Aga Khan Agency for Microfinance

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Product Development Overview

This woman is employed to break larg rocks into small stones to pave a feeder road into a small village as part of an effort to improve community infrastructure. Microfinance as a concept is deceptively simple. Give a small loan to an entrepreneur and s/he will be able to conduct business and create an income. This system has been very successful in helping millions of poor households to move beyond subsistence living and become better integrated into their local economy. Many microfinance providers continue to utilise these very basic methodologies and serve vast numbers of clients effectively, but with limited product differentiation.

AKAM has a more ambitious agenda and believes that product development and innovation are critical to broadening the range of services beyond income-generating loans into savings, money transfers and credit for social needs such as housing, health and education.

While working capital and fixed asset loans account for the bulk AKAM’s activities, many field units have also developed new financial services for their clients. To assist these innovations, AKAM collaborates closely with its field affiliates to establish standards, cross-fertilise learning and ensure that best practices are reflected in the design of these products.

In the last few years, the innovation agenda within AKAM has been dominated by new developments and research into microinsurance and sustainable housing finance. SME lending, which started in Afghanistan, has now been expanded to several other countries. The most recent initiative is the development of a comprehensive framework for addressing household educational needs, from early childhood to adult education.