The First Annual Report of Farz Foundation

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The First Annual Report

2010

FARZ FOUNDATIONThe First Islamic Microfinance Organization of Pakistan

(Shariah Certified)


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edicated to all our staff who a new

era of microfinance.Dpioneered

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VISION:

To bring social change through poverty alleviation by improving productivity and capacity of clients and staff.

MISSION:

Empowering the poor through innovative products and diverse business opportunities, by integrating socialperformance focused Microfinance with collaborative community health and education partnerships.

OBJECTIVES:

To become a model organization in social performance focused Islamic zmicrofinanceTo enhance theproductivity of home based entrepreneurs' disabled persons, HIV people, sex workers and transgender

persons.

Provide PRODUCTIVE ZAKAH (donation) and QARZ-E-HASNA (interest free loan) alongwith asset based financing to the poor, while building their capacity for sustainable livelihoods.We will prepare them for a business product within one year of program entry.

To graduate the home based entrepreneurs into micro-enterprise cooperatives.

To provide basic education, particularly business education to the poor.

To provide basic preventative health education and first aid facilities to the poor.

To offer environment awareness and education at the grassroots level and motivate environmentalclean-up and conservation efforts.

To provide a stimulating and professional work environment to the staff and build their capacityon the continuous basis.

To support the entrepreneurial modernization and technology development of Pakistan.

To make the poor productive and ZAKAH payer but not ZAKAH receiver.

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TABLE OF CONTENTS

VISION & MISSION............................................................................................3

.....................................................6

INTRODUCTION OF FARZ FOUNDATION......................................................7

FARZ METHODOLOGY......................................................................................15

FARZ OPERATIONS............................................................................................31

SUCCESS STORIES OF OUR CLIENTS............................................................35

SERVICES.............................................................................................................37

FINANCIALS........................................................................................................43

SOCIAL PERFORMANCE MANAGEMENT......................................................51

STAFF CAPACITY BUILDING PROGRAM.......................................................60

SUCCESS STORY OF FARZ FOUNDATION

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WHAT I STAND FOR

oetry has been my life long passion (Having 67 published books on my credit) which helped me feel themisery and deprivation of the people around. I have felt and studied this all pervasive poverty fromPpossible dimensions, giving me the belief this is not the ultimate destiny of the people on this planet earth.

Now the question was how to fight it. I have wandered a lot to find the answer and ultimately was convinced thatmicrofinance could be the ultimate tool in the given circumstances. Then I began to study the already existingstructures of the microfinance. Without rejecting the whole exercise done so far, I embarked upon modifying it,without disturbing the existing strategies. And then one day, like Ian Fleming, I stumbled into Farz Methodology,which I developed further to the extent of reinventing microfinance. Once being convinced of this method, Iwasted no time to practice it and spent all that I had, without any regard to the outcome. Without any claim to

greatness, I firmly believe this methodology can even undo the certain miss adventures done in the past.

Farhat Abbas Shah

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SUCCESS STORY OF FARZ FOUNDATION

chieving financial goals in such trying times is no mean business. Farz Foundation took up the task offighting poverty when the microfinance world was giving in to one of the most unique and deepAsustainability crisis. Much to our amazement, the initial outcome was quite encouraging.

Quite interestingly the whole operation was initiated with a small amount of Rs 2.5 million raised by the staffitself. Another NGO Akhuwat contributed Rs 0 .3 million. Out of this amount about Rs 1 million was disbursedamong its 85 clients. Total number of beneficiaries' amount to 409 persons who were provided healthcare andhealth care awareness. This step was aimed at restoring the confidence of people in the microfinance sector. Thereare 467 separate members who given Zakah to be made productive.

So far, the foundation has two offices including one central and one branch office. The staff in the branch officeconsists of 5 persons, one branch manager, an accountant, 2 social officers and one office boy. The central officehas the staff of 12 which consists of a CEO, CFO, GM operations, Manager Monitoring, Finance Officer,Manager Entrepreneur, Social performance Manager, Head of Communication and Market Intelligence anoffice boy and driver.

The process of organisational development was accompanied by the research, product development,

development of a unique methodology, constant assessment of the success rate, development of SOPs, setting upof the internal control system, monitoring and evaluation, expansion plans and social performance management.

What needs a special focus in all this process was the fact that simultaneously a partnership was developed withPak Qatar Family Takaful Pakistan for Islamic insurance, achieved first time in Pakistan. There was another

partnership developed with The Akhuwat to promote Islamic Microfinance operations.

Out of the whole invested amount of Rs 999,000 the receivable Rs 1,220,180, recovered amount Rs:338,900,outstanding balance at Rs 863,280 while Rs 18,000 was written off owing to the death of the client. Now, after theagreement with the Pak Qatar, such a risk has been taken care of once and for all. The recoveries are 99 percent ontime with zero percent PAR.

So far 7 training sessions have been conducted that include a workshop on Islamic Banking and Finance, Islamicproducts, principals of Murabaha, time management, client appraisal techniques, Farz Methodology, leadershipand team building and translating social into mission. The clients training sessions were conducted separately onhealth awareness and business education.

There was another traditional method of saving, locally known as committees, which was introduced to knit theclients with each other as well as with the foundation. This kind of method helps build the assets of the clients.This already existing system of saving was made secure by formalizing it through incorporating it with the otherFraz Foundation operations. So far, 102 community members and 11 times Farz Foundation (as a member) is

participating in the process. This product is attracting increasing number of members with each passing day.

The first challenge that the foundation faced was the demand of clients for hard cash instead of assets. Knowingpretty well that the cash extended is mostly spent on immediate needs instead of initiating a productive activity,

they were taught to understand how they can rid themselves of bad loans through using the assets provided by thefoundation. They even were never shy of telling their intentions of using the cash on their immediate needs.Therewere only two clients who mismanaged their business. We even didn't gave them up and gave them out of theroutine training.

One important internal challenge was changing the mindset of the internal staff to adapt to the principals ofIslamic Microfinance. That was taken care of through intensive training sessions. It is pertinent to mention thatmost of the staff so far works on voluntary basis.

But the greatest challenge that we face is the direly needed finance to tap a huge market that desperately awaitssupport.

Finally, I pay thanks to my team and all others, particularly Dr Amjad Saqib, the CEO of Akhuwat whocontributed to the success of the Farz Foundation.

Farhat Abbas Shah,

The CEO

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INTRODUCTIONOF

FARZ FOUNDATION


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A BRIEF INTRODUCTION

The Farz Foundation is a social performance based poverty alleviation organization, implementing on a uniqueand innovative Islamic Microfinance vehicle and integrated business mechanism Farz Methodology. It is theorganization which has been formed on a strong ideological foundation with the notion of partnership with the

poor and profit and loss sharing as its prior investment instrument. The asset based Islamic Microfinanceintegrated approach is the basic tool of the foundation to get long term sustainability, because the Farz Foundation

has a strong belief that the sustainability of the client is the sustainability of the organization. Farz foundation hasalso convicted to bring social change with poverty alleviation. As for as marginalized poor and destitute areconcerning, Farz Foundation provides them PRODUCTIVE ZAKAH (donation) and QARZ-E-HASNA(interest free loan in emergency situation) to start or protect their businesses. After giving them the basic businesstraining and providing them market linkages FF provides them Murabaha, and other Shariah compliant businessfacilities to make them sustained.

FUNDAMENTALS

Poverty is a global challenge that the whole civilized world is addressing to alleviate it. The philosophy of

globalization and its spirit demands societies coordinate economy, social change and development as one unitand not as divided in compartments to move ahead. The attitude of compartmentalizing societal issues intocubicles cannot effectively contend with the philosophy of globalization. Microfinance started with this veryapproach, but unfortunately methodologies, recourses, policies, systems, and procedures to grasp a widespreadmade it scattered. The race of achieving high targets detracted from most of the institutions working formicrofinance, thus leaving behind the initial focus which is the conviction of poverty alleviation by enhancing the

productivity of poor people and building their skills to earn money with honor and dignity. Microfinance also hasa social performance motivation. Farz Foundation has a strong notion that the ultimate financial sustainabilitycannot be availed without social sustainability.

However, the dream of changing the lives of poor cannot become a reality without fulfilling the aim of social

performance. No doubt, microfinance is a tool which can change not only the individual lives of the poor, but alsocan bring a social revolution in poor countries towards greater productivity. Social performance basedmicrofinance is not a commercial based industry. It has a belief on socio productive profitability, which occurs asa result of prominent social change at a larger scale.

In this perspective Farz (duty) Foundation was established to accomplish the real goals and objectives of themicrofinance sector, which are currently neglected to an enormous extent. It is a social performance based non-governmental organization with highly committed, self-motivated, innovative and enthusiastic grassrootsexperts as its founding members. They are also very experienced microfinance practitioners. Farz Foundation isregistered under Societies Act 1860 by its legal status. Farz Foundation is an organization in Pakistan aimingtowards achieving millennium development goals with a holistic approach. It is simultaneously addressing

health, education, and the financial vulnerability of poor populations to ease their burdens while systemicallyalleviating poverty.

DYNAMICS OF FARZ FOUNDATION

Farz Foundation supports a social performance movement forsocioeconomic prosperity and building a new sphere ofintegration. From inception, it has focused on translating thesocial mission of microfinance into practice.

Social performance

Integration

Microfinance

Social change

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ORGANIZATIONAL DESIGN

The partnership will look like the following diagram with communication openly flowing between all partners

involved. In this way, each organization can maximize their strengths by focusing on what they know and do

best, delivering education services, delivering health services, and delivering financial services. When the full

partnership is established, all directors and senior staff managers of each organization will meet to discuss the

work operations of each organization for working with the targeted group. In this way, no efforts and program

LEGAL STATUS

Farz Foundation is a non-governmental organization registered under the Act of 1860 and is authorized to workon a 'no profit no loss' basis. At present Farz Foundation's operations are exclusively concentrated in urban, semi-urban and rural areas of Pakistan through partnership with CBOs. The head office of Farz Foundation is located inLahore Pakistan. Now we are about to be transformed into company under the Company Ordinance 1984 sub-section 42. .

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Mr. Daud SaqlainChair Person BOD(Board of Directors) of Farz FoundationProvincial Controller Action Aid.

Specialization: Gender sensitization, Development andGovernance, Community mobilization.

Experience: More than 22 years

GOVERNANCE

he Farz Foundation's Board of directors is consisting of professionals having a strong back ground ofmicrofinance and development sectors and capable of implement effective governance.T

The board, through management, guides the organization in fulfilling its mission and protects the organization'sassets. Fundamental to good governance every individual Director is capable to work in partnership to balancestrategic and operational responsibilities. The board provides proper guidance to management regarding thestrategic direction for the institution, and oversees management's efforts to move in this direction. The chair

person of the board interplays between board and management centers on this relationship between strategy andoperation, both of which are essential for the successful evolution of the organization.In exercising their governance responsibilities, board members consider the perspectives of numerous external

actors. Depending on the legal status of the Farz Foundation, these actors can include providers of capital such

as donors, governments, depositors or other financial institutions; regulatory bodies and other stakeholders,

including clients, employees, and shareholders. In its governance role, the board also is accountable to all these

stakeholders and assesses continually which of these are the most important for the institution.

Mr.Remesh Singh AroraMember BOD of Farz FoundationChief Executive Officer of Mojiz Foundation, Micro financeSpecialist

Specialization: Institutional Development, Capacity Building,risk Management, Monitoring & Evaluation.

Experience: More than12 years

BOARD OF DIRECTORS

Ms.Dr. Huma QureshiMember BOD of Farz FoundationHealth & Education Management Consultant, Specialist in

program implementation & Evaluation.

Specialization:.Intagrated Development Project, Planning,Monitoring and Evaluation,Preventive & re-Productive Health,integrated Development and Community Development.


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Mr.Nadeem Fazil AyazSecertory BODAdvocate & Member Human Rights Commission of Pakistan,LLM International Human Law

Specialization: Human Rights, Monitoring & Evaluation,Globalization, Effective Conflict Regulation, Training/workshopModule Developer.


Mr.Tahir MalikMember Board of Advisers and ambassador for poverty alleviation

CEO, Trafco Group of Companies, Economist, Intellectual

Br(r).Hamid Saeed AkhterChairman Board of Advisers

Scholar, Writer, Researcher & Columnist

Mr.Shahid KhanMember BOD of Farz FoundationExecutive Editor Monthly Techno Biz, Social Worker, CEO of

Global CNG.

Specialization: Entrepreneurship, Community services & SocialWork, Civil Society Mobilization.


BOARD OF ADVISERS

Mr. Tashie ZaheerChairman Oversees

Managing Director at Innovative Staffing SolutionsFounder/ CEO at Business & Real Estate Group EVP at Citibank.

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Mr. Raza AliMember Board of Advisers

Islamic Banking & Finance, Trainer, Banker

Mr. Ali Nawaz ShahGeneral Secretary Board of Advisers

Project Director, Writer, News Caster PTV, Social Worker.

Mr.Nadeem BhattiVice Chairman Board of Advisers

Chairman regional standing committee of garments industryFederation of Pakistan, Chamber of Commerce & Industry

Mr.Farhat Abbas Shah FounderChief Executive Officer & Head of HR, of Farz Foundation,Microfinance Management Expert.

Specialization: Business Development, Marketing &Advertising,Communications, Financial Management, ProjectManagement, Social Performance Management.


MANAGEMENT

Hafiz Muhammad Ali ChaudhryChief Finance Officer, CA finalist of the institute of chartedaccountants of Pakistan, MBA Finance.

Specialization: Accounting & Finance, Business Development &

Strategic Planning, Costing & Budgeting.


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Mr.Rafay Mahmood FounderGeneral Manager Operation & Marketing, Micro FinancePractitioner.

Specialization: Marketing & Sales Management, MicrofinancePortfolio Management, Risk Management, Financial

Management, Trend Analysis, Competitor Analysis &Management, Customer Relationship Management, MarketIntendance & Analysis.


Mr.Saeed Ahmad

Head of Communication & Market Intelligence

Specialization: leading journalist, columnist, TV anchor andpolitical economy analyst. Apart from doing post-graduation inEnglish Literature, he has obtained a diploma in communicationfrom the University of Las Vegas (UNLV)


Mr.Tariq JavaidMBA Finance, Monitoring Manager

Specialization: Policy Monitoring, Branch Monitoring, System &Procedure Monitoring

Experience: More than 6 yearsz

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Mufti Mahmood AhmadShariah Auditor

Specialization: Head of online fatawa programe Jamia Ashrafia,Student of Mulana Taqi Usmani



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Ms.Kanwal NiazOperational Manager

Specialization: Microfinance Portfolio Management, RiskManagement, Financial Management, Trend Analysis,Competitor Analysis & Management.


Mr.Naveed LiaqatFinance & Account Manager

Specialization: Accounting & Finance, Costing & Budgeting.


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Ms.NoumanaEntrepreneur Development Manager

Specialization: Micro-Enterprise Capacity Building, Visibility &Market Linkages,Skills Development Management.


OUR PARTNERS

AKHUWAT

PAK QATAR FAMILY TAKAFUL COMPANY LTD.


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FARZMETHODOLOGY


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FARZ METHODOLOGY (REINVENTING MICRO FINANCE & SME)

CONCEPT

overty certainly emerged as the single most problem that lies at the heart of modern day crisis. It quiterecently has assumed alarming proportions. Many efforts were made in the past but they could not wholly

Psucceed. Among significant tools, the microfinance was also used for getting rid of poverty which quite

recently plagued the whole world. There is always a room for innovation to be introduced to already existingstructures. Though microfinance made some gains in alleviating it but with sufficient services the amountinvested lie in the danger of being spent on the items of daily use owing to extreme poverty.

What in fact is required is the provision of certain services that may enable the person concerned to become self-earning unit. So the first and foremost thing in this regard is not to simply extend credit. It is more advisable to dokind of asset sharing, along with provision of services which could lead to an economic activity at an individuallevel.

Certain experiences in this regard bore good results. For instances a woman who was provided with the necessarymaterial and skill, is successfully running her business of making and selling artificial flowers. What worked inthis case was the fact the instead of extending credit, she was provided the raw material along with the skill. Whatcould further be added to it is the provision of health and education facilities to the community so that eachindividual keeps on learning during this process.

By adopting this method microfinance becomes a well-organized business as well as a community services andincidence of default is reduced to the maximum level.

Now this issue of poverty is what upon which the future of political structures rests. It needs more coordinated andscientific approach. Among the efforts made so far, this method of empowerment through education and asset

based loaning has bore good results. At a time when world economies are shrinking and people at large losingtheir jobs worldwide, this method could be used to off set the impact of recession in the poorer world. We haveseen that the government agencies could not come up to the expectations and number of people falling below the

poverty line is growing. The supply side economics or trickle down theory is being looked at with suspicion. We

need more non-governmental structures to fight this growing menace.

Owing to shrinking world economy, the poor countries are also being hit hard. The individuals' economies cannotsort this problem out as they have to cut their non-development expenses. In such a critical period poverty needs to

be fought at war footing.

Recently, Farz Foundation (The First Islamic Microfinance Organisation ) has completed its two-year pilotproject in the area of Shalimar Lahore in two phases. The organisation has done the comparative analysis ofcurrency disbursement and the Farz Methodology (asset delivery method) in which the asset based microfinanceshows 80 percent positive and productive results while the popular practice of microfinance, which is based oncredit in the shape of currency depicted 80 percent negative and non-productive results. The study confirms thereports are already being published in the international journals about the very low impact of currency deals in

microfinance. Although the efforts made by the CGAP and other agencies at the international level and PakistanPoverty Alleviation Fund at the national level cannot be ignored but the speed of the inflation and poverty increaseratio demands more sincerer and creative efforts.

There is another challenge of exploring the new markets which still needs to be addressed because the process ofdemand and supply matters even at the level of the micro entrepreneurship. Home Based Women Entrepreneursare still in the clutches of the middle man, who is earning far more than the HBMEs.

Another important issue is trust-building. The development sector has successfully won the hearts of thecommunity but unfortunately the microfinance sector is losing the trust day by day particularly in Pakistan andIndia. Although The SEWA in India and RSPs in Pakistan has set the milestones remarkably, however, variousMFIs have annoyed the poor community.

Though the poverty alleviation objective stipulates to support the innovative mechanisms like Farz Methodology,even at the government level as well as at the institutional level; the microfinance donors are not encouraging thenew and innovative players as per the need and the requirement of the day. It will be lethal not only for theinnovative human recourse of the sector but also will reduce the impact of the endeavors already being made bythe sector of microfinance.

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There is Chinese proverb that says we are living in very interesting times. Indeed we are. Old economic patternsare directly flying in our face. The ongoing recession has defied most of our beliefs. What triggered this, to put it

brief, was the irresponsible ways of lending that almost sunk the world economy.

Amid all this there is another effort through lending to alleviate poverty, known as microfinance. It began with ajustified fanfare and made certain gains as well but the over all outcomes betrayed some imperfections. This rightup would tend to elaborate the so-called Farz Methodology, which, in fact, is another attempt to avoid certainnegative outcomes. The irresponsible ways of lending, which we mentioned earlier and which almost sunk the

ship of world economy, may also be one of the factors responsible for certain negative results in the world ofmicrofinance.

What could not work in the cold world of business could never have done better where the borrower is amarginalized poor. Here comes the Farz Methodology which enshrines in its philosophy the passage to therelative well being of the person concerned through social as we as economic empowerment.

Another technique that this methodology carries is that of not allowing the direct access to the poor and thevulnerable to the hard cash. What is suggested instead is educating the poor along with providing him withnecessary tools such as the stuff he needs to initiate an economic activity.

Our initial experience was also a clear testimony to the potential that this method carries. Our success rate in ourprojects remained 80 per cent which also worked as a spur because we had a long list of volunteers who were

ready to work without compensation in the beginning

What made a clear difference was the realization that microfinance is not a mere business. It rather needs abusiness like skill, understanding of the world in which the poor exist and understanding of their limitations. Weachieved this by looking at the world through the eyes of the poor.

Farz Methodology as an innovative economic mechanism ensures the long-term profitability of microfinance.We need to help the borrower make his business successful. Recovery, of course, cannot be had from a failed

business. MFIs must make certain the recoveries from their profits, instead of their losses. Recovering from lossesdefeat the very purpose of the whole exercise. The micro trade cycle technique of Farz can ensure not only thesustainability of the sector but the long term profitability as well.

There are many researches that demonstrate that funds spent and efforts made are being wasted. What our

methodology ensures is the maximum possible empowerment through basic health and education. Because thehuman resource of external organization (Members or clients ) should also be capable of delivering things wellregarding their businesses. A business can not be a successful with bad health, illiteracy and skills. As theorganizations build the capacity of their staff to get more and more output. Similarly microfinance sector willhave to trained their clients to get more and more out put. So the integrated approach of Farz Foundationemphasizes on a skilled poor community to win the war against poverty to achieve the ultimate vision of thesector.

Today even the first world is no more unscathed by this recession. But that still has the advantage of a skilled labor.This fact alone would soon retrieve the falling economy in the rich countries, may be sooner than later. But incountries like Pakistan we need to initiate this activity on war footing.

The strategies of Pakistan Poverty Alleviation Fund (PPAF), studies of Pakistan Microfinance Network, (PMN)efforts of Social Performance Management and Social Performance Task Force focus on making loansproductive through social performance is need of the hour.

Considering our collective past experience, we should not hesitate far a moment to implement these strategieswith collaboration of Farz Methodology because the purpose of the sections is the same, how ever the Farzmethodology will protect the expected gains. This would even help retrieve even the failing projects.

The capacity building of clients like training in credit discipline, basic marketing skill, and feasibility preparationare of paramount importance. This should be carried out the way we train our staff.

Another advantage of this strategy is that it would bridge conventional microfinance and Islamic banking. Thatwould also allow us in a huge market that still remains untapped.

At a time when Pakistan's economy is expected to grow by less than 2 per cent, we should adopt this measure toenhance the growth. Government is facing many other challenges like war on terror and perhaps cannot focus oneconomy as much as the civil society can. In the ultimate analysis war on terror could only be won througheconomic and social empowerment of the people. So the success of microfinance is the success of the forcesstruggling for peace and betterment of the country.

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The idea of decoupling that was being put forth in the beginning of this recession could only be materialized bykick starting growth where the impact of the world recession is slightly less.The task of course is gigantic. But of course the journey of thousands miles begins with one step. Let's startrestructuring existing MFIs methodologies and also begin establishing new projects to steer out of these testingtimes.

Changing the economic environment always calls for more innovative response. We, of course, are living in atime where hosts of events have crowded a comparatively short time span, particularly in the world of finance.

Despite an incorporated world economy, the tools and methods needed in the so-called Third World woulddefinitely be different from those of implied in the developed world. For instances the ways to fight poverty in thecountries like Pakistan needs certain changes to suit a constantly aggravating economic situation.

The main emphasis in this approach is that by empowering an individual through services other than finance, infact, we secure the money lent and make it productive over a long time. The most important task that today we faceis not only to mitigate the impact of the recession but also to off set it. The governments in the region are tied withthe host of other challenges, including war on terror. It makes it more important for the civil society to play its rolein more effective and intelligent way. By kick starting an economic activity through incorporating the poor with

provision of non-financial services as well as financial, we would bring them closer to the institution ofmicrofinance. They own this whole process which in turn is enhancing their productivity and also inculcates asense of responsibility among them.

The various research and evaluation projects have already unveiled the causes of the breakdown of the financialservices system. So it is imperative to sort out a method which could offer a viable solution to provide a long-termrelief. Undoubtedly the microfinance can provide a contingency plan in the right direction. Different studiessuggest that the week impact of different microfinance methodologies already in place demand an innovativemicrofinance mechanism to be implemented at a large scale. The efforts made to link microfinance with SmallMedium Enterprise (SME) and SME to Medium Enterprise and then macro enterprise are still in the process ofachieving the goals to make any breakthrough. One reason behind not achieving our goals has been unduecompartmentalization and division of work. What is needed, instead, is the integration. No business or credit orany financial system can be sustained in isolation. This is the core philosophy of Farz Microfinance Methodology.What goes without saying is the fact that consumption is the key to all types of production. Dwindling

consumption means a stalled or hampered productive process. Thriving need-based local markets can become agateway to micro productivity. At the micro enterprise level there are a lot of things that need to be addressed likethe role of middle man and the whole sellers. Farz methodology emphasizes providing a just economic system forthe productive poor according to their needs and requirements. The productive poor will have to be facilitated as awheel for the international trade cycle. The role of currency should also be minimized and would have to bereplaced by income generating kinds like tools and assets, etc. The artificial expansion of businesses or tradeshould be checked through asset providing mechanism. Farz Methodology as Noe Microfinance has provedthrough positive outcome as the most effective system in the given economic milieu. This inference has beenmade on the basis of results achieved in the poor neighborhoods like, Chongee Amarsidhu and Meu Colony inLahore. Previously about eight MFIs targeted this area and six left by declaring them red (negative) areas. Tworeaming are grappling with their zero tolerance policy and late night recovery problems. In the same area FarzFoundation has started its pilot to gauge the results and to observe the effectiveness of Farz Methodology.

First time in Pakistan the microfinance is being customized according to cultural and religious circumstancessimultaneously unlikely the various previous practices. Farz Foundation has also launched a saving scheme thatrequires each member to pool a specific amount on monthly basis which is given to one member or the other on the

basis of lucky draw. This is a practice known as committee (community's rotating funds) which develops savinghabits and also works as a trust-building measure. What FF did was that it began, in accordance with FarzMethodology by conducting free eye camps and also picked some of the poor families and took the responsibilityof paying for their children's education. Through further penetration into the area it was learnt that previously the

borrowers were further lending the money at even a higher rate of interest, which defeated the very purpose of thewhole exercise. They, of course, were bound to fail. All that Farz Foundation has dealt with so far does not lay barethe whole panorama of opportunities. In the future FF intends to provide direct market linkages to eliminate the

role of middleman that will further increase the rate of profit of the home-based women entrepreneurs.As the first Islamic microfinance organization of Pakistan from its first day with a full fledge Islamic vision oftrade and business Farz Foundation has provided an Islamic solution of the non productivity of the micro loans,which not only can cater to a huge Muslim Market but the general clientage as well. The main aim of this exerciseis to kick start the demand at micro level which will initiate an economic activity at the supply side.

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FARZ METHODOLOGY (System)

Step-2 Murabaha

Our Target

Household

Intend to do

Membership

done via

Female

Step-1

Takaful

HouseholdBusiness

Req u

estforM

ember sh

ipt h

roug

hOffer

forMembershipt h

rough

S

tep-1

Step-2

Member

Business

Education

Household

Step-3

Business

Business

Profit generated

from Business

Meet Business

Expanses

Meet Household

Expanses

Reinvestment in

Business

Installment of

Farz Committee

Even agricultural sectors lie untapped and the efforts made so far did produce desired results. As mentionedearlier, through adequate financing, the expectations assigned to the microfinance sector could easily be fulfilled.At a later stage it wont even involve a great deal of finances as through market linkages an economic activitywould be initiated on the credit bases between the venders and sellers all that would be required to monitor andguide it to more productive directions. However currently it needs the support from the institutions which areworking for the promotion of Islamic or conventional microfinance as a poverty reduction tool.

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Members

get PKR:

2,440

after one

Year orMonthly

PKR:20

Investment Pool of Farz Foundation(FF & Community are partners in MURABAHA

Business)

Members

do

partnership

with FF

Committee Pool and

Total Collection= PKR:

2,200

To meet

immediate Needs

Build asset

Reinvest in Core

Business

Committee GroupMember

Option

FFgenera

tesother

sourceof

Income

fortheir

Client

Step

-3

Ste

p-3a

St

ep-3b

Farz CommitteePool

FF Provides facility to client (See Farz Committee)

Member

Household

Business

Business

Profit generated

from BusinessInstallment of

Farz CommitteeMembergives

installmenttoFF

Committee Pool and

total Collection=PKR: 2,20010 Members ofCommunity fromOne Cluster

Farz Foundationas 1 Member

Share PKR:200In CommitteePool

Committee GroupMember

From every 3rd to11th,member gets thetotal collection2,200through a monthly luckyDraw . (1st and 2nd

collection go to FF &group organizer)

P:22

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Step

-4

Ste

p-5

Ultimately

Household

Health Care Awareness

FF Provides health care

awareness to clients

Household

Future Protection Program

FF gives awarness to clients

about their childrens

education through

Children Education Awareness Program

Lotem

Potatyoth

So

Sustained Clients

BusinessEducation

FinancialService

HealthCare

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AN INTEGRATED APPROACH

Target Market

The asset based Islamic Microfinance integrated approach is thebasic tool of the foundation to get long term sustainability, becausethe Farz Foundation has a strong belief that the sustainability of theclient is that of the organization.

There are three categories of markets namely the Upper, Middleand Lower but Farz Foundation is working with the LowerMarket.

Farz Foundation has categorized thelower into four differenttypes and offering products package for each market.

TARGET MARKET

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OUR CLIENTS GRADUATION STRATEGY

Murabaha Size

Murabaha (Small) PKR: 5,000 to 30,000

Murabaha (Medium) PKR: 31,000 to 80,000

Murabaha (Large) PKR: 81,000 to 150,000

MURABAHA

Murabaha refers to deferred payments structure agreement for the sale of tangible goods. The seller acquires anasset, which the buyer agrees to purchase at some point in the future. The seller is entitled to a profit, as long as theexact profit is disclosed in the contract. Payments may be spread out over time. Murabaha agreements are oftenused for real estate financing and other purchases that are paid off over time.

0

200

400

600

800

1000

1200

1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year 9th year 10th year

1080

734

499

340

231

157

107

7349

34

180

468

553536

473

396

319

251

194

148

0

58

207

384

556

707

834

936

1017

1079

Murabaha Small

Murabaha Medium

Murabaha Large

IDENTIFICATION OF AREA FOR OPERATION

To allocate the Area for Social Center (Branch)To allocate the Potential working areas for social centerProduct needs assessment.Potential businesses.Cash flow of different businesses.Size of micro trade.

STAFF HIRING

Add for staff hiring in local News paper.Collection of CVs as per given date.Short listing of CVs and finalize prospective candidates for interview.Sending calling letters to all selected interviewees.Conduct 1st interview.

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CAPACITY BUILDING OF STAFF

To deliver the orientation of FARZ FOUNDATION to final candidates for jobs.To deliver three days Step-in-Training to all Selected staff.(In house)Islamic banking & finance. Conventional microfinance Farz MethodologyBasic Selection criteria of FARZ FOUNDATIONArea survey

Effective Mobilization skillsClients appraisal trainingCluster formation stepsConduct of community meetingsCustomer relationship managementSocial performance managementDelinquency managementMonitoring

Three days on the job training to the staff.Basic Selection criteria of FARZ FOUNDATIONArea survey

Effective Mobilization skillsClients appraisal trainingCluster formation stepsConduct of community meetingsCustomer relationship managementSocial performance managementMonitoringIslamic banking & finance. Conventional microfinanceFarz Methodology

Interview and selection for one month internshipSelection for 11 month on a contract.

After 11 month, contract extension / permanent employee.

SOCIAL CENTER (BRANCH) OPENING

Social Center Opening Ceremony.Mobilizationz

KICKING OF OPERATIONS

BRANCH STRUCTURE

Office Boy

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COMMUNITY CLUSTER STRUCTURE

Cluster CommitteeCluster has three groups each consisting of fivemembers. Each group has a leader while onecluster managers heads the whole body. Threegroup leaders and cluter managers forms a

cluster committee that responsible forcollecting installments and ensures social

performance.

DELIVERY PROCESS

STEP-1MOBILIZATION

OBJECTIVE

To mobilize the target customer who is able, willing and independent

PURPOSE OF MOBILIZATION

To inform people about the objectives of the organizationTo know about the needs of the people through question answer sessionTo introduce the facilities extended by the organization

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STEP-2

COMMUNITY MEETING CONDUCTED BY SOCIAL OFFICER (SO)

OBJECTIVE

To introduces Farz Foundation in detailTo finalize the group leaders and cluster managersTo inform about the existing and upcoming facilities of the foundationDetail of the duties of all participantsTo tell about the method of installment and meetingTo tell about the documents

THE METHOD OF COMMUNITY MEETING

After the mobilization, gather all the members at place, address their objections and after resolving them formgroups consisting of five members and then let them choose their group leaders and afterwards their clustermanager.

STEP 3

COMMUNITY MEETING CONDUCTED BY SOCIAL (SM)

To finalize the cluster manager and group leaders

STEP 4HOME SCREENING

OBJECTIVE

To visit the final members homes after community meetingTo fill the KYC and home screening forms at each members home

THE METHOD OF HOME SCREENING

On visiting the potential members home for verification, home screening form is to be filled. To fillKYC form after the member fulfills the home screening criteria

STEP 5BUSINESS SCREENING

OBJECTIVE

After the community meeting and home screening, to check the home and business of final membersTo fill the business screening form at the place of business of the members

METHOD OF BUSINESS SCREENING

At the place of the potential members business first of all business screening form is to be filledThe KYC form is to be filled after the potential member's place of business is verified

Note: The business details will only be obtained from the businessman.Note: The 100 per cent screening of cluster will be done after or during the filling of KYC form

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DIRECTIONS FOR FILLING THE FORM

Cluster SO will work according to the laid down method.

The screening of cluster manager and filling of the form should be done in the presence of groupleaderThe screening of group leader and filling of the form should be done in the presence of cluster

managerThe screening of the members and screening of the form should be done in the presence of the groupleaderForms are to be filled after question answer session.Form and the copy of the original documents should be signed as ' original seen.Home screening, business screening and KYC forms should be filled at the home of the membersKYC form should also be filled along with them

STEP 6

FINAL FORMATION MEETING

OBJECTIVE

To tell the cluster manager, group leader, members about the responsibility of the clusterTo verify the home visit by the cluster committee

THE METHOD OF FINAL FORMATION MEETING

If a member exit during the filling the form , new member should be introduced to the cluster.Cluster committee and members to be apprised of principles and agenda of the Farz Foundation.After the completion of all the five clusters all the members and their heads should be gathered in the

social centre to approve according to the agenda given bellow.

STEP 7

SALE AGREEMENT AND DELIVERY OF ASSET & STOCK

OBJECTIVE

To buy the required things to the membersTo sign the agreement about the things agreed to verify all the things bought by the members

THE METHOD OF SALE AGREEMENT

METHOD 1

FARZ FOUNDATION staff will go with the members to a selected vender to buy the stuff and sign theagreement at the time of delivery.

METHOD 2

To buy the stuff according to list and handover it to the member after signing the agreement.

METHOD 3

An agent with the confidence of the community to be sent to buy thing, to bring them to the branch to handover after signing agreement.

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MONITORING & EVALUATION

Daily, weekly, monthly, quarterly and six monthly reports system.Field visits of bottom to top Management.Fortnightly Meetings with 100% Clients.Social Performance Management.

ASSET BUILDING

Farz Committee: Rotatable community saving

Farz Foundation has developed a market driven, need based and innovative product having deep cultural roots.The product is known as Committee (Rotating savings) in Pakistan. The people usually build their assets by thisrotating saving activity at a street or a market level informally and without any proper bookkeeping. However,Farz Foundation has not only made it formal but uses it as another source of income by providing the service ofinvestment in Murabaha as a partner. Farz Foundation in Pakistan proposes this partnership concept-basedapproach to encourage community savings and profitability to sustain its clients. Members of the committee haveregular meetings in order to save and borrow from a community's pool of money. Each member contributes equalamount of money to the pool and at each meeting, one member takes the whole amount by a lucky draw. The ideais for transparency of the entire saving, lending, borrowing, process and generating another source of income.The foundation's role is that of a manager, monitor and trainer as well as a bookkeeper. Farz Foundation also takes

part in this Committee as a member by contributing its money to the pool and gets first Committee. According to acultural rule manager gets the privilege of taking the first Committee. It is a triple edge financial service becauseof its participatory, saving and investing features.

FEATURES OF FARZ COMMITTEE

HEALTH CAREThe biggest reason for the low productivity according the WHO is the poor health all over the world. The FarzFoundation pays keen attention to this aspect and conducts health awareness workshops and health camps.

AWARENESS PROGRAM

The greatest problem in the area we work is the water born diseases and we teach them to boil water beforedrinking. The general principals of cleanliness for instances, washing hands before taking meals are emphasizedduring the training.

EYE CARE

Farz Foundation has launched its eye care program by starting a free eye care camp for poor peoples of the brancharea. In this camp Farz Foundation provide eye checkup facility and provide spectacles to the poor home basedmicro entrepreneurs with any cost.

Heads FeaturesCommittee Size

Period of Committee Cycle

Participants of Committee in each Group

Number of Committee group under one cluster

Frequency of Committee installment

Frequency of Committee draw (lucky draw)

Min=PKR:100 and Max=unlimited

11 Month

10 Members + 1 Farz Foundation=11

Min=1 and Max=3

Fortnightly

Every Month

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FUTURE PROTECTION PROGRAM

This program deals with educating the clients to provide education to their children apart from picking the kids ofthe most vulnerable members and provide expenses for their education. This is done to ensure the better future ofthe community.

ENTREPRENEUR DEVELOPMENT PROGRAM

CHALLENGES FOR HBMEs FARZ PROVIDES

0

50

100

150

200

250

300

350

1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year 9th Year

346

235

160

109

74

50

34

23 16

58

150

177172

151

127

102

80

62

Trained for Murabaha Medium

Trained for Murabaha Larg

Personal

Health Care Awareness

Business TrainingSkill Development TrainingTakaful (Islamic Insurance)

Internal

MurabahaBook keeping trainingOther Source of incomeBusiness Development

TrainingMarket LinkagesNetworking

External Guarantee

Personal

Lack of Health

Lack of Business Education

Lack of Skills

Family & Business (Both sidesManagement)

Families Restrictions

Internal

Lack of Fund

Lack of Research

Lack of Market Linkages

Lack of Networking

Lack of Product DemandValue

Lack of Business Managementknowledge

Problems of Mobility

lack of Access to Market

Client Satisfaction

External

Delayed payments

Distance to WholesalerMarket

Exploitation by Middleman

Lack Guarantee

Low profit Margin

Bad debts

Unwilling Employees

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FARZ OPERATIONS

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WORKIG TARGET AREA

The area, where the Farz Foundation team started its operation is 16 kilometer from the Lahore city. The name ofthe area is Kacha Jail Road Chungi Amar Sidhu which is not well developed and the living standard of the

people is quite low .Especially the level of education, health is very poor along with environmental problems.About six to seven microfinance institutions also work in this area and facilitate the people through financialservice .

PRODUCT OFFERED

1. Murabaha (Small)2. Fraz Committee3. Takaful4. Health5. Business Education6. Donations

OUTREACH

This report covers the activities from Jan 2010 to 30th June. Farz Foundation has 1070 Clients, 85 clients ofMurabaha with Business Education & Takaful , 102 clients of Farz Committee, 467 beneficiaries of Zakah andBusiness Education service, 409 beneficiaries of our health service and 9 beneficiaries of child education

program. We have only one social center operating in the undeveloped area of Lahore districts of the province ofPunjab. The graph below illustrates growth in Farz Foundation's outreach from 1st Jan 2010 to 30th of June 2010.Farz Foundation will continue to focus on maintaining and even accelerating this growth.

Murabaha Small

Keeping in line with growth, disbursement successfully surged month by month. The figure below depictscumulative micro trading to the tune of PKR. 999,000 or roughly $11,753. The table on the next page

demonstrates breakdown of Farz Foundation's portfolio by the institution's product and corresponding averagetrade sizes PKR. 11,753 till month ending on June-2010. Farz Foundation's micro trades were disbursed in theform of Murabaha during the Jan 2010 to June 2010.

OUTREACH

120

100

80

60

40

20

0# of Murabaha Small with

Business Education &Takaful

# of Farz Committee

85102

500

400

300

200

100

0

Beneficiariesof Health Service

Beneficiariesof Zakah / business

education

409

467

32

Child educationprogram

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SUPPORT TO DIFFERENT BUSINESS SECTOR.

The figure below illustrates distribution of different areas. As many of Farz Foundation's clients are located inLahore and surrounding areas, 61% invested in TRADING Sector and 29% in the services sector and only 10%invested in MANUFACTURING & PROCESSING Sector.As Farz Foundation expands and goes deeper into rural areas, it is building its clientele base in other sectors.

MANUFACTURING &PROCESSING 10%

SERVICE29%

TRADING 61%

MANUFACTURING &PROCESSING

SERVICE

TRADING

33

Jan-2010

MONTH # OF CLIENTS FUNDED AMOUNT

Feb-2010

Mar-2010

Ari-2010

May-2010

Jun-2010

22

15

13

13

0

22

85

Farz Foundation

Farz Foundation

Akhuwat

Akhuwat+Fraz Foundation

-

Farz Foundation

255,000

178,000

166,000

134,000+2000

0

264,000

999,000


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REPAYMENTS

Descriptions Details

Due Recovery (Jan 2010) PKR.4110

Recovered PKR.4110

Due Recovery (Feb 2010) PKR.27980Recovered PKR. 27980Due Recovery (March 2010) PKR.45880

Recovered PKR. 45880Due Recovery (April 2010) PKR.74330Recovered PKR. 74330Due Recovery (May 2010) PKR. 80220Recovered PKR. 80220Due Recovery (June 2010) PKR. 106380Recovered PKR. 106380

Total due PKR. 338,900

Total Recover PKR. 338,900

On time Percentage (%) 100 %

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SUCCESS STORIESOF

OUR CLIENTS

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Asia Bibi W/O M. Arif16 Km.Feroz Pur Road Chungi Amer Sidhu Lahore.

y name is Asia Bibi, wife of Mohammad Arif. Before becoming FarzFoundation's client, I was daily wager of sewing clothes. I hadMalready borrowed money from a microfinance organization but used

it to meet my immediate needs. Then Farz Foundation approached me and

trained me how to productively use the loan. I direly needed to be self-sufficient as my husband is mentally retarded and is also dependent upon me.I have five children, one son and four daughters and was not even able to pay fortheir education. The eldest daughter got marriage, while the rest, dependedupon me. The Farz Foundation conducted a community gathering where I wasintroduced to it. I told them about my needs. They offered the people

productive assets to start or to upgrade their micro businesses. I asked formoney but they told me they don't deal with cash and they can give only

productive assets etc as par their policy. I thought I had already mismanaged aprevious loan and now I was convinced that asset based help can get me out ofmy crisis.

They, according to my demand, bought me cloth for bed sheets of worthRs15,000. I began to produce bed sheets as I already had a sewing machine

began to sell them in the Sunday Bazaar with the help of my son. In a matter ofthree weeks I earned and additional Rs 15,000 in three weeks. Now I couldseriously realized the benefit of asset based help. Now I have reinvested thesame amount while using the profit to meet my needs. Now I am even repayingthe previous loan to the other MFI as well as to the Farz Foundation as I amearning enough to meet all these expenses. Thank you Farz Foundation.

Rubina W/O Ejaz Ahmed16 km.gulshan coloni feroz pur road chungi amer sidhu lahore.

y name is Rubina wife of Ejaz Ahmed and I live in Chungee AmarSidhu Lahore. My husband is earning only Rs 2, 000 as a driver in aMfactory. I used to work at a beauty parlor as an assistant. I was

making some money, but could not meet my expenses. We have three childrenand could not afford their education. I was taking loans without knowing how Iwould repay them. I had no idea how I could get rid of this vicious circle. Oneday my friend who was working at some other Parlor, told me about the FarzFoundation, which lends assets and gives business training to women so that

they could be self-sufficient. I visited where there was a training session beingheld by the Farz Foundation. There I met Nomana sister, a trainer at FarzFoundation. I had a five-day course of business development. There we weretaught that to be self-sustained and we need to start our own business. And wealso need a business education to be successful.They taught us book keeping, preparation of feasibility and estimation ofincome and expenses. After the training they offered certain productive assetsto us to start our business. I wanted to establish my own beauty parlor. They

bought me assets worth Rs 10,000 . I started a little parlor from my own home.In accordance with the education given by the Farz Foundation, I introducedmy beauty parlor in the neighboring area. Within one month I shifted my

beauty parlor to an independent place. Now I look forward to furtherdevelopment of my business. I now earn about Rs 15,000 to 20,000 a monthand can easily meet my expenses, including school fee for my children, apartfrom paying my installments to the Farz Foundation. Thank you Farzfoundation.

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SERVICES

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Product Trade Size

Murabaha (Small) PKR: 5,000 to 30,000

Murabaha (Medium) PKR: 31,000 to 80,000

Murabaha (Large) PKR: 81,000 to 150,000

PRODUCTS PACKAGES FOR DIFFERENT MARKETS

FINANCIAL SERVICES

MURABAHA

Murabaha refers to an installment credit agreement for the sale of tangible goods. The seller acquires an asset,which the buyer agrees to purchase at some point in the future. The seller is entitled to a profit, as long as the exactmarkup is disclosed in the contract. Payments may be spread out over time. Murabaha agreements are often usedfor real estate financing and other purchases that are paid off over time.

THE KINDS OF MURABAHA1. Murabaha Small2. Murabaha Medium3. Murabaha Large

Features of Murabaha Small

Trade size

Annual increase in trade size

Rate of profit

Duration of installment

Exempted days

Total Installment

Frequency of Payment

Collateral 1

Collateral 2

HEADS

PKR: 5,000 ($ 60) to PKR: 30,000 ($ 37)

In according with the business performance

24% Flate

One Year

Eid holidays

22

Fortnightly

Personal guarantee

Post dated cheque

DETAILS

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Features of Murabaha Large

Features of Murabaha Medium

FARZ COMMITTEE

Summary

Farz Foundation has developed a market driven, need based and innovative Product, having very deep culturalroots. The product is known as Committee (Rotating savings) in Pakistan. The people usually build their assets bythis rotating saving activity at a street or a market level informally and without any proper book keeping. However Farz Foundation not only makes it formal but uses as another source of income by providing the service ofinvestment in Murabaha as a partner. Farz Foundation in Pakistan proposes this partnership concept basedapproach to encourage communal savings and profitability to sustain its clients. Members of the committee haveregular meetings in order to save and borrow from a communal pool of money. Each member contributes an equalamount of money to the pool and at each meeting; one member takes the pool home by a lucky draw. The idea isfor transparency of the entire saving, lending, borrowing process and developing another source of income. The

foundations role as a manager, monitor and train this committee in bookkeeping. Farz takes part in thisCommittee as a member by pooling its money also and gets first Committee as par the culture, because, accordingto the cultural rule, manager gets the privilege of taking the first Committee. It is a triple edge financial service

because of its participatory, saving and investing features.

Trade size


Rate of profit


Exempted days

Total Installment


Collateral 1

Collateral 2

HEADS

PKR: 81,000 ($ 964) to PKR: 150,000 ($ 1786)


24% Flate

One Year

Eid holidays

22

Fortnightly

Personal guarantee

Post dated cheque

DETAILS

Trade size


Rate of profit


Exempted days

Total Installment


Collateral 1

Collateral 2

HEADS

PKR: 31,000 ($ 369) to PKR: 80,000 ($ 952)


24% Flate

One Year

Eid holidays

22

Fortnightly

Personal guarantee

Post dated cheque

DETAILS

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WHAT IS A COMMITTEE ? (COMMUNITY ROTATING INFORMAL SAVINGS)

Committees are a popular form of informal saving in many countries and considered as a form of participatorysavings at community level. Committee is a community participatory informal saving mechanism having a longcultural history. According to this informal saving activity at community level a group of individuals who agree tohave regular meetings for a defined period of time in order to save and borrow together and pool a same amount ofmoney by a manager from the same group. Some times the group selects a committee manager from the group

who collects a pre settled particular amount of money from the members and gives it to a single member.Sometimes an already known collector initiates a new committee. Usually she or he keeps the first collectedamount of money by her or himself. Committees are the poor man's POOL, where money is not idle for long butchanges hands rapidly, satisfying both consumption and production needs.

Meetings can also be regular or tied to seasonal cash flow cycles in rural communities. Each member contributesthe same amount at each meeting, and one member takes the whole sum once. As a result, each member is able toaccess a larger sum of money during the life of the COMMITEE, and use it for whatever purpose she or he wishes.This method of saving is a popular alternative to the risks of saving at home, where family and relatives maydemand access to savings. Every transaction is seen by every member during the meetings. Since no money has to

be retained inside the group, no records have to be kept.

Features of Farz Committee

TAKAFUL (ISLAMIC INSURANCE)

A type of Islamic insurance, where members contribute money into a pooling system in order to guarantee eachother against loss or damage. Takaful-branded insurance is based on Sharia, Islamic religious law, and explainshow it is the responsibility of individuals to cooperate and protect each other.

Farz Foundation and the Pak-Qatar Family Takaful has made this type of agreement at the microfinance level forthe first time. Both the organizations have set this milestone in the Islamic microfinance sector of Pakistan.

Takaful Details

Size of Committee Installment

Period of committee cycle

Participants of committee in each group

# of committee group under one cluster

Frequency of committee Installment

Frequency of committee draw (lucky draw)

HEADS

Min=PKR:100 ($ 1) and Max=unlimited

11 Month

10 Members + 1 Farz Foundation=11

One Year

Eid holidays

22

DETAILS

M e m b e r

Head of the family

HEADS

PKR: 115 ($1.35)

PKR: 115 ($1.35)

TAKAFUL FEE

PKR: 20,000 ($ 235)

PKR: 20,000 ($ 235)

TAKAFUL AMOUNT

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NON-FINANCIAL SERVICES

BUSINESS EDUCATION

CHALLENGES FOR HBMEs FARZ PROVIDES

Farz Foundation offer four types of training to clients:

1. INITIAL BUSINESS TRAINING

The first one is regarding the market research, collecting information about the potential buyers and vendersdealing in raw material/finished goods. It also help client decide the type of business which he or she deems moresuited to his or her aptitude. The business plan or feasibility is also part of the initial training.

2. BUSINESS DEVELOPMENT

The second training deals with the clients/non-clients having already running business but they lack the skills toefficiently run it. They are taught to conduct their relations with clients and vendors a more productiverelationship. They are also provided effective market linkages to make their business more profitable. They are

also trained to market their products more effectively.

3. BOOK KEEPING

The training deals with daily book keeping monitoring the expenses and income.

4. PRODUCT QUALITY

This type of training teaches to enhance the quality of the product they intend to sell so that they can compete inthe market to their advantage.

Personal

Health Care AwarenessBusiness TrainingSkill Development TrainingTakaful (Islamic Insurance)

Internal

MurabahaBook keeping trainingOther Source of incomeBusiness Development

TrainingMarket LinkagesNetworking

External Guarantee

Personal

Lack of Health

Lack of Business Education

Lack of Skills

Family & Business (Both sidesManagement)

Families Restrictions

Internal

Lack of Fund

Lack of Research

Lack of Market Linkages

Lack of Networking

Lack of Product DemandValue

Lack of Business Managementknowledge

Problems of Mobility lack of Access to Market

Client Satisfaction

External

Delayed payments

Distance to WholesalerMarket

Exploitation by Middleman

Lack Guarantee

Low profit Margin

Bad debts

Unwilling Employees

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HEALTH

The biggest reason for the low productivity according theWHO is the poor health all over the world. The FarzFoundation pays keen attention to this aspect and conductshealth awareness workshops and health camps.

AWARENESS PROGRAM

The greatest problem in the area we work is the water borndiseases and we teach them to boil water before drinking. Thegeneral principals of cleanliness for instances, washing hands

before taking meals are emphasized during the training.

EYE CARE

Farz Foundation has launched its eye care program by startinga free eye care camp for poor peoples of the branch area. In thiscamp Farz Foundation provide eye checkup facility and

provide spectacles to the poor home based microentrepreneurs with any cost.

FUTURE PROTECTION PROGRAM

This program deals with educating the clients to provideeducation to their children apart from picking the kids of themost vulnerable members and provide expenses for theireducation. This is done to ensure the better future of thecommunity.

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FINANCIALS

43


44/6244


45/6245


46/6246


47/6247


48/6248


49/6249


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SOCIALPERFORMANCEMANAGEMENT

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MANAGING

We are convinced from the day one that without the social performance we can neither sustain the clients norinstitutions. The Farz Foundation has put its social mission into practice. The principals of social performance are

part and parcel of our systems and procedures. It also formed a body to implement the newly promulgated lawagainst sexual harassment. We also formed a client complaint cell to address their problems with the staff.To put it brief, the code of conduct for customers' protection is the major chapter of our operational manual.

SOCIAL PERFORMANCE STANDARDS REPORTThis is a print, original can be provided as request

SOCIAL PERFORMANCE

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54/6254


55/6255


56/6256


57/6257


58/6258


59/6259


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STAFF CAPACITY

BUILDING PROGRAM


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STAFF CAPACITY BUILDING PROGRAM

Farz Foundation has its own capacity building vehicle Learning Solutions. Through Learning Solutions Farzfoundation not only builds the capacity of its own staff by inviting outside trainers as well as its own experts, butalso offers services to the other institutions. Learning Solutions offers on going certificate programs throughoutthe year and aims to start a diploma program in Islamic microfinance and Sharia compliant products in comingdays.The all staff of Farz Foundation have earned seven training programs (mentioned below) during the year2010.

Ledership & Team Building

Islamic Microfinance

Intentional Time Management

Principle of MURABAHA

Farz MethodologyCommunity & Social Mobilization

Clients Appraisal Training

TRAINING

All Staff

All Staff

# OF STAFF

All Staff

All Staff

All StaffAll Staff

All Staff


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The First Annual Report of Farz Foundation

Documents

Transcript of The First Annual Report of Farz Foundation