Aga Khan Agency for Microfinance (AKAM) has increased its influence in the micro lending sector in Africa by launching a fintech solution in partnership with Orange Money in Madagascar.
The Premiere Agence de Microfinance (PAMF), which is an initiative of AKAM launched a new digital credit and savings service which will enable Orange Money customers across Madagascar to have digital access to credit and savings products, helping them to quickly and easily manage unplanned expenses or save for the future.
AKAM’s microfinance initiatives range from group lending to small business financing, from regulated microfinance institutions to full-fledged microfinance banks in Asia, Middle East, and Africa.
The entity is a non-profit agency of the Aga Khan Development Network (AKDN), and it works to reduce poverty and economic and social exclusion in several countries across Africa, South and Central Asia and the Middle East.
As of 31 December 2017, AKAM’s network MFIs had a total portfolio of $300 million in loans serving approximately 530,000 borrowers, and $380 million in deposits with 1.2 million savers.
According to Jesse Fripp, General Manager of the Aga Khan Agency for Microfinance (AKAM), a founding shareholder of PAMF, “This service will promote financial inclusion by putting savings and credit within the reach of unbanked people nationwide. By enabling our clients to save money easily and providing quick access to funds at all times, we help them build financial resilience.
This initiative he says reflects AKAM’s global vision of using digital technology for financial inclusion and improving the quality of life of low-income people.
About the new partnership, Patrick Roussel, Orange Money Group Executive Vice President, said, “The convergence of PAMF’s banking know-how and Orange’s digital expertise helped us reimagine an innovative value proposition and lay the right foundation for an unmatchable customer experience. Now in Madagascar Orange Money customers can benefit from real-time 24/7 access to credit.”
This is part of a wider scheme by the Aga Khan, the spiritual leader of the Shia Ismailia Muslims of raising the welfare of communities across the world. AKAM also operates in Mali, Burkina Faso, Egypt and Ivory coast as well as other countries in Asia like Afghanistan, Tajikistan and Pakistan.
In Afghanistan, a similar initiative to the Madagascar one is operated through Roshan Telecom which is partly owned by the Agha Khan Development Network which has been offering mobile based credit to its customers.
The Aga Khan Foundation has been training savings groups for decades, starting with Rural Support Programs and most recently in the form of Community Based Savings Groups (CBSGs).
However, scale is inhibited by implementation cost (an average of $30 per member globally), given that CBSG is an entirely donor-dependent activity. Further, in Tanzania, where AKF has its largest CBSG program, the risk of cash theft is a growing issue.
In 2016, in order to scale faster and eliminate the risk of cash theft, AKF began testing a new Digital Savings Group (DSG) in partnership with experienced CBGSs in Southern Tanzania.
The DSG platform was designed by AKF with the facilitation from Bankable Frontier Associates. It was developed, and is temporarily hosted by Selcom, a Tanzanian technology company and payments aggregator.