How AFS Helps Reach Microfinance Objectives in Africa

Africa is one of the booming economies in the world. And Microfinance institutions are the major influence behind that economic growth. But it is not easy for MFIs to operate in the region without technological assistance.

Though, in recent years, MFIs have been leaning forward to technology solutions for reaching the microfinance objectives in Africa. So, we thought we would share how our award-winning microfinance solution, AFS, contributes to the Microfinance growth in the region.

About African Microfinance Market

There is a huge untapped microfinance market in Africa, which is a great opportunity for African MFIs. But, most microfinance organisations struggle to reach their goal.

According to Microfinance Barometer,

African microfinance has grown 56% since 2012. In 2018 the total borrowers stood at 6.3 million.

On the other hand, despite a low-quality portfolio and high costs per borrower, the African MFI portfolio shows a strong yield of 20%, according to the same report.

So why do African MFIs struggle?

Well, it is quite simple, lack of technology. The market should have grown way faster if all the MFIs had the necessary technology.

But there is an exception!

Today a significant number of MFIs are using microfinance technology. As a result, those contribute to fulfilling the microfinance objectives in Africa better than others.

So we can say that microfinance technology is one of the most important contributors here. And Southtech’s Ascend Financials is one of the MFI technologies helping African microfinance institutions.

Now let’s learn how AFS helps reach the microfinance objectives in Africa.

How AFS helps Reach Microfinance Objectives in Africa

AFS is the pioneer of microfinance solutions in Bangladesh. It has been contributing significantly to the growth of Bangladesh’s microfinance industry. Moreover, some other MFIs beyond the borders have benefited from this software.   

And currently, a few African MFIs utilise this award-winning software to increase their outreach and profit.

So, let us tell you how AFS helps reach the microfinance objectives in Africa in detail.

Increasing outreach

Increasing market borrower outreach is a very challenging job for MFIs in Africa.

According to the United Nations report,

More than 58% of the African population lives in rural areas.

A significant percentage of the rural population does not have a good transportation system and is unaware of financial services. On the other hand, these are the people in need of micro-loans. Therefore, they are the most potential people in the microfinance industry.

But technology could help reach those people for microfinance institutions.

You might be thinking, how?

Well, meeting those people is hard but not impossible. On the other hand, if you lack the knowledge, it will prevent you from reaching those customers.

So, if you could analyse the data properly to know the market potential, it would be helpful. And this is what AFS is doing for its African clients. It helps them analyse data and increase outreach. Thus, it helps reach the microfinance objectives in Africa as a whole.

Simplifying Operations

Microfinance operation is very challenging because of several reasons. And operational complexity is one of the reasons we must address.

You need to understand that microfinance operation is more complex than traditional banks. Therefore, it needs simplification.

But in Africa, things are even more complex due to the unawareness of financial services among borrowers.

AFS simplifies microfinance operations so that organisations can run their activities smoothly. It eliminates the difficulties of information management, manual collection process, reporting and more.

You are reading this blog now, and our clients, on the other hand, are conducting their daily MFI work smoothly with AFS.

Reducing Risk

Financial collateral is one of the biggest challenges of all for African MFIs.

Due to the lack of awareness among borrowers, African MFIs operates under tremendous risk. So risk management becomes challenging for MFIs which prevents them from reaching the microfinance objectives in Africa.

Here come Ascend Financials. It is helping African MFIs to reduce the risk because it helps them with advanced customer tracking. Moreover, MFIs can analyse customer data to provide risk-free services.

Besides, it helps you in decision making by showing the real-time financial health of the organisations.    

Saving Operational Cost

For African MFIs, the operational cost per borrower is higher than in any other region in the world. So, this is another challenge that slows down MFIs in reaching the microfinance objectives in Africa.

The cost of microfinance operation is higher because it is difficult to reach the borrowers. Besides, the process consumes many resources like paper and workforce. Therefore, it becomes tough for MFIs to operate and make desired benefits. Eventually, many MFIs fail due to the imbalance between cost and profit.

AFS is a technology developed to reduce operational costs. And in Africa, it is doing so and helping MFIs to make their desired profits.

In short, AFS is helping the Microfinance industry in Africa as it does at home. A few microfinance organisations from Africa are benefiting from the technology. In particular, our technology enables you to increase outreach, simply your operations, reduce risk and cost. Eventually, it is helping MFIs to reach the microfinance objectives in Africa.