A Microcredit Alternative in South Asia

Akhuwat's Experiment

Shahrukh Rafi Khan, Natasha Ansari

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780367591694
• eBook ISBN: 9781351174565
• Edition: 1
• Topic: Social Sciences
• Subtopic: Ethnic Studies
• Index: Social Sciences

Microcredit took the development world by storm as a tool for poverty alleviation in the 1980s. After being hailed as a panacea, a few decades on it started being forcefully criticised based on its practice.

This book explores Akhuwat (literally brotherhood), a rapidly growing Pakistani NGO formed in 2001, which addresses the shortcomings of conventional microfinance. Its vision is of a society built on empathy and social solidarity and its mission is that of creating self-sufficiency among the entrepreneurial poor. This book examines whether Akhuwat fulfils its promises of not pushing loans or encouraging clients to get on a debt treadmill and helping them to avoid high debt burdens by charging no interest and easing repayment terms. Conventional microcredit organizations are criticised for losing sight of the original mission of poverty alleviation by engaging in empire building and Akhuwat's goal is to avoid this by embracing an alternative strategy of scaling up. Finally, this book also analyses Akhuwat's approach as being gender sensitive and embracing all religions, castes and ethnicities.

Based on fieldwork designed to assess if Akhuwat is the microcredit alternative it claims to be, this book will be of interest to scholars of poverty and development studies in general and microcredit in particular.

Section 1

Conceptual and institutional issues

1 Introduction

Akhuwat can contribute to a much needed debate in Pakistani society; one that is currently repressed.¹ While election research demonstrates that the public in Pakistan is not enamored with a forceful imposition of religiosity, nonetheless polls show most view themselves as religious and identify with Islam. In 2006, Gallup Pakistan asked: “Should religion be separate from politics?” Fifty-three percent replied in the affirmative, 18 percent were not sure and only 29 percent thought that religion should not be separate from politics.

These views were even more strongly reflected in questions about religious decrees that affect personal life. In response to the question “Some people think that the hijab (head covering) by Muslim women should be made compulsory while others are of the view that it is a matter of personal choice and willingness. Should the hijab be enforced?” In response, 83 percent thought it is a matter of personal choice, 10 percent said that they did not know and only 7 percent stated that the hijab should be enforced.²

On the issue of religiosity, Gallup Pakistan found in a survey of youth (18–30) that living according to religious doctrines was very important for 66 percent and only 3 percent considered it to be not important at all.³ Thus while religiosity is high among the population, the majority view faith and religion to be a personal issue.

However, religiosity among the public creates a ratchet effect in social legislation, such as alcohol prohibition or blasphemy laws (also see below), which deepen and entrench social fissures because such concessions to an extremist vision of Islam are difficult to reverse. Both popularly elected politicians and military dictators alike have used religions symbols and policy for legitimacy. Once a concession to intolerance is made, reversing that becomes seemingly impossible in the face of popular religiosity and orthodoxy buttressed by militancy.

Orthodoxy or fundamentalism is a reference to those who subscribe to traditionalist interpretations of Islamic law. Modernists or progressive interpretations include those believing in the separation of religion and state.⁴ The suppression of liberty, such as via state imposition of intolerant social legislation, breeds resentment among liberals (both religious and secular) while the orthodox view as paltry the state’s concessions to them.⁵

The orthodox view the doors to debate as shut and view the Islamic tradition of ijtihad (independent reasoning to arrive at truth in religious matters)⁶ as heresy, while secular liberals find such a debate irrelevant and view the orthodox with disdain. However, in our view it is necessary for the modernists to engage since having popular veneration, street power and militant backing make the orthodox far from irrelevant.

Unfortunately the ability of orthodoxy to harness street power and militant violence creates a climate of oppression not conducive to debate and discussion. The case of a prominent modernist Islamic Scholar, Fazl ur Rahman Malik, comes to mind. He was invited back from teaching in the West by Pakistan’s first military dictator, General Mohammed Ayub Khan (1958–1969), to head the Central Institute of Islamic Research. Traditionalists engaged in ad hominem attacks rather than address the scholarly logic of his positions, and he resigned his post.⁷ This was Pakistan’s loss, and Fazl ur Rahman went on to establish the Center of Middle Eastern Studies as a full professor at the University of Chicago.

Pakistan’s third dictator, General Zia-ul-Haq (1978–1988), decided unilaterally to Islamize the country and imposed a highly orthodox version of Islam on the population. Government employees and the wider population became subject to social pressure to pray in the work places, women were expected to cover their heads and don shawls or conservative clothing, eating publicly was prohibited during Ramzan (month of fasting), and overt practice and expressions of religiosity were encouraged and rewarded such as in securing promotions. The dictator announced that senior promotions would be awarded to those who conformed. Western culture was discouraged on state-run TV, and movie going was subjected to increased taxes. For many, religion went from being a matter of personal faith to a public show of piety responding to state and social pressure.

School curricula were Islamized, and madrassa (religious schools) education, on a separate track, was encouraged; and it is the proliferation of these schools with Middle Eastern funds that are viewed as becoming the hotbed of the Afghan and Pakistani Taliban. Social legislation included the Hadood Ordinance for adultery, fornication and crimes (including stoning, whipping and amputations). The initiatives for Islamizing the economy included compulsory zakat (wealth) tax, though modernist Islamic scholars argue that giving is intended to be voluntary as a form of striving to attain spiritual purity. Interest-free banking (most agreed this is an eyewash) was introduced to conform to the ban on usury or riba (see Chapter 8).⁸

It was not possible for democratic regimes that followed to reverse any of these Islamic initiatives. In fact Zia-ul-Haq’s protégé, Nawaz Sharif, unsuccessfully attempted to declare himself Amir-ul-Momineen (leader of the faithful) and introduce sweeping constitutional amendments to entrench Islamization in his second elected bout in office (1997–1999). During his most recent tenure (2013–2017), Sharif did not attempt such radical restructuring, though this alliance with religious parties remained strong. The public mood shifted away from support of extreme Islamic ideology after the Taliban groups subjected the local population to incessant and brutal acts of terror.

So Pakistan has not engaged in a much needed debate, and little renaissance in Islamic thinking is evident. This is despite the Qur’an’s (the main source of Law in Islam) emphasis that enforcing a particular perspective is not called for. There are numerous verses in the Qur’an indicating the Prophet’s role to be only that of a warner⁹ (7:184, 7:187, 11:2, 11:12, 13:7, 15:89, 16:82, 17:105, 22:49, 27:92, 28:46, 29:50, 33:45, 34:28, 34:46, 35:23, 36:6, 38:65, 42:48, 46:9, 48:8, 50:51, 64:12, 67:26), guide (16:64, 43:52), emissary (17:93), reminder (16:44), witness (22:78), messenger (13:40, 29:18, 36:3), conveyor (29:55), herald of glad tidings (18:56, 33:45, 34:28, 35:24,36:11), bringer of truth (23:70, 33:45), beacon of light (33:45) but not that of a guardian (17:55), or keeper (10:108, 42:48), or responsible for others’ conduct (42:6). Nor was he sent with the “power to determine (human) fate (17:55).” As indicated in the Qur’an, apart from this role as a messenger “he is but a mortal” like other humans (17:94, 18:110, 41:6), “not a prodigy” and unaware of “what will be done with him” (46:9), and reckoning or requiting belongs only to God (13:40, 45:14).

Another related recurring theme is that of avoiding the use of force in matters of faith. The Prophet was informed that “your mission is only to give warning: It is for Us to do the reckoning” (10:98) and that God “needs none to defend Him from humiliation” (17:105). Another verse in the same vein is: “He that fights for God’s cause fights for himself. God needs no man’s help” (29:6).¹⁰ More explicitly, believers are informed that there should be “no compulsion in religion” (2: 256) or that humans should be called “to the path of your Lord with wisdom and kindly exhortation” (16:126). Thus, once humans are confronted with the truth from the Lord, humanity is told: “Let him who will, believe in it, and him who will, deny it” (18:28).

Citing chapter and verse is tricky business as Shakespeare informed us so long ago in The Merchant of Venice. His celebrated quote, spoken by Antonio, is: “The devil can cite Scripture for his purpose.” Yet, the purpose here is simply to challenge a trenchantly held position by militant orthodoxy that it has the monopoly on religious truth and the right to dictate and indeed “force this down people’s throat” as the Pakistani military dictator, Zia-ul-Haq, stated he was justified in doing.

The extremists bury prescriptions privileging choice and instead practice oppression. This is what makes Akhuwat important, particularly since it taps into enlightened Islamic traditions with practice (rather than just words) and good work, as prescribed by Islam (and also other religions), is much more difficult to stamp out. But with the emphasis on “good work,” Akhuwat brings to the table an inclusive and enlightened interpretation of what it means to be a Muslim and one that is consistent with the verses cited above. For Akhuwat, being a Muslim means accepting all faiths and a religious practice that emphasizes altruism, volunteerism and giving. Accordingly, Chapter 2 of this book explores altruism in the broader economics literature to contextualize the Islamic perspective on it and to arrive at a working definition that we can use to evaluate Akhuwat’s policy in this regard.

Lindblom (1977) classified the mix of mechanisms governing political economic systems into authority, markets and “preceptoral (using norms to guide social behaviour).” The complexion of the system is identified by the predominant mechanism such as market for the capitalist liberal democracies and centralized planning for socialist states. Based on this classification, Akhuwat predominantly relies on the preceptoral mechanism which involves “ ‘educating’ the population towards the right socio-economic conduct” by example (Khan, 1987, p. 16).

Akhuwat attempts to make altruism and volunteerism operational at various levels in all its initiatives or interventions including microcredit. Other than microcredit, Akhuwat has also diversified into various other activities mentioned briefly below and described in more detail in Chapter 3. It encourages successful borrowers to offer ‘internships’ to new borrowers. Akhuwat volunteers also run social delivery programs like setting up libraries at orphanages and organize field trips for students from low-income schools and orphanages. It also has training, education and health initiatives.

Akhuwat Institute of Social Enterprise & Management is a state-of-the-art research and training center and also contains an incubation center for microenterprises. Potential entrepreneurs (artificial jewelry making, embroidery, spare parts manufacturing, electrical items, clothes stitching, leather products) undergo capacity building including in marketing, financial services, advertising, product design and improvement and forward/backward integration. The plan is to provide training and angel investment for promising projects. The pilot project is to be gradually scaled up to eventually cater to 500 micro-enterprises. The hope here is that these enterprises will create livelihoods, and they are expected therefore to operate at a larger scale than the self-employment it facilitates via its microcredit initiative.

By mid-2016, more than 27,000 students had benefited from Akhuwat’s various education initiatives. It also supported students from income-poor backgrounds who gained admission to Pakistan’s top educational institutions. It has plans to found an Akhuwat University for bright students from income-poor backgrounds. Akhuwat’s Internship and Leadership program has been training 60 interns per year through a rigorous and practical four-week module which acquaints the interns to multiple organizations in the development sector.

Akhuwat Clothes Bank collects clothes donated by more-prosperous families; and after repair, cleaning, and packaging, these are distributed as gifts to needy individuals. In partnership with a non-profit organization, Fountain House, it has also established a program for the social reintegration of the khwaja sira (transgender) community members who run this program. The program has several intended stages, starting with social engagement and provision of a small income supplement (Rs.1,150) to the most vulnera...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• Appendices
• Preface
• Section 1 Conceptual and institutional issues
• Section 2 Empirical assessment
• Section 3 Summary and conclusions
• Index