Translating Economic Down Grading

Livestock through Islamic Microfinance
8/14/2011 Farz Foundation Farhat Abbas Shah

Translating Down Grading

Islamic Microfinance to counter current economic crisis By: Farhat Abbas Shah. Down grading of America’s credit rating from AAA indicates world economic recession is aggravating. About ten thousand American industries have shut down since2003. In equality between extreme incomes groups is soaring. All these developments emphasize the fact the interest based economic system has failed to kick start the economy. And this has come to the point where political and social un rest is hitting the economies like United Kingdom. All that is left is a partnership based system, which Farz Foundation has propounded. Despite all these eye opening developments, world financial bodies are clinging to market fundaments. Real Islamic financial model still provides a middle of the way road to fight the current economic mess. By engaging the have nots through profit and loss business mechanism a viable solution could be offer. A historic opportunity has been provided by the economic recession to the Islamic Banks. By making Islamic banks a little bit flexible for profit and loss sharing great results could b had. The fall of credit rating of America unveiled the reality of the claims about offsetting economic crises by subsidizing banks and imposing cuts on various grounds in different areas of the globe. Here the importance of “twist up economy” accentuates the implementation at a required level. Two and half billion poor people are still an opportunity to provide a strong foundation to the world economy and

the asset based microfinance could be an effective tool to achieve the targeted results. If the financial institutions come with a productive and unbiased vision, it is not an unattainable goal. Only a one hundred thousand SME Villages can change the scenario. Partnership with the poor on profit and loss basis is the core component of the Twist Up Theory, which can exhibit a great sense of responsibility at grass root level to keep the world secure. Poor can be utilize positively to create a productive universe at large by making them partners. Farz Foundation working with the notion to make available a precedent, which is still in the process of becoming an Islamic Microfinance bank , has created over 3200 micro business models by sustaining the same number of families on profit and loss basis. The most important point to be made here is that there has not been even a single default. By taking a risk on profit and loss basis we infect eliminated the risk factor almost in totality. We actually close the door of default by creating the stakes of the client. Farz foundation has introduced a new and structured model of Halal investment through livestock. We provide five goats to one poor rural family. In a course of one year it becomes a flock of 25 goats. According to this business model the family raising the goats 10 of goats . Farz Foundation and the investor have an equal share of the rest of the goats. Mean while the value of the principle goats is doubled in one year. The next years the male goats are taken out to be sold on handsome price, while the female goats will again be ready to produce 60 goats. In three and a half year the indicial five goats will become a flock of at least 150 goats. This simple arithmetic demonstrates a huge potential of this purely Islamic financial product. What goes without saying is the fact that there are swear shortage of goat meat in the

Pakistani Market, which has pushed the price of goat meat to at least $ 7 per KG, which is a very high price considering income index of the majority of the population in Pakistan. All the major agricultural bodies are waring against swear food shortages in not very distant future. This type of economic models simultaneously can help the individuals in need while give a boost to the agricultural sector which in Pakistan consist of 60 present of the total economy. This model can help the African countries also where famon has almost hit a large number of people of black continent. To have a more crystal view of this Halal investment model, one can visit CGAP MicrofinanceGateway. http://www.microfinancegateway.org/p/site/m//template.rc/1.9.5169 6

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