Aga Khan Agency for Microfinance

Country Reviews

AKAM’s microfinance initiatives range from village lending cooperatives to self-standing microfinance institutions to full-fledged microfinance banks. These activities currently operate in Afghanistan, Burkina Faso, Egypt, India, Kazakhstan, Kenya, Kyrgyz Republic, Madagascar, Mali, Mozambique, Pakistan, Syria, Tajikistan, Tanzania, and Zanzibar. Often they are part of wider integrated development strategy being implemented by the AKDN within each country. In addition to providing financial services to the poor, they may include business or technical advisory/training extension services and business development programmes that work directly with local entrepreneurs.

Afghanistan

Microfinance Banks, Institutions and Programs

Several of these programmes were initiated by the AKF’s rural development programmes, including well developed savings and credit programmes in Northern Pakistan (Aga Khan Rural Support Programme), Tajikistan (Mountain Societies Development Support Programme), and India (Aga Khan Rural Support Programme (India)). The focus of these programmes has been to target areas and populations that are vulnerable and do not have access to formal credit.

AKAM also oversees microfinance activities that were previously managed by AKFED, including support for credit cooperatives in poorer rural and urban communities in India and Pakistan. It has taken over the Enterprise Support Facility, a microfinance and small business support programme operational in Tajikistan since 1996. The Facility trains entrepreneurs and finances a wide range of micro and small-scale businesses ranging from farming, cottage industries, agro-processing to services and commerce.

Microcredit, extended in the context of the AKTC’s Historic Cities Support Programme, is also supervised by AKAM. The Historic Cities Support Programme uses microfinance as a tool to aid in the revitalization of poor neighbourhoods in conjunction with other projects for architectural restoration, conservation and urban development. These efforts consist of activities ranging from the provision of rehabilitation loans to help restore houses dilapidated by years of neglect, to business development programmes under which competitive credit is provided to small-scale entrepreneurs in the areas surrounding rehabilitated and redeveloped cultural sites. As with most of the AKDN’s activities, these programmes are part of an integrated approach that complements the microfinance activities with social programmes focusing primarily on health care, early childhood education and community programmes.

AKAM currently operates the First MicroFinanceBanks (FMFB) in Afghanistan, Pakistan, Tajikistan and a steadily increasing number of countries. These banks are formally regulated by the Central Bank of the countries in which they operate and direct their services to the poor and their micro and small enterprises.

Reaching beneficiaries through geographically spread out branches and mobile banks, this bank network offers an array of services comparable to – and in some cases even broader than those of commercial banks – including credit, savings, payment services, money transfers, microleasing, and microinsurance, among others. The banks also support small and medium enterprises (SMEs), particularly those that develop as clients reach a higher level of financial stability. The aim at these banks is to operate at international standards, conserve the capital base and reach sustainability as rapidly as possible.