“To alleviate poverty in Pakistan
, we have to focus on the farmers,” says Farida Tariq, founder and chief executive officer of Wasil Foundation
, a microfinance institution. “But many farmers will not opt for interest-based lending because of religious reasons.”
To address this gap, Wasil started offering a Sharia-compliant microfinance package aimed specifically at smallholder farmers.
Wasil Foundation: Islamic Financing to Farmers
Wasil is an example of how microfinance and Islamic finance can be successfully combined.
An estimated 650 million Muslims live on less than $2 a day. Examples like Wasil show that Islamic microfinance can play a key role in bringing the poor into the financial mainstream in a way that doesn’t force them to choose between their religious practices and their wallets.
But despite an impressive increase in the number of financial service providers that offer Sharia-compliant microfinance products in Muslim countries, Islamic microfinance is still limited to a few countries. The range of offerings is narrow as well – most are largely focused on the cost-plus-markup product known as murabaha, which is geared toward asset purchases.