ASA: The Ford Motor Model of Microfinance

Publication Date: 2002
Published by: Asian Development Bank (ADB)
Document Type: Journal Article

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How to standardize low-cost microfinance?

This article presents the study of Association for Social Advancement (ASA), Bangladesh, and compares the founder of ASA, Md. Shafiqual Haque Choudhury, with Henry Ford, who standardized the operations of Ford motors. The authors remark that ASA champions standardized low-cost microfinance, is one of the most efficient microfinance institutions (MFIs) in the world.

ASA, which started in 1978 as a NGO with the 'vision of creating an enabling environment to establish a just society', became a specialized micro credit NGO in 1991. The salient points are:

• It is committed to large outreach, cost-effective lending and achieving financial self-sufficiency through efficiency within a relatively short time.
• It has developed a flat management structure with only three tiers - head office having a staff of only 95, 1.4 percent of the total; regional and divisional managers; and its backbone the branch unit.
• ASA branches are profit centers and are expected to fully cover costs after 9-12 months of operations.

• By end-April 2002, it had 1,121 branches with over 4,000 credit officers serving over 1.68 million clients with outstanding loans.
• About 96 percent of its clients are women.
• The average of over 400 clients per credit officer is one of the highest in the region.
• On-time loan recovery rates have been impressive exceeding 98 percent during the last five years.

• Tight cost control,
• Emphasis on transaction costs,
• Loan officer productivity,
• A lean administrative structure.