Traditional Islampur textile sector revived through LPH

Weaving woolen shawls and other fabrics is a God-gifted talent of the people of Islampur, a village in district Swat. During the 1990s, the weaving sector was said to be at its peak with around 90% of the population related with it in one way or another. When militancy hit the area in in 2007 business of hand looming reduced.

Livelihood Programme Hindukush (LPH) of the Inter-Cooperation (IC) with the funding assistance of Swiss Agency for Development and Cooperation (SDC) is working on the revival of the traditional textile cluster of Islampur, district Swat.

Since 2009, Inter-Cooperation (IC) with the funding assistance of Swiss Agency for Development and Cooperation (SDC) is implementing Livelihood Programme Hindukush (LPH) in the Marghuzar valley of Swat; making efforts to reduce vulnerability of the people and help them restore and sustain their livelihood. During the course of time LPH realized a need to look for sustainable microfinance services for the weaver families with customized Islamic financial services that could improve their relationship with other actors in the value chain along with improving their livelihoods.

LPH provided an opportunity to improve the bleak conditions of the weavers by supporting a microfinance institute named ASASAH, through establishing its branches in the valley on sustainable basis. ASASAH designed and introduced microfinance products according to the needs of the clients.

The microfinance products offered include Musharka, a partnership based product designed on profit and loss sharing basis for bonded weavers who have handlooms but are unable to purchase raw material. The raw material worth Rs. 55,000 to Rs. 65,000 is offered to weavers as an investment for 45-90 days duration, the weaver contributes in kind ie their labour charges.

While Murrabaha is a product designed for provision of assets required for weaving like handlooms, machines/assets for entrepreneurs. It is also carried out for woolen fabrics, sewing machines, knitting machines.

These loans helps borrowers upscale there business and now they are transformed from bonded weavers to owner weavers. The Islamic mode of micro financing not only promoted a sense of ownership of the business among the weavers, but also resulted in a sense of legitimacy of the business due to Islamic way of financing.