Building Institutional Capacity for Outreach: ASA's Experience

This paper presents ASA's experience in building institutional capacity of a microfinance institution (MFI). The paper discusses ASA's innovative way of managing microfinance to suit the poor who have small requirements of loans and frequent the small payback system.

The paper lists all the factors that have helped ASA reach a scale in its microfinance operations at low-costs:

Factors that have facilitated rapid growth/outreach, include:

• Simple bookkeeping, account-keeping;
• Residential offices facilitating continuous informal training;
• Rapid expansion;
• Decentralized decision-making to speed up the operation;
• Written manual help to reduce error in operation and decision-making;
• Decentralization for efficient fund management, thereby allowing rapid expansion with same volume of fund.

Factors that have led to ASA's income-increase, include:

• No group liability;
• Easy loan provision to regular payers;
• Quick expansion into new areas;
• Fast provision of loans to new members;
• Strict control on weekly installments;
• Savings collection service to borrowers;
• Quick information on default;
• Zero-tolerance default management.

Factors that have made ASA's operations cost-effective, include:

• Simple forms;
• Non-conventional, low-cost staff recruitment;
• Appropriate staff qualification;
• On-the-job training;
• Fixed standard/ ceiling on expenses;
• Standardized branch structure.

The features that help ASA reach large numbers cost-effectively, include:

• Firm determination and committed leadership;
• Continued innovations;
• Low cost organizational culture;
• Enabling environment;
• Franchise methodology.