The 2005 Aga Khan Agency for Microfinance Annual Report

WORKING IN CONCERT WITHTHE AGA KHAN DEVELOPMENT NETWORKDespite the existence of more than 12,000 microfinance institutionsin the world, the promise of microfinance faces severalchallenges. Chief among these is the application of microfinance inisolation from social and cultural issues. Without addressing otherdetermining factors, the effect of microfinance is circumscribed,especially where infrastructure is poor, trade is impeded andtransaction costs are high. For example, when an entrepreneurcreates a new product or a farmer grows a surplus, he or shemight not be able to take the output to a market due to a lack oftransport. Other factors such as armed conflict, a lack of accessto basic healthcare and education, endemic corruption or a weakenabling environment can inhibit entrepreneurial activity.As an agency of the Aga Khan Development Network, AKAMis well-placed to benefit from the complementary developmentactivities and initiatives of its partner agencies. Indeed, as the heirof the microfinance activities of the Aga Khan Fund for EconomicDevelopment, the Aga Khan Foundation and the Aga Khan Trustfor Culture, AKAM enjoys strong support and working relationshipswithin AKDN.Founded and guided by His Highness the Aga Khan, AKDN bringstogether a number of international development agencies, institutionsand programmes that work primarily in the poorest partsof South and Central Asia, Africa and the Middle East. All AKDNagencies are non-denominational and conduct their programmeswithout regard to faith, origin or gender. They all operate in concertwith the other agencies of the Network.The Aga Khan Foundation (AKF) focuses on rural development,health, education, environment and the strengthening of civil society,with a special emphasis on the needs of rural communities inmountainous and other resource-poor areas. Its community-baseddevelopment approach, first developed in Pakistan and India, hasbeen replicated in many other environments in Asia and Africa.ABOVE: A SMALL VILLAGE COMMUNITYIN JALALABAD, AFGHANISTAN RECEIVEDMICROFINANCE ASSISTANCE TO BUILD AGIRLS SCHOOL.BELOW: RICE PRODUCTION HAS IN-CREASED IN MADAGASCAR AS MUCH AS600 PERCENT THANKS TO A COMBINA-TION OF AGRICULTURAL INPUTS ANDMICROFINANCE.LEFT: TO INCREASE INCOME FROM NON-AGRICULTURAL ACTIVITIES, AKAM OFFERSSMALL LOANS FOR THE PURCHASE OF LIVE-STOCK AND RELATED PROJECTS, SUCH ASTHIS VETERINARY HOSPITAL IN TAJIKISTAN,WHICH BORROWED US$ 1,000 TO BUYMEDICAL SUPPLIES.11