Association for Social Advancement
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The Association for Social Advancement (ASA) (Bengali: আশা) is a non-governmental organization based in Bangladesh which provides microcredit financing. It was established in 1978 by Shafiqual Haque Choudhury and a team of people who were then working for other established NGOs, but who themselves were arguing for a better, more radical way to alleviate the exploitation of rural villages caused by the 1971 Bangladesh atrocities. The founding framework of ASA was aimed at empowering rural landless villagers from the “bottom up” through “people’s organizations”. These were run by volunteers who advocated that a consciousness for solidarity amongst the village poor would lead to collective social action. ASA has currently over 2.2 million members forming different groups with special emphasis on saving practice and 8,000 employees engaged in disbursing and collecting loans and savings deposits.
For many years, ASA sought to combine social development (in health, education, nutrition, and sanitation) with credit provision, but in 1991, these were abandoned, and ASA shifted its focus solely to microcredit lending. This was because they wanted to stop “donor dependence” and become specialized and financially self-sufficient. Since then, it has become a fully self-sufficient microfinance institution – operating mainly in Bangladesh, but with presence in Africa and South America. ASA offers a wide range of financial services to its clients – including micro-credit, small business credit, regular weekly savings, voluntary savings and life insurance – and follows a simple, standardized, low-cost system of organization, management, savings and credit operations.
Its funding has evolved smoothly: first came generous donors, then some small commercial bank loans, then low-cost loans from a subsidised wholesaler, and finally, as outreach expanded and surpluses piled up, client deposits and retained earnings. But by far the most important of the stable conditions in which ASA has prospered has been the expanding demand from an enormous client pool for the very basic service that ASA offers. The core service has remained the low-value year-long weekly-repayment loan, the staple of its successful growth. ASA has not had to undergo large-scale internal reorganisation or training because the basic product and its delivery have remained largely unchanged. Also, savings mobilised from clients are used to provide security against default by protecting the small loan portfolio, instead of being used in more risky ventures like raising capital.
Today, ASA's official mission is to "reduce poverty and improve the quality of life of the poor through the provision of qualitative and responsive micro finance services in an innovative and sustainable way".
ASA offers a successful alternative microfinancing model to that of the Grameen Bank. In December 2007, it placed Number 1 in Forbes Magazine’s list of the world’s top 50 microfinance institutions. Grameen Bank placed Number 16, despite having won the Nobel Peace Prize 2006.
ASA combines low-cost operations and high growth to fuel its success. Its ability to constantly reduce interest rates and focus on efficiency has led to its high profitability. ASA’s flat rate was 15% (approximately 32% annual percentage rate) until July 1995, when it dropped to 12.5% at a time when micro-finance institution (MFIs) were coming under increasing criticism in the press for their prices.
ADB describes ASA as the “Ford motor model” of microfinance” because of its success in standardising low-cost microfinance in an efficient and sustainable way. This is due to its flat organizational structure that consists of just three tiers: a relatively small central office in Dhaka, district offices, and branch offices. The branch offices are their main arm through which their core loan products are disbursed. These branches report to the district offices, who in turn report to the head office.
This organization makes their processes efficient with few organizational breaknecks. Each of its 3,324 branches in Bangladesh is a self-sufficient unit, run by six people: a branch manager, an assistant branch manager, and four loan officers. The branch manager is given the liberty to approve all transactions within the branch, provided they meet the guidelines of a detailed operating manual. Each branch is a profit centre and is expected to fully recover costs between 9 and 12 months.
Up to December 2009 ASA's cumulative Loan disbursement has been TK. 342,514 million (US$ 5,418 million) while loan outstanding (principal) is TK. 31,322 million (US$ 457 million) among 4 million borrowers. At the end of 2009 ASA's Operational Self Sufficiency(OSS) was 143.38%, Financial Self-sufficiency (FSS) 112.49% and rate of loan recovery 99.64%. ASA has successfully extended its outreach in Bangladesh through 3,236 branches and its 24,021 staff work relentlessly to serve more than 5.50 million clients.
Impacts on Bangladesh
Despite its position in the world of microfinance, there are remarkably few studies attempting to quantify ASA’s impacts, and this may be because having become self-sufficient, it does not need to demonstrate its impact for the benefit of donors. A 2008 study conducted by ASA’s Research and Documentation Cell showed that its Credit and Savings Program increased, among other outcomes, business capital, education, employment and sanitation. In 2011, ASA, together with Grameen Bank and BRAC, accounted for 62 per cent of Bangladesh’s 18.5 million micro-borrowers and 69 per cent of the sector's gross loan portfolio.
However, despite their expansion success, ASA’s impact on the Bangladeshi economy maybe be decreasing or if not, may not be as large as expected. There is anxiety that microfinance’s breakneck pace of growth may mean that the market for ASA’s core product, the small, general purpose loan, is nearing saturation. While at the industry level, overall average borrower numbers and portfolios have been rising steadily, ASA’s active borrower accounts in 2008 and 2009 fell by 32 percent. This was data was analysed as a need for ASA to diversify their products and increase their quality of service.
Furthermore, it has not faired great in the areas of long term financial empowerment of women, despite the fact that women are the main demographic to which ASA provide their services to (In 2007, 71% of services were to women). Women who belong to ASA are reported to be among the least active within community and political life.
ASA is currently involved in advising various organizations in setting up micro-credit facilities in several countries worldwide (e.g. Philippines, Nigeria, Indonesia, India, Pakistan, Tajikistan, Afghanistan, Yemen, Jordan, Ethiopia, Myanmar, Peru). Latvia, Italy.
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