Most of the world’s poorest people are unable to access financial services, such as loans, that would help them earn a living for themselves and their families.
Most of the world’s poorest people are unable to access financial services, such as loans, that would help them earn a living for themselves and their families. Without securities or guarantors demanded by banks, many are vulnerable to exploitation by loan sharks and can be driven further into poverty with interest-charges. For over 15 years, Islamic Relief has been providing a much-needed lifeline with its ethical finance programmes. The Shariah-compliant small loans available through the programmes are interest-free, and Islamic Relief shares in the risk and profit. This means that the loan doesn’t have to be paid back if the beneficiary has difficulty doing so, and profits support the scheme so others can benefit. Islamic Relief sees its micro-finance programme as an innovative and sustainable solution to reducing poverty, as part of an integrated approach to development. It is working hard to raise awareness of the scheme as an example of the massive potential of Islamic humanitarianism. Other programmes rooted in Islamic teachings, that the organisation is further developing include Waqf – the Islamic concept of permanent endowment. Transforming lives in China The under-developed eastern Gansu Province, China, is one of the latest places to benefit from access to our Islamic micro-credit scheme – which aims to reduce poverty and promote sustainable rural livelihoods. Here, we are investing in income generation activities, promoting rural enterprise and improving the skills of farmers so they increase their income. Already, 266 families have accessed the programme, including that of Ma Wenhua, who lives in Xiyang Township, Pingliang city. People of the township’s mountainous villages suffer from poor living conditions, little cultivated land, and low income. “There is much dry land,” said Ma, “There’s not much income to get from arable land here.” Ma’s family of six were loaned a beef cow, providing an income through breeding, supported by our animal husbandry training. A calf is worth 5000 yuan (£502). Ma said, “The calf will be sold, and the loan cow will be fattened till the market situation improves. If the market trend is good, I will sell it. If not, I will keep it and breed more calves.” In the Xiangquan Township of Liu Ming, 45, and his wife, Dong Fengqing, 43, accessed the Dingxi City programme. “I have two loan beef cattle and four sheep, which will increase our income by 10,000 yuan (£1,055) a year. The money will mainly spend on daily expenses and my kids’ studies,” said Lui, who has also used the additional income to improve his family home. “My children are getting older, so we need more money. The best way is to breed more livestock.” From their new income, beneficiaries repay the loans and mark-up, ensuring that the programme is sustainable and can help other people to generate an income. In future, local agencies and communities will be able to maintain and expand this revolving fund, with Ma’s community planning to build a new cattle shanty and sheep-fold to maximise the benefits of breeding livestock.