Aga Khan Agency for Microfinance

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Education Finance

Click on the graphic to enlarge it.The importance of lifelong education is an integral component of the AKDN philosophy for development and it is reflected in the wide range of education programming. AKAM takes a life-cycle approach to supporting education, which is structured around key elements that underscore the cumulative nature and inter-dependency of development programmes targeting different age groups. The range of products will support borrowers in each demographic segment (pre-natal and early childhood to early development, and adolescence to adulthood) to provide opportunities for education and encourage entities to build long-term relationships with clients.

The World Bank suggests that it is “economically efficient” to invest in the early years and “demographically urgent” given that the largest demographic today consists of children and youth. Research indicates that a child's involvement in work is associated with his/her tendency to lag behind in school, resulting in higher incidence of drop-out. In instances where child labour is critically necessary (i.e. household enterprises) for income generation, an effort will be made to develop special purpose products to promote children's education and workplace safety.

AKAM takes a life-cycle approach to supporting education, which is structured around key elements that underscore the cumulative nature and inter-dependency of development programmes targeting different age groups.It has been demonstrated that mothers generally allocate a higher portion of income towards a child's education than fathers. Targeting female borrowers will remain an objective of AKAM's strategy for the provision of education loans. Well-designed incentive programmes can encourage borrowers to ensure that their children receive proper education, and will be integrated into product design.

Recognising that many borrowers may seek skills development training, AKAM will also collaborate with the Aga Khan University (AKU) and the University of Central Asia (UCA) to enable students to access vocational training and technical courses to improve productivity and enhance their employment prospects.

Complementing the growth and development of AKAM's core microfinance operations, a concerted effort will be made in 2009 – 2010 on the development of innovative financial products to support households in achieving their educational goals.

Product development will be guided by the following objectives:

Increased access to education fees and related expenses with the goal of improving school attendance/completion records;

• Improved quality of the physical conditions in educational centres to improve the learning environment;
• Creating safer workplaces so that child and adult labourers avoid occupational injuries and disease;
• Enabling businesses to invest in technical education and training of employees to enhance economic productivity; and
• Achieving outreach to develop products that promote lifelong learning.

Sustainability will dispel the notion that loans are subsidies and impress upon borrowers the principle of education financing as an investment for the long-term.

AKAM’s strategy will build on linkages with its sister AKDN agencies Academies, AKES, AKU, and UCA in all countries of mutual operation.