Microtakaful

Countries have different yardsticks to assess how poor a person must be for takaful protection to be considered micro. Generally, it is for those who are ignored by mainstream commercial and social insurance schemes. This should include people working in the informal economy who do not have access to commercial takaful, nor have any protection provided by employers directly, or by the government through employers. Commercial takaful works for those who have a predictable income, even if it is a small sum, but for those working in informal economy with irregular cash flows, microtakaful would a great savior for them in times of crisis.

One big contribution within reach of regulators and policymakers, in making microtakaful widely available is to impress upon businesses and society about the dire need for it and perhaps make it conditional upon relevant micro institutions, NGOs and takaful providers to develop processes and offer microtakaful to protect the lives of those who are at the bottom of the income pyramid. Often it is politics, profits and greed that prevents this and creates the tragic gaps in society. Some estimates in 2019 (pre-covid) showed nearly 700 million people living in extreme poverty (on less than $1.90 a day), 1.8 billion living below the higher poverty line of $3.20 a day and 40% of world population (3.3 billion) living below $5.5 a day.

Empowering Communities Through Compassion: The Akhuwat Story

Since 2001, Akhuwat Islamic Microfinance has redefined poverty alleviation, harnessing the transformative power of compassion to uplift millions. Rooted in the Islamic principle of Mawakhat—solidarity with unwavering compassion—this trailblazing not-for-profit organisation has forged unbreakable bonds of trust within marginalized communities. In Akhuwat, borrowers don’t just receive loans; they join a movement. They stand shoulder-to-shoulder, donating even meagre amounts back to Akhuwat to ensure no neighbour is left behind. This profound spirit of mutual care has achieved the unthinkable near-zero default rates and a self-sustaining cycle of hope.

Akhuwat’s groundbreaking model goes far beyond the realm of finance. By fostering a sense of family and unity, it dismantles barriers rooted in poverty, gender disparities, and social exclusion, confronting systemic inequities with unwavering resolve. Its holistic approach seamlessly aligns with 10 UN Sustainable Development Goals, ranging from eradicating hunger to promoting inclusive and sustainable growth.

At the heart of Akhuwat’s mission lies Microtakaful—a beacon of hope for marginalized communities. This innovative Islamic social insurance serves as a shield for society’s most vulnerable, preventing them from sliding back into poverty while enabling them to not only survive but truly thrive. Families that once faced despair now build thriving businesses, access quality education for their children, and reclaim their dignity with renewed purpose.

Akhuwat’s work is more than microfinance and microtakaful. It’s a global blueprint for humanity—proving that when compassion fuels economics, communities don’t just rise; they soar. Akhuwat’s legacy isn’t measured in loans repaid, but in lives transformed, generations empowered, and a world reminded that poverty is not inevitable. Together, we rise.

Dr. Amjad Saqib, Founder and Executive Director of the Akhuwat Foundation, Pakistan.