PROHAM expresses deep concern over the news that a private commercial company might take over the operations and ownership of Amanah Ikhtiar Malaysia (AIM). One reason cited in the news on February 25 is the difficulties AIM faces in repaying a government loan. The private company is said to make a commitment in repaying the outstanding sum in full.
AIM started in 1986 as an action research project on microlending among women based on the Grameen Bank model. This project was undertaken by the USM Policy Research Centre led by Prof David Gibbions and Prof Sukhor Kassim with the support of the Islamic Economic Development Foundation (YaPEIM) and the Selangor government.
Eventually, the pilot project was consolidated in 1988 and institutionalised as AIM under the Trustee Incorporation Act 258. It grew to become the largest microcredit and business development programme among poor women in Malaysia.
AIM has more than 380,000 women who are called Sahabat and part of the five-member self-help groups. AIM has an excellent repayment track record of close to 95%.
AIM also has a well tested group guarantee scheme with five-member groups and a number of self-help groups form a centre where compulsory weekly meets are held. They start with microloans of RM2,000 and below and move up to over RM20,000. Repayments are collected weekly at the group meeting.
AIM, as an institution, is well-distributed in 136 districts in all the states in Malaysia and has about 2,400 field staff members, a majority of whom are women. AIM Sahabat has established a cooperative called Koop Sahabat Amanah Ikhtiar.
The members’ savings are mobilised and they have more than RM500 million in the cooperative. The cooperative employs about 170 staff and about 60% are women. They undertake business activities and dividends are paid to members for their saving-investments.
The government has provided funds to AIM to reach out to the poorest women and to empower them through self-help, self-reliance, and savings mobilisation to start microbusinesses and move out of poverty.
There are many academic studies that provide empirical evidence to the success of this group guarantee scheme. The government is said to have provided soft loans, too, to AIM for relending to members.
Questions before us now
There are a number of unanswered questions that should be answered due to public interest in this case:
Why would the trustees surrender AIM to a private commercial enterprise? Who are they and how are they appointed? Who appoints the chair? Who do they represent? Who are they accountable to? Are they accountable to the Sahabat of AIM?
Are there representatives of the Finance Ministry and Economic Planning Unit (EPU) in the AIM board of trustees? Why is AIM unable to repay its soft loans when the women are repaying weekly?
How is AIM managed? Why is it unable to manage its loan profile in the same way it collects repayments from poor women?
Is the Finance Ministry recalling the outstanding RM600 million? What is the real reason for the takeover by a commercial private sector company, which does not have the Grameen experience of lending?
A human rights perspective
This matter is of public interest as the lives of more than 380,000 women and their families will be directly affected. This matter must be viewed from a human rights perspective as the right to development approach.
Proham calls on the federal government to establish an independent inquiry committee made up of representative from the Finance, Rural Development, and Entrepreneurship and Cooperative Development Ministries, the EPU, academics who have been researching poverty and a member of the Human Rights Commission (Suhakam).
The inquiry committee could make recommendations on how best to address these issues and if AIM can be placed under a cooperative framework as there would be greater transparency and accountability to the women who have been part of AIM over the years.
It is said that “Malaysia provides solid evidence that microfinance is indeed an effective tool for poverty alleviation” (Siwar Chamhuri 2000: 191). AIM has shown that the poor can be trusted and are bankable, even without collateral other than their trustworthiness. – The Vibes, March 1, 2021
Issued on behalf of Proham by chairman Tan Sri Michael Yeoh, deputy chair Prof Datuk Denison Jayasooria, secretary-general Khoo Ying Hooi and exco Lin Mui Kiang
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