Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

With reference to AK Bank, describe two features of for-profit microfinance providers.

Refer to Afghan Sun case study SL/HL P1 May and Nov 2018

Su is considering two possible locations for the production facility (lines 51–52). Explain the factors (reasons) that Su may consider when deciding between the two locations.

Features include:
• they provide small amounts of capital
• they provide finance to people who might otherwise not get finance (eg, poorer people, specific groups such as women)
• they often help business start-ups
• they lend to people without collateral
• they often operate in developing economies.

Candidates may interpret AK Bank as being a social enterprise and this is a reasonable assumption. Although it is unusual to assume it is not a social enterprise this will also be allowed.
Comments such as ‘low’ or ‘high’ interest rates are too vague unless developed.
Context will come from the information given about AK Bank. Two different contexts are needed. Context includes the activities in Bangladesh, the fact that it will work with a social enterprise such as AS, support for other social causes.

Do not reward answers that say “it’s for profit” and/or “it provides finance” unless these are developed.

Mark as 2 + 2.

Accept any other relevant feature.

Award [1] for each correct feature identified and [1] for a description of how that feature relates to AK. Award a maximum of [2] per feature.

Refer to Paper 1 markbands for May 2016 forward, available under the "Your tests" tab > supplemental resources.

This is not an AO3 question so there does not have to be a recommendation.

Factors/reasons include:

For country B:
• This is a social enterprise, so a developing economy may be important.
• Distribution could be a problem, so simple transport links are favourable.

But:
• One party state may be high risk and seen as unethical.
• Quality is an issue, so skills are important.

For Country A:
• Free market economy, high skills.
• Trading easier.
• Stable currency, stable government.

But:
• Does it need the work?
• Costs likely to be higher.
• Finance not so important so how relevant are grants, low rents?

NB A decision is not required. However, an answer that works towards a decision may discuss factors and can be rewarded.

Accept any other relevant analysis.

Marks should be allocated according to the paper 1 markbands for May 2016 forward section A. 

Award a maximum of [3] for a theoretical answer.

Award a maximum of [4] if explanation does not effectively bring out the factors/reasons or only considers one country

Award a maximum of [5] if the explanation of more than one factors/reasons is mainly descriptive, but in context.

For full marks, the explanation needs to be developed and in context and both countries considered.