WHO’S WHO IN MICROFINANCE: Mr. Shafiqual Haque Choudhury of the Association for Social Advancement (ASA) in Bangladesh

Shafiqual Haque Choudhury is the founder and President of the Association for Social Advancement (ASA), a microfinance institution (MFI) based in Dhaka, Bangladesh serving over 5.5 million borrowers and reporting a loan portfolio of BDT 32.4 billion, or USD 482.5 million, in April 2008. Additionally, he recently served as an Advisor to the Caretaker Government of Bangladesh (December 2006 through 2007) with responsibility for the Ministry of Agriculture, Youth & Sports, and Cultural Affairs.

Prior to founding ASA, Mr. Choudhury earned a masters degree in Sociology from Dhaka University in 1969 and worked as a Trainer for the Bangladesh Academy for Rural Development (BARD), an institution providing training and research since 1959 for the education of government officials and other concerned parties on issues of rural development. Financial information was not available.

A nonprofit, ASA was established in 1978 to fight poverty and improve the general standard of living in Bangladesh, but it wasn’t until 1991 that the institution began utilizing microcredit as its primary activity. Today, ASA provides several microfinance products to its members including savings, insurance, loans tailored for agri-business and the information technology (IT) sector, and a free-of-charge health assistance program for “major/critical diseases” with 2008 funding of over BDT 49 million, or USD 730,700. ASA has also provided technical assistance to MFIs and non-governmental organizations (NGOs) in 16 countries through Mauritius-registered ASA International Holdings (ASAIH), a firm in which ASA retains partial ownership. ASA operates with a loan recovery rate of 99.37 percent (April 2008), a return on assets (ROA) of 4.51 percent (December 2007), and an operational self sufficiency (OSS) ratio of 175.5 percent (December 2007). According to the MIX Market, the microfinance information clearinghouse, ASA reported 2006 total assets of over USD 355.3 million.

ASA was recently ranked number one on Forbes’ list of the top 50 MFIs, as reported by MicroCapital here. Additionally, ASA secured the largest equity commitment to date for an MFI (USD 150 million) through its private equity fund, Catalyst Microfinance Investors (CMI), and plans to use the funds to expand commercial lending outside Bangladesh. As reported by MicroCapital, the size of this capitalization effort far exceeds that of other significant deals such as India-based Swayam Krushi Sangam Microfinance’s (SKS Microfinance) USD 37 million equity sale (Microcapital story here) and TIAA-CREF’s USD 43 million private equity stake in ProCredit Holding AG (ProCredit), a Frankfurt, Germany-based holding company comprised of 22 banks across Africa, Latin America, and Eastern Europe (MicroCapital story here).

From February 1997 through 2003, Mr. Choudhury served as the Team Leader for ASA’s participation in the United Nations Development Programme’s (UNDP) and United Nations Capital Development Fund’s (UNCDF) Special Unit for Microfinance (SUM) MicroStart program in Nigeria and the Philippines as a technical service provider (TSP). The MicroStart program built the capabilities of new MFIs through technical assistance from experienced TSPs as well as through subsequent seed funding assistance. According to its web site, MicroStart operated in 20 countries and grants of up to USD 150,000 were approved for 68 MFIs.

Mr. Choudhury serves as one of two Executive Directors of Mauritius-based CMI, which is run by ASA and Sequoia, an international private equity and corporate finance advisory firm founded in 2002 whose assignments have a total transaction value of “close to EUR 4 billion.” CMI actively searches for MFIs, mainly in Asia and Africa, who desire to grow in scale and improve financial performance while, simultaneously, CMI gathers investors interested in the dual financial and social benefits of investing in MFIs. According to the MIX Market, CMI makes 100 percent of its investments, which totaled USD 50 million as of October 2007, in local currencies.

He is also a member in the General Body of the Social Development Foundation’s (SDF) Steering Committee. SDF is a nonprofit aiming to reduce poverty and facilitate sustainable social development by conducting small-scale infrastructure works, advocating for the legal rights of the poor, and enhancing health care services and sanitation, among other projects. Founded in 2000, SDF reported June 2005 total assets of BDT 115.9 million, or USD 1.8 million (page 70).

He was a member of the Policy Advisory Group (PAG) at the Consultative Group to Assist the Poor (CGAP), taught at the Boulder Institute of Microfinance (BI), and was a visiting fellow at St. Francis Xavier University’s (StFX) Coady International Institute (CII).

Mr. Choudhury is well-known for his insistence on preserving the slim, low-cost nature of ASA’s operations through standardization of products, simplification of procedures, and a zero-tolerance rule on late repayments, and has been compared to Henry Ford by the Asian Development Bank’s (ADB) quarterly Finance for the Poor, as a result. As stated in Finance for the Poor, Choudhury believes that “MFIs have a social obligation to be cost-efficient because the poor cannot afford to pay for the inefficiencies of service providers (page 2).” Indeed, the organization’s expenditures are run tightly all the way down to the branch level where individual branches have a year or less to begin covering costs and each one is given an operating manual dictating all standards for all operations including a furniture layout and a simple accounting method (page 2). Additionally, borrowers may not take more than one loan out at a time and, although the group liability format is not used, borrowers are served in groups of 20-30 to reduce the expenses of staffing a location for an entire day.The end result is a low cost of money lent at five percent in 2007.  However, Finance for the Poor points out that ASA has been criticized for its lack of a diverse set of funding options for its clients to which Mr. Choudhury replies that ASA “has not been designed to provide a wide array of flexible services. If clients want such services, they are free to go somewhere else. So clients have choices (page 3).

Mr. Choudhury will speak at the Asia-Pacific Regional Microcredit Summit 2008 taking place in July in Bali, Indonesia, an event which MicroCapital reported on here.

Please refer to “Additional Resources” for papers by Mr. Choudhury.

By Anthony Busch, Research Assistant

Additional Resources:

Shafiqual Haque Choudhury, “The Challenges of Scale in Microfinance Operation”, from Banking With the Poor’s (BWTP) 2006 Asia Microfinance Forum, March 21, 2006

Shafiqual Haque Choudhury, “Fostering Successful Technical Assistance Partnerships”, from the Global Meeting of the United Nations Capital Development Fund (UNCDF) Special Unit for Microfinance (SUM) and United Nations Development Programme (UNDP), May 30 – June 1, 2001

Asia Microfinance Forum: Home, Biographies

Asian Development Bank: Home, Finance for the Poor, “ASA – The Ford Motor Model of Microfinance”, by Nimal A. Fernando and Richard L. Meyer, June 2002

Asia-Pacific Regional Microcredit Summit 2008: Home, Speaker Bios

Association for Social Advancement: Home, MIX Market Profile

Bangladesh Academy for Rural Development: Home, About

Catalyst Microfinance Investors: Home, Shafiqual Haque Choudhury, MIX Market Profile

Forbes: Home, The World’s Top 50 Microfinance Institutions”, by Matthew Swibel and the Forbes Staff, December 20, 2007

MicroCapital event, May 19, 2008: “Asia-Pacific Regional Microcredit Summit 2008 Hosted by Microcredit Summit Campaign and Gema PKM”

MicroCapital article, June 4, 2008: “Bangladesh-based ASA to Allocate Funds from Historic $150m Equity Deal Toward Microlending Outside Bangladesh”

MicroCapital article, January 21, 2008: “Forbes’ Special Feature on Private Investment in Microfinance Includes Top 50 Microfinance Institutions”

MicroCapital article, February 4, 2008: SKS Microfinance Raises $37 Million in Equity Sale”

MicroCapital article, September 21, 2006: TIAA-CREF Creates $100 Million Global Microfinance Investment Program (GMIP). GMIP’s first investment to be with ProCredit Holding AG”

MIX Market: Home

OANDA: FXConverter

ProCredit Holding AG: Home, ProCredit Institutions

Sequoia: Home

Social Development Foundation: Home, About, Report 2003-2005

Swayam Krushi Sangam Microfinance: Home

TIAA-CREF: Home

United Nations Capital Development Fund: Home, Special Unit for Microfinance, About MicroStart, Nigeria, Philippines

United Nations Development Programme: Home

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