Asasah Islamic Microfinance Institution

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Asasah Islamic Microfinance Institution
House 249, A-1 Block Wafaqi Colony, Johar Town, Lahore, Pakistan.
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Asasah Registration Status

• Registered as a non Profit Public Limited Company
  Limited by Guarantee in December 2003 under
  Companies Ordinance 1984, section 42 of Pakistan.

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Asasah Vision

• A Programme to Enhance Micro-Productivity
• and Alleviate Poverty

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Asasah Mission

• Improve living standards of people below the
  poverty line through provision of diverse
  economic, market linkages, educational and
  information services
• Safeguard the interest of donors, financial
  institutions and individuals interested in
  poverty alleviation
• Improve community well-being and balance the
  interests of stakeholders by encouraging
  participation
• Keep employees motivated and ensure continuous
  achievement of objectives through staff capacity
  building.

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Asasah Model
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Performance Indicators
Indicators Performance (2003-2013)
Geographical Speared Covered 10 Districts of Punjab with 32 Branches
Household served 167,122
Accumulated Gross loan portfolio 2,587 million
Recovery Rate 99
Percentage womens borrowers 100
Sehat Sahulat (Health Insurance) 35,000 Families
Financial Literacy Training 2,800 Women
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• As on July 01, 2014
• Asasah Transformed from
• Conventional MFI
• to
• Islamic MFI

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As Islamic Microfinance Institution FOCUS ON

• Beyond Murabaha ( Sale Purchase) Product
• Credit products for consumption purpose
• High profitability of Institution
• Low Cost charge to clients
• Safety net(grants) for Destitute

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Asasah Islamic Microfinance products

• 1 Musharkah (Profit Loss Sharing)
•  

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Asasah Islamic Microfinance product - Musharakah
Profit Loss Sharing
Features
Musharkah for entrepreneurs. Investing Rs. 50,000 to Rs. 200,000 in running businesses. Profit Sharing ( Client 60 and Asasah 40) Loss Sharing (Client 20 and Asasah 80) Period of 30 to 180 days.
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Asasah Islamic Microfinance products

• 2 Murabaha Income Generating (Business Material
  purchase sale)
•  

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Asasah Islamic Microfinance product Murahaba
Income Generating
Features
Murabaha for running small sized businesses and both for men and women Investing Rs. 15,000 to Rs. 50,000 for Assets Murabaha is offered for seasonal and non seasonal businesses. Asasah purchasing business assets and selling to the member for a period of 3 - 6 months, on credit Asasah take profit from clients business profit (b/w 8-20)
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Asasah Islamic Microfinance products

• 3 Murabaha Income Home Asset Building
  (Purchase Sale Asset)

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Asasah Islamic Microfinance product Murahabah-
Home Assets
Features
Murabaha on home assets purpose build assets of poorest household. Minimum period 3-18 months. Charged no advance payment to clients. Client got asset with Rs 500-50,000/ Client can get any home asset from Asasah assigned suppliers on wholesale rates.
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Asasah Islamic Microfinance products

• 4 Interest Free Loan Food Security Program  

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Asasah Islamic Microfinance product Interest
Free (Food Security Program)
Features
The purpose is to provide Food security to the poor households Food items are provided on monthly basis without any additional cost. The amount ranges from 18,000 to Rs 72,000 in the form of food stuff for a period of one year. This product is primarily for the daily wage or weekly wage workers and is returned in the form of weekly installment.
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Asasah Islamic Microfinance products

• 5 Qarz-e-Hasna (Help through Interest free
  Loans)

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Asasah Islamic Microfinance product Qarz-e-Hasna
Features
Qarz-e-Hasna (loan without any additional charges) is offered to destitute, widows and orphans. Households whose PPI score is higher than 40 are considered vulnerable by Asasah and we offer financial support to them. The amount of Qarz-e-Hasna to both men and women is Rs 10,000, which is returnable in 3 to 6 months time.
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Performance Indicators (IN Punjab)(July 01
2013-June 30 2014)
Product Numbers Amount in Million
Murabaha (Income Generating) 172 3.89
Murabaha (Building Home Asset) 30 0.31
Food Security Program (Interest Free Loan) 2,554 95.89
Qarz-e-Hasna Interest Free Loan 36 0.23
TOTAL 2,792 100.32
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Loan Disbursed
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Bird Eye View Assessment Feb 2012(IG
1-Weavers 2- Embroidery Stitching)

• Understand identified businesses and needs of IGs
• Identify demand-driven financial product/services
  for such IGs
• Explore nature of relationship between Asasah and
  IC for future intervention

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Assessment Process

• Review Livelihoods Assessment Report of Marghzar
  Valley
• Discussion with IC-LP staff
• Focus Group Discussions
• Develop cash flows

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Weavers IG

• Why
• Organized
• Skilled/experienced
• Sustained Supply demand
• Commitment
• Productive Asset

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Sewing Embroidery IGs

• Basic level skills
• Lack of market knowledge on products
• Lack of market linkages
• Some have potential as entrepreneur

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Analysis of Financial Service Providers

• Meetings with GLs of Credit Groups (COs) by NRSP
• Meetings with Kushali Bank and NRSP staff on
  their previous interventions
• Review Microfinance Situation in Malakand
  Division through Micro Watch 2002-07 (prepared by
  PMN)
• Review of Weavers supported by LP-IC10 Khadi
  Status.xlsx

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Relationship IC Asasah
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Asasahs Role

• Financial Product development
• Service Delivery Process development
• Training/Backstopping of local organization
• Monitoring Mentoring

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Local organizations Role

• Mobilize community
• Identify and select groups
• Develop Cash flow (Existing Future)
• Disburse and recover
• Evaluate

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Inter Cooperations Role

• Support Financial Intervention Model
• Cover financial risk
• Process observer
• Provision of non financial assistance

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Strategic Partnership

• Expand microfinance program to underdeveloped
  districts
• Deliver financial services through local
  community organization
• Scale-up businesses of Interest Groups in value
  chains
• Learn Livelihoods interventions

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Strategic Partnership

• Increase stakeholder network through technical
  assistance

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Asasah signed agreement on January 2013 to offer
Murahabah product (purchase of handlooms) to
1,000 bonded weavers through branch office
Islampur and expected that program will be
sustainable in 17 months. Intercoperation given
grant Rs. 7.8million for operational cost
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Work Plan Jan-Dec 2013
Period Work plan
Jan Mar Set up branch office Hire Trained staff
Apr-Jun Understand Handloom Cottage Industry Mapping Weavers Product Development
Jul- Sep Product awareness PPI Assessment of potential members Finalised potential clients Conduct financial Literacy trainings with women
Oct Dec (Pilot) Partnership Musharakah Disbursement of Qarz-e-Hasna (interest free loan)
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Jan Mar, 2013
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Hired Staff (local)
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Branch Office Setup
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Output
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Mapping
of Potential areas/Muhallas 14
of Naek 58
of weavers bounded 366
of weavers owner 134
of active Khadi 619
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Financial Product Development for Weavers
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Process of Financial Product Development

1. Understand Handloom Weaving Sub-sector
2. Review Analyze Weavers Activities and Cash
   flow
3. Review Analyze Household Expenditure and Income
   Gap
4. Analysis of Financial Services Providers
5. Develop Customized Financial Product for Weavers

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Customized Financial Product for Weavers
Product Specification Perceived Previously Designed after Assessment
Product Asset Finance for Handloom Murabaha Shariah Compliant Equity Finance i.e. Musharakah for Raw Materials and/or Productive Asset
Loan Size PKR 20,000 30,000 PKR 40,000 150,000
Loan Period 12 18 Months 30 days 8 Months (one business cycle season)
Disbursement time Any time in a year In season July - February
Legal Status Shariah Compliance Certificate available Shariah Compliance Certificate required
Focus Concentrating only on handloom Explore other steps of value addition like spinning, dyeing, washing, pressing, embellishing etc
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During pilot phase Jan-Dec 2013, it was learned
that by giving handloom to bonded weavers cannot
make them sustainable.
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Profit - Musharakah
Total Investment (Asasah Weavers) Rs.843,975
Investment Share Asasah 71 Weaver29
Total Profit amount earned 60 days Rs.113,303
Profit on investment 13.44 each turnover 54 per annum
Profit Share Asasah 40 Weavers60
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Profit - Female
Total Loan 3 to 6 months Rs. 292,800
Profit Earned - Amount Rs.120,820
Profit Earned 41
Income increased by 13 6 months 26 annual

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Sustainable Business require

• Skill
• Product (design,
• Investment
• Raw Material
• Demand/Market

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ADVERSARIES

• The religious faction declared, Asasahs
  microfinance is non Islamic. Hence it should be
  closed.
• Discourage female population to come at Islampur
  swat branch because Asasah offering financial
  services male and female at the same venue which
  is against the culture of swat
• Weavers could not sell their handloom shawls due
  to off season, resulting could not payback loan
  on time to Asasah.
• Current overdue of rupees 54,157

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Shariah advisor meeting with religious faction
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Common Facility Center for Females
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Market Development Forum
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PARADIGM SHIFT OF ASASAH from July 01, 2014
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Role of Asasah

• As on 1st agreement Jan 2013

• From July 2014

• To offer financial services

• Offered financial services
• At look out to find market linkages at national
  and international level

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Financial Product

• As on 1st agreement Jan 2013

• From July 2014

• Murabahah for purchase of handloom

• Musharkah (partnership with weavers)
• Murabahah ( purchase of business asset)
• Interest free loan for poor
•  
• Saving product under the name of Mera Asasah
  for female.

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Target Audience

• As on 1st agreement Jan 2013

• From July 2014

• Estimated 450 bonded weavers

• 600 bonded weavers
• 150 Non weavers
• 1050 embellished fabric women

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Branch Office

• As on 1st agreement Jan 2013

• From July 2014

• 1 branch office for both gender (male female)

• 1 branch office and 2 sub branch office
• 1 for male
• 2 for females

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DISBURSEMENT As on July, 2014
Product Numbers Amount in Million
Musharika Profit Loss Sharing 26 1.32
Murabaha (Income Generating) 81 1.58
Murabaha (Home Asset Building) 5 .02
Qarz-e-Hasna Interest Free Loan 30 0.19
TOTAL 142 3.41
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Increased Income Oct 2013 Jul 2014
Interest Group Used
Weavers - Thread 32
Weavers Handloom 17
Embroidery Stitching Wool Machines 35.60
Shopkeeper Grocery 19.82
Average 27.26
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Increased Income 2 times financed

Average 40.92
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Strategy Jul 2014 Jun 2015

• Market linkages for the continuous growth for the
  products manufactured by Asasahs clients.
• Sign MOU with Texlynx, to offer woolen shawls and
  embellished fabric items through their
  international offices in 11 countries. it
  estimated that Texlynx will sell 100,000 woolen
  shawls per annum.

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Strategy Jul 2014 Jun 2015

• Financial products will be offered to individual
  need bases.
• Approximately 800 women will register with CFC
• Approximately 90 operational cost of Asasah will
  be recovered from sale of piled up woolen shawls.

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Target jul dec 2014

• MARKET LINKAGES
• Sale existing stock of woolen shawls through
  Texlynx and other vendors in international
  market.

• Existing stock 98,000
• Stock Value 78m
• of weavers 66
• Expected Profit 9.8m

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Target jul dec 2014

• MARKET LINKAGES
• Bring orders for embellished women from local
  market

• Expected Orders 2m
• of beneficiaries 40

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• Achievement
• Jul Aug 05 2014

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Jul 01 Aug 05, 2014

• MOU signed with Texlynx.
• 292 embellished women got membership of CFC
• Outlet Artisan opened in Lahore and sale was
  Rs. 110,000.
• Exhibition in Lahore attended by FSA of CFC
• Developed market linkages with 6 local vendors
• Confirmed order of Rs. 618,000 from local vendors
• 26 women got work at home
• Explore two international clients other than
  Texlynx.

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Sustainability Strategy of Asasah

• 90 operational Cost cover from corporate sector
  by sell woolen shawls and embroidery clothes
• Sale existing stock of woolen shawls 98,000.
• 100 membership do of 800 embellished fabric
  women.
• Asasah will cover six months expenses

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OUTLET ARTIZAN
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• Thank You