Islamic Micro Finance is a step towards Poverty Alleviation, A case of Khyber Pakhtunkhwah

Imdad Ullah (
IMIS, CECOS University of IT & Emerging Sciences Peshawar
March, 2013


Poverty occurrence starts to the existence of human being and presently it has taken important place in human development matters of almost all countries of the world. In Pakistan it has been a big challenge since independence and its alleviation is the first priority of the national vision and to achieve the strategic goal of the millennium development goal (MDGs) by 2015 to fight against poverty and to improve the standard of living of the poor in the country, but so far actual achievement are still inadequate.
Islamic micro finance which involves sharia principles of financing and providing loans without any assets collateral to the vulnerable poor for their needs and wants for the main objectives to increase productivity of the poor, empowering them to enhance the economic development and giving social benefits in a sustainable way to them.
This study determined the role of Islamic micro finance in poverty reduction strategy in Pakistan and how this role can be made better. It was planned to recommend Islamic microfinance and its principles that raise economic development and reduce poverty line in the country. This fact was in the view that conventional institutions charge prohibited interest on their loans while mostly population (97%) of the country is Muslims.
This study was conducted through questionnaire on which data was collected in the end of 2012. Researcher targeted Akhuwat Islamic micro financial institution and its clients. Collected data was analyzed and presented in figures and tables.
This research finds that Akhuwat organization has envisaged, as its main objective is to self sustain the poor and to have good impact on their income levels. However, study concluded that Islamic micro finance play vital role in poverty alleviation in Pakistan.
The study also recommended that in Pakistan, mostly Islamic micro financial institutions are less in numbers, if existing institutions expand their network in entire country and especially in rural areas of Khyber Pakhtunkhwa (KPK), then it will be supportive for these institutions and also for poverty alleviations in the country.