Abdul Qadeer Mugul, of Kabul Afghanistan, is an SME client and he has taken three microfinance loans and two SME loans from FMFB-A. His business produces decorations from lapis, marble and other precious stones and he employs 18 people. The underlying objectives of AKAM are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. AKAM aims to improve the quality of life of people by helping them to improve their incomes, become self-reliant and gain the skills needed to graduate into the mainstream financial markets.
At the end of 2010, AKAM had a network of 13 field entities that operated 289 branches and outlets with more than 3,371 employees. In 2010, these institutions were able to support 309,976 microfinance and SME loans with US $226.6 million in loans disbursed.
A significant part of AKAM’s lending activities are directed to social sectors, including housing, education and health. Although these loans only represent a small portion of the overall AKAM portfolio, clients have been showing increasing interest in them for the purpose of cash-flow smoothing, for payment of medical expenses and tuition fees, or for improving housing. These loans have a direct impact on the clients as they meet their day-to-day needs, and allow AKAM to have a big impact on the quality of life of the poor.
Loans for income generating activities continue to represent the largest proportion of loans provided by AKAM entities. These loans cover a large spectrum of sectors and industries, ranging from livestock, planting, trading or production. Loan terms and conditions are designed to reflect the various cash-flows from those sectors, and to fit clients’ needs as closely as possible.
In addition to its main microfinance activities, AKAM supports small and medium enterprises (SME) to create jobs or stimulate increased economic activity. Despite their importance to economic growth and employment, many SMEs find it extremely difficult to access financial services, particularly long-term loans that fit their needs. Many SMEs are considered too risky by mainstream banks, as they are perceived to be either too small or to have insufficient collateral or credit histories to be able to secure loans or financing from traditional commercial banks. As a result, SMEs are caught in a gap between the growing supply of finance for micro-entrepreneurs and the mainstream market for traditional business financing.
AKAM’s approach has as its foundation a long-term commitment to the geographical areas in which it works. AKAM seeks to focus on poverty alleviation through innovative product design based on clearly understood needs of the target clients, effective management and the introduction of new initiatives to enhance access to financial services for poor and low-income households.
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