The Wasil Foundation, a Pakistan-based microfinance institution, won the Islamic Microfinance Challenge, a global contest to identify innovative Sharia-compliant financial products. Wasil won the $100,000 grant award for its package of products aimed specifically at smallholder farmers.

The theme of the Islamic Microfinance Challenge was “Beyond Murabaha.” It received entries from microfinance institutions in 11 countries. The Challenge is co-sponsored by the Islamic Development Bank, Al Baraka Banking and Triple Jump. It aims to spur innovation in an Islamic microfinance market where there is growing demand, but also a narrow product offering, focused mainly around murabaha – a cost-plus-markup product geared toward asset purchases.

Judges of the Islamic Microfinance Challenge selected Wasil’s entry – an “Agricultural Financing Package” of salam and ijara products – for its impact on the lives of its clients, the sustainability of the offering and its potential to scale up in Pakistan and in other predominantly Muslim countries.

Salam offers agricultural clients a cash advance against a guaranteed purchase price for their crops. Through ijara, Wasil rents agricultural land and then subleases it to a farmer for an agreed period of time. Fruit, vegetable and flower farmers pay a monthly rental fee in cash, while wheat and rice farmers can pay in the form of crops. By combining these two financial products, Wasil helps smallholder farmers sustain themselves between harvests while reducing their costs. The Agriculture Financing Package represents an average of nearly 10 percent of Wasil’s current portfolio, though that number can increase to 20 percent during the peak agricultural season.

“To alleviate poverty in Pakistan, we have to focus on the farmers. But many farmers will not opt for interest-based lending because of religious reasons,” said Wasil’s Founder and Chief Executive Officer Farida Tariq. “We are extremely thankful to the organizers of the Challenge who have given recognition to our work in Islamic finance.”

Other entries that were shortlisted for the final round of the Challenge included Sudan’s Bank of Khartoum and the Kyrgyz microfinance institution Kompanion Invest. Both submitted profit- and loss-sharing mudaraba products, which split risk between the institutions and their clients.

Videos of all finalists are available at

“We hope this recognition will inspire other microfinance providers to expand their own Sharia-compliant product offerings,” said Mayada El-Zoghbi, Senior Financial Sector Specialist at CGAP. “With high poverty rates in the Muslim world, Islamic microfinance can play a key role to provide financial access for the poor. Broadening the range of Islamic microfinance products is an important way to bring the poor into the financial mainstream.”