Flexible loan terms, climate insurance open door to small farmer financing
Listening to farmers helps manage risk and boost repayment rates.
Listening to farmers helps manage risk and boost repayment rates.
AMK finished a challenging 2017 with very credible results. Despite regulatory changes, interest rate cap, and a competitive market, AMK increased both its loan book and its deposit balance by around 35%, while maintaining a satisfactory PAR30 level of just under 1.5% as on year-end. Its micro-insurance product saw a strong growth of almost 50% to reach 286,000 policies sold during 2017. Similarly, its money transfer and payroll/payment facility saw almost 2 million transactions during the year, a 23% increase over the previous year.
AMK continues to reach deep into the market and work with a large number of lower income families. Its average insurance policy costs $6.72, the average deposit balance is $300, and the average money transfer is $291. Its client satisfaction reports for 2017 showed that its poorest clients are its happiest insurance customers. As a result of its wide geographic and product coverage, AMK showed strong financial performance with a RoE of 14% even while its lending yield contracted by 15% over the previous year as a result of the new interest cap introduced in Cambodia. As at end 2017, AMK was working with almost 700,000 clients through its loan, deposits and micro-insurance products.
Meanwhile, AMZ finished 2017 with very strong results, the best in its short history so far.
It finished the year with a 70% growth in portfolio while achieving a 20% reduction in Operating Cost levels. As a result, its topline income increased by 41% even as its effective lending rates came down by over 10%. PAR30 remained impeccable at 0.5%, and profitability was strong at a RoE of around 20% for the year. During the year AMZ also expanded operations and opened two new branches, diversified its loan book by introducing small-group and MSME loans in addition to Village Bank (large group) loans, and ventured into mobile money agency business by partnering with Airtel, MTN and Zoona. Towards the end of the year it also developed two micro-insurance products in partnership with Insurance companies, for weather-index, health and funeral cover. These products are set to be tested during 2018.
At the end of 2017, AMZ was working with 17,000 clients across 6 branches and with a staff strength of 71, of which half were Client Officers. It has also built partnerships in and outside the country with Grameen Credit-Agricole, Oikocredit, LendAHand, Financial Sector Deepening Zambia and Global Partnerships.
AMIL continued its progress towards growth and viability and is set to record its second successive year of financial viability, after breaking even in the previous year. While its financial year ends in March, the estimated loan book for its year end is over USD4.5 million, with a healthy position on portfolio quality and profitability. Like other Agora MFIs, AMIL has also branched out into mobile payment services as a super-agent and has further consolidated its geographical reach in Mumbai with operations run from 11 branches. We expect that AMIL will end its financial year with approximately 20,000 clients in Mumbai.
In the last months of 2016, AMZ successfully started operations in two new locations in Zambia. It started a new rural operation in Chongwe, and the first few months have seen strong demand in the area from small farmers and traders. AMZ also kickstarted its SME product in Lusaka after a short gap. Another new initiative towards the end of 2016 was an agreement between AMZ and Airtel Money to appoint AMZ as a super-agent of Airtel Money for managing agent-level liquidity in rural areas.
As at the end of December 2016, AMZ had 919 clients and ZMW 680,000 (USD$ 68,706) loan portfolio in Chongwe, comprising about 4% of the total loans outstanding. Similarly it had 23 clients and ZMW 1,719,000 (USD$ 173,685) loan portfolio in Lusaka (SME only), comprising 11% of the total loans outstanding.
The new locations now extend AMZ’s network to 6 locations. Their geographical location is highlighted below.
Alongside achieving financial viability during 2016, AMIL has also strengthened its geographic reach in Mumbai, and successfully started operations in 3 new locations during the year. In addition to its pre-existing 5 branches, it established new branches in Vashi Naka, Bhandup and Mumbra (Thane). Thus it is now operational in 8 branches, all of whom are managed through its Head Office in Chembur.
Its branch and head office locations are shown below.
AMZ achieved an important milestone in its short history by achieving full year profits for 2016, in its 5th full year of operations. AMZ’s achievement was aided in large part by growth as well as strong portfolio quality over the last two years.
On the achievement of this milestone, Abduqodir Sattorov, CEO said – I want to thank all AMZ staff for their hard work and commitment to achieve this milestone. Also I want to thank to my predecessors who have laid a strong foundation for this success and the Board of Directors for their guidance and support. All AMZ staff are committed to continue on the same pace and achieving even much more higher milestones in the coming couple of years.
Tanmay Chetan, Chair of the Board, said – I want to thank the management and staff of AMZ for this strong and hopefully sustainable turnaround. AMZ has taken important strides in diversifying its operations by adding mobile payment services, micro-insurance and MSME lending to its rural portfolio. These steps will hold it in good stead in the years to come and enable it to reach larger numbers of rural Zambian populations.
Both Abduqodir and Tanmay had a special word of appreciation for Grameen Credit-Agricole, who were the primary lender to AMZ during 2016, and also helped in institutional development through targeted technical assistance.
For more information on AMZ, please visit www.amz.co.zm
AMZ’s Audited Financial Statement 2016 is also available to download by clicking on the link below.
Agora Microfinance India Limited has registered its first profits for the quarter ended December 2015, and also for each month since achieving monthly break-even in September 2015. Buoyed by increasing scale, strong portfolio quality and high efficiency, this milestone has been achieved relatively early in AMIL’s journey. AMIL is now in its 4th full year of operations, and works with just under 10,000 clients and a loan portfolio of Rs 12.2 crores (US$ 2 million approx).
Commenting on the achievement, Meenal Patole, CEO said “achieving break-even is a key milestone for AMIL as it demonstrates a viable model in urban lending in India. This will help accelerate our growth making it attractive to both investors and lenders. We look forward to new strategic partnerships for building on this strong foundation in the coming months and years.”
In the words of Ramakrishna Sahu, Operations Manager, “With the current foundation it is possible for AMIL to grow at a fast rate while maintaining quality, as we have now established good standards in operations”.
For more information, please visit www.amil.co.in
Agora Microfinance N.V. held its Annual General Meeting on 16th June 2015 in Amsterdam.
The AGM reviewed annual accounts for 2014 and discussed AMNV’s investment updates and strategy going forward.
Anton Simanowitz and Katherine Knotts are the authors of The Business of Doing Good, a chronicle on AMK, one of Cambodia’s leading MFIs.
The book provides 6 insights for both microfinance and other social enterprise institutions to better equip themselves to achieve both their social and financial goals.
What did you want to achieve when you first started out writing the book?
Katherine: Interestingly, our vision for the book evolved considerably over time. The first iteration was very much a thematic analysis of AMK’s experience, written I think, for a narrower microfinance audience. As we stepped back from the first draft, however, we saw the relevance of those insights emerging from AMK’s experience to a much broader range of organisations – not just microfinance institutions, but really any organisation (whether for-profit or charity) in the business of doing good.
What are your main takeaways from the book that you feel made the most impact on yourselves?
Anton: Fundamentally, AMK’s deep understanding of its clients, the purpose of the organisation, and its consistency of focus on how to build a business that reaches and serves the people.
Katherine: I echo Anton’s comments and I agree that the clarity of their purpose, “we’re going to be in business and we’re going to help people”, and their ability to maintain their vision was apparent throughout, even though the institution has changed and grown considerably over the last 10 years.
Anton: Another strong point for me was that, in many other businesses, I see a gap between theory and reality. AMK has managed to put their theories into practice.
Both: The final thing that struck us was AMK’s ability to take radical decisions. All credit to AMK for going against the grain and rejecting conventional wisdom. They are driven by their clients, they know their clients, and this has allowed them to follow through on these decisions so successfully.
During your research, did you encounter much critical feedback or conflicting comments on AMK?
Anton: By and large, most people and stories were positive. There was a challenge of longstanding clients not being able to differentiate between AMK now and AMK in the past, or fully recognise the changes in AMK’s history and development. Clients were in fact much more critical of other institutions, particularly around responses to crisis and debt collection practices. My overwhelming experience of AMK was positive.
Katherine: In our work, we’ve both heard quite negative comments about microfinance organisations in the field. The lack of such comments on AMK are notable for their absence, and that says a lot about the organization.
Where do you see AMK in 10 years?
Katherine: As independent authors, we were asked to take a historical perspective of the organisation, draw out the lessons emerging from that very rich experience. I don’t know how the Cambodian microfinance landscape will change in 10 years and I don’t think AMK does either. However, I do have faith that AMK is asking the right questions and having the right conversations so that when the landscape does shift, they’ll be very well poised to take advantage of new opportunities in a way that helps them remain faithful to their core goals.
Anton: The shift that they have gone through in the last few years by transforming themselves into a multi-product, multi-channel organisation, is the driver for the organisation going forward. They are very well positioned in providing products and services that are of great value to clients, in a way that many other organisations are not. The consistency of their approach and the DNA of the organisation have been strong up to now and that is what will make their future positive in terms of a socially focused microfinance organisation. There is always a risk that some of their social focus gets lost in the face of the challenges and complexity of commercial pursuit. But as a microfinance organisation, AMK is well structured and committed to facing those challenges.
For further information on The Business of Doing Good, please visit the website www.thebusinessofdoinggood.co.uk
Agora Microfinance India Limited has received its license as a Non-Bank Finance Company – Microfinance Institution (NBFC-MFI) from India’s Central Bank (RBI). The license puts AMIL firmly on the Indian map as a registered Microfinance Institution.
Speaking on the development, Meenal Patole, CEO said “We are thankful to the RBI for their positive consideration of our application, and I am confident that the license will help establish our presence further in the Mumbai market. The license brings a degree of accountability for responsible finance which we are engaged in”.
For more details on AMIL’s work please visit www.amil.co.in