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Microcredit Wakf

MICROFINANCE MINI PROJECT

On the basis of consultations with local stakeholders and partners, it was decided to undertake the project activity under the Ijarah or hire-purchase mode of finance. In the first phase of the project activity, eight sewing machines were purchased from the wholesale market and transported to the project location- Madhugiri town.
Beneficiaries were selected on the basis of need and ability to operate these machines. A socio economic profile of the beneficiaries (attached with this report) was prepared and these machines were allotted to them. They were also informed of the financial transaction involved.

APPROACH

The project is being implemented using Islamic financing principle of Murabaha. The approach is as follows:

Identified persons are assessed for their eligibility to be a beneficiary and suitability to operate micro-enterprise profitably – either mini-shops or home based tailoring
Islamic Relief buys required assets needed to operate the micro-enterprise (e.g. £42 for a sewing machine)
Beneficiary and Islamic Relief enter into an agreement. IR will sell item to beneficiary (in this case with 15% profit mark-up i.e. sewing machine for £48.30)* and agree repayment on 12 monthly instalment basis (in this case £4.03 per month).
Repayments are collected monthly and Islamic Relief uses repayments to support additional beneficiaries start new businesses each month Insha’Allah

Project Name:	Micro Enterprise for Small Traders
Location of Project:	Madhugiri, Karnataka, India
Implementing Agency:	Organization Functioning For Eytham’s Respect (OFFER), East Kallai, Calicut
No. of Beneficiaries:	15 small traders (15 households) per year supported to run a microenterprise (7 shop/handcarts and 8 sewing machines). These will be primarily women/widows and/or partially-disabled people with no sources of income or a member of their household.
Project Duration:	12 Months and then ongoing based on revolving fund.
Program Description: The proposed micro-enterprise proposes to enable 15 poor households per year to start small business with the help of some resources. The idea is to help them with resources to start micro-business that will earn a regular income enough to sustain their households. Priority will be given to widows and women-headed households. This project will be based on the mechanism of Self Help Groups. However, loans will be individual. The beneficiaries will be formed into groups that will be encouraged to interact regularly and also share from each other’s learning, maybe even create a savings’ and credit group. Given their bonding over a period of time, say one year, they can be brought together and supported to do something bigger that can benefit others in the long run. On a short term basis, the loans that these people repay will be re-circulated to help others. Beneficiaries: 15 households per year supported to run a microenterprise (7 shop/handcarts and 8 sewing machines). These will be primarily women/widows and/or partially-disabled people with no sources of income or a member of their household.
Input:		7 Handcarts/Shops 8 Sewing Machines Merchandise(viz. Stationery, Garments, Utensils, Fruit/vegetables)
Output:		7 new mini-shops created 8 home based tailoring units created
Desired (short-term) Results:		Regular income for beneficiaries Increased and improved life standards for poorest of the poor.
Impact (long-term):		Poverty alleviation Micro enterprise formation in rural areas Prevention of urban migration and poverty