Aga Khan Agency for Microfinance

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Medium-Term Outlook

Helping the poor to improve their quality of life particularly in the context of the economic crisis will continue to be AKAM’s foremost concern. Helping the poor to improve their quality of life particularly in the context of the economic crisis will continue to be AKAM’s foremost concern. It will pursue these objectives within a broad framework that looks beyond just economic development and growth to include support for social needs such as health, housing and education.

The key strategic themes that underpin AKAM’s progress include the sustained targeting of the poorest population segments in the countries of operation, diversification of products and services to support a holistic range of household and entrepreneurial needs, an increased geographic focus on Sub-Saharan Africa, supporting institutional excellence, and the introduction and upgrading of information and technology systems to reduce delivery costs and enhance service delivery. A further area of focus will be an accelerated programme of training for field staff. AKAM expects to have a consolidated portfolio of nearly 500,000 clients by year-end 2009. Increases in the proportion of lending for non-income generating purposes will outpace growth in the core agricultural and enterprise portfolios. SME growth is also expected to accelerate.

In 2005, Modar Al Merali took out the first of his loans from FMFI-Syria. With these funds he has been able to increase the size of his butchery. The expansion has increased his monthly net income by 20%.AKAM is pressing ahead in 2009 with new investments in Sub-Saharan Africa, because that is the continent with the greatest concentration and depth of poverty - most of the world’s 50 poorest countries are in the region. In general, the region also has an underdeveloped microfinance industry. Highlights of the AKAM strategy include the transformation of existing MFIs into microfinance banks in Kenya, Madagascar, Mozambique and Tanzania, as well as planned entry into Uganda. Lending and savings mobilisation will also scale-up in West Africa, which is now being managed using a regional structure that pools scarce human resources and increases efficiency.

Holding down the cost of delivery remains a priority for AKAM which invested heavily over the last two years in the development of its own banking software. Roll-out will continue apace in 2009 and by the end of the year eight of the 13 microfinance institutions will be running the common system. Work is also underway on development of solutions to facilitate branchless delivery of services in rural areas, including telephone banking and platforms that can operate offline in outlets with limited connectivity or even from mobile outlets.