Financial Access for Investing in the Development of Afghanistan
Financial Access for Investing in the Development of Afghanistan (FAIDA), was a three-year USAID-funded project that assisted the Government of the Islamic Republic of Afghanistan and the private sector in developing legal framework and improved market infrastructure. As a result of program activities, financial sector institutions and their business partners were better able to create value, providing growth and employment opportunities for Afghans. In addition, FAIDA supported USAID’s local Afghan partners by building institutional capacity to deliver finance where it is most needed moving forward.
Agriculture is the most common source of income for citizens in Afghanistan. Accordingly, FAIDA focused on agribusiness growth to provide the economic stability necessary to expand the job market in rural areas. Working under subcontract with Chemonics International, CNFA handled micro-level activities to expand the depth and reach of Afghanistan’s financial sector to agricultural value chains and underserved MSMEs.
Access to credit for Micro, Small and Medium Enterprises (MSMEs): CNFA’s Enterprise Component focused on two central objectives. First, facillitation of access to business loans for Afghan enterprises and entrepreneurs by providing technical assistance, including drafting business plans and gathering loan underwriting documents; and second, providing assistance to banks in recruiting and training loan officers in newly developed Shariah-compliant loan products moving forward.
Of note, CNFA facilitated the organization of FAIDA’s first Access to Finance (A2F) Fair in Kabul, held October 2-3, 2012 with support from the Afghanistan Banker’s Association. Over 40 financial institutions, including banks, microfinance institutions, insurance companies, telecommunications and business support services, exhibited their products and services to over 1,500 Afghan firms and visitors. The event hosted workshops on topics such as Access to Finance for Women, Construction Finance, Trade Finance, Leasing, and Insurance.
Agriculture Value Chain Financing Opportunities: CNFA laid the groundwork to complete the following under FAIDA Ag-extension:
- Assisted the Afghan National Seed Organization (ANSOR) to develop an Islamic loan product to extend to approximately 40 of its 100 members who wanted to access Sharia-compliant loans, and to increase the size and number of its conventional loans;
- Assisted seven women’s cooperatives that were pre-selected by the MAIL, UNDP and ACE to develop their respective business plans and loan applications for the expansion of their existing enterprises;
- Examined the feasibility of and facilitated lending for the establishment of grain storage facilities utilizing a warehouse receipt system, to better stabilize the supply and price of basic grain throughout the year;
- Provided Sharia-compliant lending to poultry feed millers to purchase ingredients, manufacture feed and provide it on credit to broiler producers.
Access to Finance through Farm Service Center Association of Afghanistan (FSCAA): CNFA facilitated the creation of the FSCAA in 2009 under the USAID Afghanistan Farm Service Alliance (AFSA) to serve as an apex organization. The FSCAA drove expansion and enhancement of a network of FSC stores and improved commercial input supply infrastructure in Afghanistan. Through FAIDA, the FSCAA gained a unique opportunity to strengthen its national presence and play a vital role in the development of the agricultural sector. FAIDA’s initiatives focused on ensuring the FSCAA’s financial sustainability and building a strong association that offered professional and technical services to its 25 agribusiness members.
In collaboration with ACE/USAID, CNFA and FSCAA, FAIDA developed a concept paper on introducing access to finance for Farm Service Centers and Ag Depots through a credit line to the FSCAA. The concept paper described a detailed approach for extending the loan, as well as the duties and responsibilities of each stakeholder. The project submitted its concept paper to ACE/USAID Credit Committee and $5 million US dollars was approved, with a recommendation to submit a full loan package. Subsequently, FAIDA provided assistance to Farm Service Centers, Ag Depots, and Agro Dealers during the loan generation process.
Promoting Bank Credit through Associations: Our team identified agriculture, construction and carpet as sectors that would best benefit from FAIDA activities. FAIDA worked with the Afghan Builders Association, Kabul Chambers of Commerce, agriculture cooperatives and associations, such as the FSCAA, to facilitate bank lending. CNFA built the capacity of these associations to be capable of advising their members on methods to acquire bank credit.
Incorporating Gender Equity: FAIDA provided specially targeted business development training and mobile money activities for Afghan women. CNFA’s Enterprise Component promoted loans to female entrepreneurs through the release of requests for proposals (RFP). At the micro-level, FAIDA facilitated direct access to finance and business training for women through numerous activities:
- Partnership with Mobile Network Operator (MNO) Etisalat to promote women’s’ access to finance together with the MoWA and the Kabul Women’s Garden;
- Development of a concept note and credit scheme for the Afghan Women’s Business Federation to link women’s MSMEs with the formal financial sector;
- Training of 42 businesswomen from Nangahar on developing business plans, financing their projects and marketing during a successful two-day Business and Gender workshop in Jalalabad, Nangahar – the first in a series of workshops held throughout the country.
- 336 financial sector employees trained;
- 38 financial sector certifications programs established that meet international standards;
- 10,252 active Mobile Money users;
- $12,683,292 in Mobile Money transactions.