| Abstract: |
Pakistan has been facing a high incidence of poverty. Despite its persistent
efforts to make a dent on poverty, the country never witnessed a systematic
reduction in the same. The country has been spending a significant amount on
safety nets and social protection programs. Some programs provide direct cash
grants and other forms of indirect support to the poor, while microfinance
programs provide microcredit, micro savings and micro insurance to the
beneficiaries. The government extends full support to the microfinance
industry and seeks to provide an enabling environment for its successful
operation. As a result, the microfinance industry in Pakistan has been
flourishing and steadily enhancing its outreach. However, despite all the
efforts, it currently covers just about 10 percent of the market in 2013. In
Pakistan, initiatives for Islamic microfinance have been undertaken by a few
NGOs and financial institutions. Almost all IMIs function below operational
self- sufficiency (OSS) and financial-selfsufficiency (FSS) levels. Most of
IMIs are unable to increase their outreach due to the human and financial
constraints. They face a constrained supply of funds as well as human
resources. This paper posits that the constraints are more apparent than real.
Islamic finance must include as part of the formal financial system, its
time-tested institution of waqf involving endowment of both financial and real
assets for community empowerment. The IMIs should be well aware of how to
create and put to use such community assets for the economic and social
betterment of the community. The paper sought the opinion of beneficiaries on
waqf- Islamic microfinance integrated model and discussed the same with the
professionals and practitioners. The beneficiaries were not aware of the main
components of the waqf-microfinance integrated model, but professionals and
practitioners, invariably supported the integrated model while voicing some
concerns that should be considered while formulating policies for the sector |