The Role of Akhwuat Islamic Microfinance in Fulfillment of Basic Needs, Improving Living Standard and Promoting Self-Employment in Pakistan

Abstract

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Purpose – This study examined Akhuwat Islamic Microfinance's (AIM) important contribution to resolving Pakistan's issues with basic needs (BN), living standards (LS), and self-employment (SE).

Design/methodology/approach – In this study, 250 Akhuwat Islamic Microfinance borrowers' primary data were collected using the stratified sample technique. The population was divided into four groups: manufacturing concerns, trading worries, services concerns, and non-trading concerns. Additionally, a two-stage structural modelling technique was used for further data analysis. The measurement model was used to assess the reliability and validity, while the structural model was used to gauge the link between the underlying variables. 

Findings – The study discovered that Akhuwat Islamic Microfinance (AIM) had a favorable and significant impact on meeting borrowers' basic requirements (BN), raising their standard of living (LS), and enabling them to become self-employed (SE). Therefore, with the lending facility of Akhuwat Islamic Microfinance, the lending practices of Akhuwat help the borrowers to lower their poverty level.

Originality/value – The impact of Akhuwat Islamic Microfinance on poverty in the area by meeting clients' basic needs, raising their standard of living, and enabling them to become self-employed by utilizing Maslow's Hierarchy of Needs theory is hardly investigated in the context of developing countries like Pakistan.