Islamic microfinance: exploring the experience of Akhuwat in promoting Qard Hasan in Pakistan

Although the global microfinance sector has expanded rapidly over recent years, financial exclusion remains high, particularly in many Muslim-majority countries. In this context, Islamic microfinance has emerged as a potential remedy for the religious constraints that restrict some Muslims from engaging in interest-based microfinance. However, the development of Islamic microfinance has been challenging, with many institutions struggling to develop practical and financially sustainable operating models. Akhuwat Islamic Microfinance from Pakistan is a notable exception and its simple, yet innovative, approach is widely welcomed. This paper analyses Akhuwat’s experience within a framework of essential questions that were identified by the panellists of a thematic session at the fifth European Research Conference on Microfinance.