Wafaa, a UK-based online microfinance platform, allows individuals to loan as little as USD 20 to fund interest-free loans to poor Muslims in the Middle East and North Africa. Wafaa co-founder and managing partner Hamman Khaled reportedly stated, “The idea started in 2008 and Wafaa was launched in 2010. (…) We choose projects through our local partners because we are a very young institution and we rely on organizations that have been working in the field for a very long time.” Wafaa has six field partner microlenders that screen borrowers and service the loans. Once the loan is repaid the lender can reinvest the money into a new project or simply withdraw the money.
According to Khaled, “We are different from other micro financing organizations because we are a hundred percent Shari`ah-compliant”. Sharia is the moral and religious code of Islam. It forbids Muslims from receiving or paying interest on loans. Khaled continued by saying, “Operational costs are covered by donations from businesses and organizations.” Funds are typically used for supplies relating to a business such as seeds for crops or a sewing machine.
As of early January 2013, Wafaa reported having 274 lenders, USD 2.7 million in money lent to projects and a repayment rate of 99.36 percent.
By Lena Phillips, Research Associate
About Wafaa
Wafaa, which was launched in 2010 and is based in the United Kingdom, is an online platform that facilitates lending to poor Muslims around the world, mainly in the Middle East and North Africa. Individual lenders may use this site to loan as little as USD 20, which is distributed via Wafaa’s field partners, which also handle repayments. The lender is then able to withdraw the money, donate the funds to Wafaa or reinvest it into another project. Wafaa does not charge interest rates so as to comply with Sharia, the moral and religious code of Islam. Instead Wafaa relies on donations to cover operational costs. As of January 6, 2013, Wafaa reported having 274 lenders, USD 2.7 million in money lent to projects, a repayment rate of 99.36 percent and six field partners.
Sources and Additional Resources:
OnIslam.net Article: by Muneeb Nasir, “Shari’ah-compliant Loans for Poor Muslims”, http://www.onislam.net/english/news/global/460614-shariah-compliant-loans-for-poor-muslims.html
MicroCapital.org Article, 26 July 2012: “MICROCAPITAL BRIEF: AlHuda Centre of Islamic Banking and Economics of Pakistan Creates Centre of Excellence in Islamic Microfinance”, https://www.microcapital.org/microcapital-brief-alhuda-centre-of-islamic-banking-and-economics-of-pakistan-creates-centre-of-excellence-in-islamic-microfinance/#more-19659
MicroCapital.org Article, 5 May 2011: “MICROCAPITAL BRIEF: 17 Websites Now Allow Individuals to Commit as Little as USD 20 as Microfinance Loans”, https://www.microcapital.org/microcapital-brief-17-websites-now-allow-individuals-to-commit-as-little-as-usd-20-as-microfinance-loans/
MicroCapital Universe Profile: Wafaa, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Wafaa
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