Microfinance Made Simple

Leading Bangladeshi Lender Emphasizes Bare-Bones Approach

Shafiqual Haque Choudhury. (Elsa Ruiz/Asia Society)

The Citi Series on Asian Business Leaders

NEW YORK, Oct. 23, 2008 - Speaking before an Asia Society audience, Shafiqual Haque Choudhury,the founder and CEO of the Association for Social Advancement (ASA),the fastest-growing international microfinance agency, attributed ASA'ssuccess to the simplicity it strives for in every step of itsoperations. Radically streamlining and decentralizing operations, hecontended, not only helps serve millions of poor clients but alsoenables his organization to grow, which in turn gives it theopportunity to help millions of additional clients around the world.

Choudhury cited four different aspects of ASA's business that apply his ideal kind of simplicity.

First, the Association reduced loan amounts to figures that caneasily be understood by clients and staff members with any level ofeducation. For example, Choudhury said, a loan of $100 with 2% monthlyinterest is easy for anyone to calculate, and the loan structuredoesn’t confuse any of the parties involved.

Second, in understanding the needs and current borrowing capacity ofASA's poor clients, Choudhury instituted very basic criteria forassessing their qualifications for loans—annual income or occupation.

Third, Choudhury reduces costs and improves efficiency in theworkplace by setting up his offices with one table per four employees.The staff's resulting proximity eliminates time spent on indirectcommunication and office expenditures. Further efficiencies in ASAoperations come from not hiring accountants, eliminating documentationof business operations, and an overall strategy of decentralizationthat does away with layered structures of communication. (Choudhuryoperates all his branches through strict written guidelines oneverything from the assessment of potential clients to the size of theloans they'll be granted.)

Lastly, Choudhury analyzed the cost benefit of what he calledpractical training as opposed to formal, institutionalized training.His belief is that practical training is more effective than formalizedtraining and allows staff to jump in to field work much more quickly.

Listen to the complete program (1 hr., 13 min.)