Sadaqah, Investment or Loan


Asking for someone else

They would like to help some people escape the trap of poverty.
But this time instead of giving money away in Sadaqah, they thought they would try to create a virtuous cycle.

I.e. Give money to help someone establish a source of income.
Some small business, corner shop or anything really.
Then pay it back. (Or even just 50% back)

Which will be reinvested. The original giver can keep injecting more into the pot. But the pot needs to be replenished by the recipient as well.

Some numbers.

Party A gave Rs. 50,000/- to Party B. One condition. When you start earning and whenever you can, return 50,000/- so that it can be given to others.
Party B purchases a sewing machine and upskills
Party B starts earning and returning Rs 50,000/- over a long period of time in small increments
Party A keeps injecting Rs 50,000/- into the system for Party C, D, E etc.

Over time the pot in circulation grows. People who managed to upskill contribute as well.

I’d like to understand the shariah perspective on this. Is there a precedent for such a system. At some point, I thought this sounds like a waqf. But there is an element of investment and loan in it as well. So unsure. And of course there is a risk that the repayment doesn’t happen.



Wa alaykum salaam,

This is effectively a Microfinance product based on lending. It can work. There are other products too instead of lending in Islamic Microfinance.

Allah knows best


So lending would be if the money was to be returned to the giver.

In this case, the returned money is intended to be given out again to someone else in need.

Does that still become a loan?


This is being applied by Akhwat

I recently attended am inspirational presentation by the founder Dr. Muhammad Amjad Saqib.The programme is so successful they have secured partnerships with various government departments.

It was at a webinar organised by Taif and is worth watching: