From Sub-Saharan Africa to the Indian Subcontinent, asset finance and leasing companies are doing invaluable, innovative work to finance critical assets for low-income and informal borrowers. But unlike banks and microfinance institutions, many of these companies do not have deep experience in organizing a credit operation, mitigating risk throughout a credit transaction or managing a portfolio of loans or leases. This has important implications for the ability of asset finance companies (AFCs) to achieve financial sustainability: poor credit risk management will prevent them from turning receivables into cash, inhibiting their potential scale.
This Technical Guide summarizes the lessons learned from those engagements and offers executives and managers at AFCs suggestions on how they can manage credit risk while growing their operations. Investors and other sector stakeholders may also find this guide useful to inform their own due diligence and TA.