Centre for Women Co-operative Development, Pakistan

Innovation at CWCD has led to a complete organizational transformation, where CWCD has let go of its conventional microfinance programs and dedicated itself completely towards Islamic Microfinance. This conversion has allowed CWCD to benefit from better recovery rates, increased organizational and borrower sustainability, as well as enabling itself to meet its core objective of poverty alleviation, increased production, and job creation.

Our proposal for the challenge is to establish retail outlets to sell goods that are required by our clients. The retail outlet would act as a sale spot and holding area for goods, and would also be responsible for the verification, screening and referral of clients to the head office for approval of disbursements.

This retail outlet, based on Islamic trade principles, will target the rural and semi-urban areas of Pakistan, and will sell grocery items to clients. Under this model, the items are sold on Musawama (cash/spot payment) or Murabaha (deferred/installment) basis. The clients are offered a selection of items that they may want to purchase and then given the option to settle their payment for the selected items either by cash or a deferred payment plan. If clients wish to opt for the deferred payment plan, they are offered the deferred tenure ranging from 8 hours up to a maximum of 15 months. The client is informed of profit charged, which is in accordance with the installment payment schedule, and then the goods are handed over to the client.

At the retail outlet, there will be a special counter where clients can submit their requisition for the products they require. These products will focus on clients who are in the transportation business. The outlet analyzes the client and then puts up a request for purchase of the vehicle (mostly motorbikes and rickshaws) to the procurement department, which subsequently purchases and delivers the vehicle at the retail outlet. The outlet then enters into a Musharaka (joint partnership) agreement with the client, whereby the client purchases units of the vehicle in a pre-agreed manner and pays rental for the usage of the units owned by the organization.

In addition to the retail outlet, we will also establish a dairy farm, where we will maintain fifty cows for eventual sale to the customer. This dairy farm will be self-sustaining by selling the cows to clients and from the sale of milk to milk processing units on a daily basis. This sale is made on Musawama basis (cash/spot payment) and deferred payment schedules are offered to the client. In this way, clients are able to choose first-hand the cow they require, and they are also not burdened by the spot payment that they have to make at other places.

After evaluating the outcomes of the pilot, this model can be implemented and scaled up to a significant scale, enabling CWCD to set up and own retail outlets near every branch. The sustainability and financial analysis of the model depicts that the model has the strength to become self sustaining within the first year of operations, and has the potential to produce reasonable profits by the end of the third year.