1. International Conference onIslamic Microfinance Organized By : CENTER OF ISLAMIC BANKING & ECNOMICS Held At: Faisal Auditorium Islamabad - Pakistan

2. International Conference on Islamic Microfinance organised by Al Huda in collaboration with Akhawat 13 June, 2011 Islamic Microfinance : An Outreach Analysis in Global Perspective Presentation By : Dr Shabbir Hussain MD, HHRD

3. PRESENTATION MICROFINANCE MODELS OUTREACH ANALYSIS

5. Fixed Asset Loans

7. Group Formation

8. Social Collateral

10. Production/Skills Training

12. Health & Nutrition

13. Literacy Training“ Credit Plus” includes development and social services in comparison with “Credit Only” approach Integrated Approach Minimalist Approach Credit Only Credit + (Financial & Non Financial)

14. MF Models of Outreach based upon the integration level of supply chain Three- ProngedApproach Promotion of MED, training & helping linkage with banks NGOs as Facilitators NGOs V/WOs Specialized Banks Promotion of MED, training & providing Credit Support NGOs NGOs as Financial Intermediaries V/WOs Specialized Banks Promotion of MED, training & providing Credit V/WOs Specialized Banks Banks as MFIs

15. The effectiveness of Microfinance approaches varies across different levels of poverty HHRD Mudarba HHRD Murabah HHRD Qard Hasn

16. OUTREACH ANALYSIS OF SELECTED INTERNATIONAL MODEL OF MFIs

17. Outreach Analysis of Selected MFIs in South Asia (Source: www.micromarket.org,

18. Microfinance is fast emerging viable tool to reduce Poverty (Source: www.micromarket.org.

20. Weekly/Monthly Repayments

23. Women disseminate knowledge to childrenDealing with Arrears/Default Less aggressive and use Islamic teachings to recover loans

24. SOME MODES OF ISLAMIC FINANCE Islamic microfinance represents the convergence of two rapidly growing industries: microfinance and Islamic finance.

26. 25-30 percent reveal religious reason for not seeking conventional loans (Jordon)

27. 40 percent of the poor demand Islamic financial services regardless of price (Yemen)

28. 43 percent of respondents consider religious reasons to be largest obstacle in obtaining microcredit (Syria)

30. Bangladesh has largest outreach (100,000 +) with two active institutions . However it represent about one percent of its microfinance market

31. Syria and Indonesia has 3 % and 2 % of respective microfinance market

33. Overall percentage of female participation using Islamic Microfinance products is comparable to those using conventional microfinance products (66 %) globally (Mf Info Exchange 2007)

34. 70 percent of products offered are Murabah based

36. 17 Outreach of Islamic Microfinance Source : Focus Notes No 49, August 2008, CGAP

37. Islamic Microfinance Programs across the Globe

39. OUTREACH ANALYSIS OF MICROFINANCE IN PAKISTAN

40. Roughly 80% of the current borrowing is from the non-formal sector in Pakistan However, the cost of borrowing from the non-formal sector is 4% higher Borrowing Pattern in Pakistan

41. Approximately 60% of the non-institutional lending is through money lenders, Shopkeepers, and agriculture input dealers

42. 1999 – 2011 MICROFINANCE IN PAKISTAN: HISTORICAL PERSPECTIVE PPAF Phase I & II : US$ 300 Million PPAF begins disbursing microfinance funds PPAF Phase III Microfinance Sector Development Programme (ADB) US$ 150 Million 1.4 million 40 + MFPs 1999 2000 2001 2005 2009 2011 2006 5 Microfinance Banks PIR: PMN starts collecting and publishing member MFIs’ performance indicator report Khushhali Bank becomes operational FMFBL,TMFBL,RMFBL, POMFBL, NMFB. BRAC-PAK NRSP, ASA Kashf Bank Microfinance Ordinance

43. Major Microfinance Providers in Pakistan

44. SCALE OF OUTREACH

45. Current Outreach of all MFIs in Pakistan exceeds 1.85 million Active Borrowers Data Source: Microwatch, PMN, Sep 2009 Presentation By : Dr Shabbir Hussain,

46. DtSource: Microwatch, PMN, Sep 2009 Presentation By : Dr Shabbir Hussain,

47. Only 5 to 10 % of the poor population in need of micro credit is currently covered Current Outreach 1.83 million borrowers Estimated Demand 27.7 million borrowers Access Access Quality Quality Products Products Funding Funding Sustainability Sustainability

48. 29 Conclusion An estimated 72 percent of people living in Muslim-majority countries do not use formal financial services Of the total US $ 500.5 billion global Islamic finance market, 36 percent is located in the Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE), 35 percent in non-GCC Southwest Asia and North Africa, and 23 percent in Asia (primarily Malaysia, Brunei, and Pakistan) (The Banker 2007). Islamic microfinance is concentrated in a few countries, with the top three countries (Indonesia, Bangladesh, and Afghanistan) accounting for 80 percent of global outreach. Bangladesh is a country where conventional microfinance products have the largest outreach—exceeding 18 million borrowers—and Islamic Microfinance represents only 1 percent of its microfinance market.

49. Presentation By : Dr Shabbir Hussain, TJAZAK ALL Thank You!

50. Thank You CENTER OF ISLAMIC BANKING & ECNOMICS Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056E-mail : info@alhudacibe.com Web: http://www.alhudacibe.com