1.

0 Introduction
Women constitutes an integral part of any society but their importance is undermined due to
gender discriminatory policies set by the government and norms by societies in both developing
and developed world. The poverty burden is beard by them. Women perform 66% of the global
work, contribute to the production of 50 % of global food, and in return receive only 10% of
world income and 1% share of property. 38% of the world registered business is owned by
women and its rate of growth is increasing in Asia, Europe, Africa and Latin America
(GEM2009). Despite the fact that women constitutes major share of the population, they
experience status disparity in developing and developed nations (Rehman and Naoroze,
2007).Women are the untapped sources of economic growth. International organizations like
United nation is using women empowerment as a strategy to reduce poverty and population
growth rate (Kabeer,2001) An economically independent woman invests more in the family and
community, therefore , women economic empowerment is a prerequisite for sustainable
economic development and pro poor growth.
Hisrich (1984) argues that the financial community rates women as a second class citizen.
Financial markets have been showing gender discrimination and possess a certain bias towards
women entrepreneurs and had been a major obstacle in their efforts to start up a new business or
strengthening their position (Thabethe, 2006). Furthermore as per Khan & Noreen (2012) 70 %
of world poor are women who are rarely financially independent due to hurdles in accessing
credit and financial services. This makes them most vulnerable members of the society. In order
to overcome this financial, social, and economic instability, microfinance can be considered as
an integral source of contribution through targeting women. Littlefield, Murduch, and Hashemi
(2004) argue that microfinance can be used as a developmental tool to create emancipation and
women empowerment. In concordance Holvoet (2005) suggests that the only platform that can
encourage women social, economic and political empowerment in the wake of skeptical financial
instruments is microfinance. The role of microfinance is considered significant by many
researches (e.g. Mayoux 2001 or Gurin 2006 for the African context; Mahmud 2003, Holvoet
2005 or Moodie 2008 in Asia; Velasco and Marconi 2004 in Latin America).
Researchers from different parts of the world agreed that women empowerment is created by
microcredit if the program is structured according to social and economic context of
women.(Hartungi, 2007; Holvoet, 2005; Gurin, 2006).
Saqib, ( 2006:2) argued that Muslims deterred participation in conventional microfinance
programs due to Riba (interest) that is forbidden in Islam. This becomes the basis for the
development of Khushali microfinance products. Khushali microfinance is in nascent stage of its
evolution, contributes 1% of total Khushali banking outreach globally. The existing studies on
Khushali microfinance are mainly done in Malaysia, Bangladesh, Indonesia and Egypt. Many
writers such as El-Gamal (2006), Ahmed (2001), and others, believe in the great potential of
Khushali banking to be involved in microfinance programs to cater for the needs of the poor who
usually fall outside the formal banking sector. Moreover different researchers are of the opinion
that diverse nature of Khushali instruments in collaboration with mechanisms like Zakat, charity
and waqaf can promote entrepreneurship (Akhtar, 1996, 1998; S. Al-Harran, 1995, 1996, 1999;
S. A. S. Al-Harran, 1990 Al-ZamZami & Grace, 2000; Dhumale & Sapcanin, 1998; Hassan &
Alamgir, 2002).
There are very limited offerings of Khushali microfinance products in Pakistan. Therefore,
majority of Muslims are forced to use interest based products or exploitive informal money
lender. Only two institutions Akhuwat foundation and Wasil Foundation are offering limited
Khushali microfinance products to both men and women. No exclusive offerings are designed
for women. The importance of women empowerment through micro credit and possible bridging
of gap that exists between religious beliefs and practice demands a study to explore the role that
Khushali microfinance can play in the empowerment of women.
The aim of this research is to explore the role of Khushali Microfinance products in the
empowerment of women entrepreneurs in the light of social and financial structures in Pakistan.
The study focuses on the women entrepreneurs from Lahore District that are using Khushali
Microfinance products to reveal their rich experiences and challenges in accessing and using the
Khushali Microfinance products. In addition, the current research will explore the perspectives of
Khushali and conventional microfinance providers operating in Pakistan on the challenges faced
by them in offering the Khushali microfinance products and the possible reasons behind the low
outreach of these products.
1.1 Background of Research
Women possess a disadvantaged position in developed and developing countries. This can be
tracked from studying history starting from post-world war II period. Women were considered
unproductive and isolated as housewives till 1970. Post 1970 era is characterized by industrial
development where women remained an unequal recipient. This resulted in receipt of only 10%
of world income by women even after performing 67% of world working hours as reported by
GEM (2010). This reflects that women economic health globally. Cheston and Kuhn (2002)
argue that women hold low paid jobs mostly in informal sector in most economies of the world.
This is further supported by the work of Islam (2006) that highlights the contribution of women
in the economic development. Consequently, World bank (2002) acknowledge that the ease of
access of financial resources to women creates women empowerment and subsequently
contributes to the development of economy. Mayoux (1998) noted that increasing women's
access to micro-credit has the tendency to initiate a series of 'virtuous spirals' of economic
empowerment, increased well-being for women and their families and on the wider scale, on
social and political empowerment.
Jolosheva (2010) argued that microfinance rates are higher for women and creates distress in
women in Kyrgyzstan. The inherent problem with the conventional microfinance products are
high interest rates. Also Interest or Riba is forbidden in Islam. Therefore the conventional
microfinance products create a conflict in ones religious belief system and the practical needs.
The emergence of Khushali banking and subsequently development of Khushali microfinance
products are the solutions that can resolve this conflict but it is not that easy. Riba is prohibited
in Islam and this poses a major challenge to Khushali banks to extend credit in an efficient and
profitable manner that is Shariah compliant. A study by Isler (2010) revealed an efficiency gap
in conventional and Khushali microfinance products. He proposed that the gap can be bridged by
improving the nature of products offered by Khushali banks. He proposed a study to understand
the nature of products that can improve the profitability of banks.
A study in Bangladesh (Hossain and Siwar,2008) explores the prospects and problems of
Khushali micro finance uncover the untapped opportunity. Ahmed (2009) argues that customer
satisfaction and service quality has weak influence on the performance of Khushali banks in
Pakistan.
1.2 Aims of the Research
Research in the area of Khushali micro finance and its role in empowerment of women
entrepreneurs is considered to be important in order to deal with the issues of easy access and
interest free Khushali micro finance products for the welfare of Women in particular and society
as a whole . Specifically the studies on independent microfinance programs and
entrepreneurship are less researched areas (Islam, 2009). The emerging field of Khushali
banking and Khushali micro finance is characterized with lack of comprehensive knowledge on
the nature of Khushali micro finance products and their efficiency in serving the women.
The primary aim of this study is to explore the role of Khushali microfinance products in the
empowerment of women Entrepreneurs in Pakistan. This study will bring out the perspective of
women entrepreneurs on challenges faced by them in accessing the Khushali microfinance
products due to the nature of the products. The study will further examine the perceptions of
managers of Khushali microfinance institutions about the inherent issues and prospects in
offering Khushali micro finance products to women entrepreneurs.
1.3 Research Objectives:
To assess the effectiveness of Micro-Finance program through Khushali Bank for women
in Pakistan.
To analyze the significance of Micro - Finance on women empowerment in Pakistan
To investigate the contribution of Micro - Finance on economic development of a country
1.4 Research Questions
What role does microfinance play in the economic empowerment of women Entrepreneurs in
Pakistan?
What are the challenges faced by women entrepreneurs' in accessing the microfinance in
Khushali Bank?
What are the reasons behind the limited offering of microfinance products by Khushali Bank
in Pakistan?
What changes are required in the Khushali micro finance products to cater to the needs of
women entrepreneurs'?

















Chapter #2
LITERATURE REVIEW

Women often play a sovereign role in the business and professional life by undertaking their own
small scale enterprises (Warren, 2001). New theories of economic growth also take this into
consideration that gender equality is a fundamental part for economic development and the role
of women to increase as economic well being of the society (Klasen and Wink, 2002). Gender
inequality inversely impacts on agriculture and industrial productivity (Blackden and Bhanu,
1999; World Bank, 2006).
Krishnaraj and Kay (2002) have defined the role of women empowerment and microfinance:
In Bangladesh, women have been shown a good deal of empowerment in their capacity to
articulate their needs and receptivity to new ideas. More impressive was the emergence of
womens groups as a dynamic, articulate constituency These observations and interviews come
out to certify the conclusions of other studies (Cheston and Kuhn, 2002).
MICROFINANCE IN PAKISTAN The work of microfinance started in Pakistan at the early
1980s. Aga Khan rural support program (AKRSP) was the first microfinance institute in Pakistan
which started to provide micro credit in northern area of Pakistan. In 1982 Orangi pilot project
Karachi was launched under AKRSP. Later (1990) on the model of AKRSP was extended across
the country and established National Rural Support Program which was provided country wide
microfinance facilities but the provided facilities were not sufficient according to the requirement
of Pakistan economy. In 1996 it was established as a microfinance bank, that is, Kashaf
foundation. In 1998, Pakistan micro-finance network was designed, which played a very
important role to provide microfinance facilities in Pakistan. Further, Pakistan poverty
alleviation fund (PPAF) was allocated in 2000 which provided funds to microfinance banks and
SBP (State Bank of Pakistan) established a separate unit for it. The government of Pakistan is
also creating different financial institute which provide microfinance facilities.
Leading microfinance institution in Pakistan Highlighted a portfolio position of
microfinance institution of Pakistan Microfinance institutions strive enables women to
participate in the professional activities. How much this objective has been achieved is still a
question mark with reference to microfinance providers in Pakistan. Apart from this, there are
certain hurdles on the way for women pertaining to the access to microfinance services. Figures
2 and 3 depicts scenario of the issues.



















Chapter 3: Methodology:

According to Saunders (2007) Research methodology provides a crucial role for investigating a
phenomenon in a particular research, methodological issues regarding this research could be
followed according to the following structure:
3.1 Research Philosophy:
The purpose of this research is to explore the Empowering the women through microfinance in
Pakistan. Researcher has decided to follow realism approach which is the combination of both
positivism and interpretivism philosophy, to achieve research objective of this study by adopting
positivism approach some well-established variables have been standardized. On the other hand
to solve more complex and complicated variables interpretivism philosophy has been adopted.
3.2 Research Approach:
To conduct this research inductive approach will be chosen because there is no existing
hypothesis and to avoid rigidness, inductive approach has been chosen.
3.3 Research Design:
Survey method would be applicable to conduct this research because data would be collected
from large scale respondents and survey is capable to obtain information from large samples of
the population.
3.4 Data Collection Method:
Questionnaire would be used to collect data to explore the effectiveness of microfinance to
empower the women in Pakistan by taking the Khushali bank as case study. This questionnaire
would be consists of several questions associated with micro finance, poverty alleviation and
management of credit by poor and uneducated people.
3.5 Quantitative Research:
This research would be conducted according to the quantitative nature of the research as it would
be difficult to analyse data based on qualitative nature from large scale of population.


3.6 Sampling:
Population of this research would be the women Khushali Bank Pakistan and sample size would
be 100.
3.7 Data Analysis:
Summarizing, categorizing and structuring process with numerical analysis would be applied to
get maximum outcomes of this research. Several graphs, charts would be used to analyze data of
this research.
















References

Ablorh,W.(2011). Microfinance and Socio-Economic Empowerment Of Women: A case of
opportunity international savings and loan clients. MBA Thesis. The institute of distance
learning, KWAME NKRUMAH University of Science and Technology, Retrieved October 1,
2013, KWAME NKRUMAH University of Science and Technology Digital thesis

Akhter,W.,Akhter,N. and Jaffri,K.A. (2009) Islamic micro-finance and poverty alleviation: a
case of pakistan.presented at CBRC,Lahore

Al-ZamZami, A. and Grace, L. (2000) Islamic Banking Principles Applied to Microfinance,
Special Unit for Microfinance, United Nations Capital Development Fund, November.
Al-Harran, Saad Abdul Sattar (1990) Islamic finance : the experience of the Sudanese Islamic
Bank in partnership (musharakah) financing as a tool for rural development among small farmers
in Sudan. Doctoral thesis, Durham University.
Chammas ,G.(2006). Islamic finance industry in Lebanon: Horizons, enhancements and
Projections. Master Thesis. Ecole Suprieure des Affaires, ESA- Beirut . Retrieved October 1,
2013, ESA- Beirut Digital Thesis
Essers,C.(2007).Entrepreneurship in public private divides: Business women of Turkish and
Moroccan descent playing family ties. Paper presented at reconnecting diversity to critical
organization and gender studies, Critical management studies conference,11-13
Global Entrepreneurship Monitor (GEM), 2010
http://www.gemconsortium.org/docs/266/gem-2010-global-report

Guerin,I.(2006).Women and money lessons from Sengal. Journal of Development and change.
37(3)549-570

Hossain.T.B.M. , Siwar,C. and Mubarak,T(2008).Determination of the effective ways if
microfinance for Islamic Banksto Eliminate Poverty: an empirical Investigation. PROSIDING
PERKEM III, JILID 1 822 832

Hartungi,R.(2007). Understanding the success factors of Micro-finance institution in a
developing country. International Journal of Social Economics, 34(6), 388 401

Holvoet,N.(2005). The impact of microfinance on decision making agency: Evidence from south
India. Journal of Development and change. 36(1)75-102

Hassan,K. Alamgir, D.(2002).Microfinancial Services and Poverty Alleviation in Bangladesh: A
Comparative Analysis of Secular and Islamic NGOs, in Islamic Economic Institutions and the
elimination of Poverty, ed. Munawar Iqbal, 113-86. Leicester: The Islamic Foundation.

Hisrich, R. D. & Brush, C. (1984). The woman entrepreneur: Management skills and business
problems. Journal of Small Business Management, 22, 1, 30-37 Abstract. Retrieved October 4,
2013 from the Proquest database Capella University, the Sheridan Library at Johns Hopkins
University.

Isler. B.F. (2010), The Efficiency of Microfinance Institutions Applying Principles of Islamic
Banking, Bachelor Thesis, University of Zurich, Retrieved October1,2013, from University of
Zurich digital Thesis
Islam, N., 2009. Can microfinance reduce economic insecurity and poverty? By how much and
how? [Online]. DESA Working paper No. 82, United Nations Department of Economic and
Social Affairs.
Jamali,D.(2009).Constraints and opportunities facing women entrepreneurs in developing
countries , A relational perspective: Gender in Management. An International journal,24(5),232-
251
Jolosheva,A.A.( 2010). Entrepreneurship and Microfinance: Economic Development and
Women's
Empowerment in Kyrgyzstan. Masters of Arts Thesis. University of Oregon, Retrieved October
1, 2013, University of
Oregon Digital Thesis
Jabakhail,M.(2012). Islamic Microfinance: A remedy for poverty in Afghanistan? Master of
Public Policy, University of Erfurt, Retrieved October 1, 2013, University of Erfurt Digital
Thesis
Khan, R. E. A., & Noreen, S. (2012). Microfinance and women empowerment: A case study of
District Bahawalpur (Pakistan). African Journal of Business Management, 6(12), 45144521.

Khan,M.(2012), ROSCAs and Microfinance in Pakistan: Community and Culture, PhD Thesis,
University of Leicester, Retrieved October1,2013, from University of Leicester Digital Thesis

Kossmann ,K.H.(2008). Micro Finance and empowerment from a womans perspective- The
effect of Micro-Finance on the empowerment of women in Bangladesh. Master Thesis.
Copenhagen Business School, Retrieved October 1, 2013, Copenhagen Business School Digital
Thesis
Khan,A.M. and Rehman,A.M.(2007). Impact of Microfinance on living standards,
Empowerment and Poverty Alleviation of Poor People: A case study on Microfinance in
Chittagoang District of Bangladesh. Business Administration Master Thesis. Ume School of
Business, Retrieved October 1, 2013, Ume School of Business Digital Thesis
Kabeer, N. (2001) Reflection on the measurement of women's empowerment. In discussion
women's
empowerment theory and practice, Sida studies No.3, Novum Grafishka A.B. Stockholm

Littlefield, E. and Rosenberg, R. (2004), Microfinance and the Poor;Breaking down walls
between microfinance and formal finance, Finance and Development, June, vol. 41, n2
Mahmood,S.(2013).Access to Finance and the Role of Microfinance for Women Entrepreneurs
in Pakistan. PhD Thesis. Birmingham City University. Retrieved October 1, 2013, from
Birmingham City University Digital Thesis
Mayoux, L., and M. Hartl (2009) Gender and rural microfinance: Reaching and empowering
women a guide for practitioners. IFAD report. Rome: International Fund for Agricultural
Development

Mustafa.Z. and Ismailov,N. (2008), Entrepreneurship and Microfinance-A tool for empowerment
of poor- Case of Akhuwat-Pakistan, Master Thesis, Malardalen University, Retrieved
October1,2013, from Malardalen University digital Thesis

Moodie,M. (2008). Enter microcredit: A new culture of womens Empowerment in Rajistan?
Journal of American Etnologist. 5(3)454-465

Mahmood,A.G (2006). A simple Fiqh-and Economic Rationale for mutualization in Islamic
Financial Intermediation, Rice University

Mahmud,S.(2003). Actually how empowering is microcredit? Journal of development and
change.34(4)577-605
Mayoux, L. (2000). A forthcoming. Selected Programme CaseStudies: SHDF, Zambuko Trust,
SEF, CGT and SCF-UK Vietnam Programme, ILO.

Mayoux, L. (1999). Questioning Virtuous Spirals: micro-finance and women's empowerment in
Africa. Journal of International Development 11:957-984.

Morduch, J., (1998). Does microfinance really help the poor? new evidence from flagship
programs in
Bangladesh. Working Paper No. 198. Stanford CA: Hoover Institution, Stanford University.

Mayoux, L. (1998)a. Women's Empowerment and Micro-finance programmes: Approaches,
Evidence and Ways Forward. The Open University Working Paper No 41.

Mayoux, L. (1998b). Participatory programme learning for women's empowerment in micro-
finance
programmes: negotiating complexity, conflict and change. IDS Bulletin 29:39-50.

Ufuk,H. and Ozgen ,O. (2001). Interaction between the business and family lives of women
entrepreneurs in Turkey. Journal of Business ethics, 31(6), 95-106
Velasco,C. and Marconi, R.(2004). Group Dynamics, gender and microfinance in Bolivia.
Journal of International Development. 16(3)519-528
http://www.polity.org.za/article/thabethe-address-to-women-in-ghana-24102006-2006-10-24