This month Islamic Relief (IR) renewed its pledge to empower vulnerable communities by providing them with the financial kick-start they need to break out of the poverty cycle. In January 2011, thousands of Kosovars and residents of Chechnya will receive interest-free loans from Islamic Relief to help fund and start up their businesses.
Islamic Relief has secured US$3m of funding from the Islamic Development Bank (IDB) and US$560,000 from Qatar Charity which will be spent in Kosova and Chechnya (Russian Federation) respectively. The money will provide 4,000 people with Islamic microcredit loans, at any one time.
Lotfy El Sayed, Manager of IR’s Middle East Department, said “This funding is essential in helping disadvantaged communities to become self-sufficient and equipping them to generate a living. It also enables individuals to offer something of value to their neighbourhood, be it a shop offering winter clothing, or an organic vegetable farm. We are grateful to the IDB and Qatar Charity who will help to empower thousands of people over the coming years.”
Many organisations use microfinance to lend money to people who wouldn’t qualify for loans from a bank, simply because of their economic situation. But high interest rates and strict cut-off dates for repayments can mean that poor people become even less well-off as a result.
Dr Hossam Said, Director of International Programmes, explained, “Islamic Relief’s loans are inspired by Islamic finance, meaning that borrowers pay no interest on their loan. This form of charity is also ongoing, as once loans have been repaid, the money can be lent to another person in the community.”
Ninety-six per cent of all Islamic Relief micro-finance loans are repaid successfully, with a small number of debts being cancelled if events beyond the borrowers control affect their repayment, such as a harvest being killed due to drought. This ensures that those who are most in need of financial support are able to secure a fair, just loan.
The majority of borrowers will use the money to start up, or improve small ventures that benefit the community, such as manufacturing businesses or shops.
Borrowers will have up to three years to repay the loans, after which the money will either be lent back to them again or borrowed by another person, depending on where the need is greatest.
You can help give some of the poorest people in communities across the world the kick-start they need to break out of the poverty cycle. Donate to our microfinance projects.