else in the world would you have such a model?”

“We do not have overheads in terms of local offices because mosques, churches and temples are used as places where the initial meetings take place.”

The charity was established in 2001 when the idea of Akhuwat was presented before a group of friends at the Lahore Gymkhana.

During the conversation, charging of exorbitant interest rates on microfinance programs aimed at poverty alleviation was being criticised.

One of the friends pledged a donation of ten thousand rupees, while another friend, Dr. Amjad Saqib, took it upon himself to utilise that donation as an interest free loan.