Afghanistan

Financial Access for Investing in the Development of Afghanistan

Overview:

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.

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.

Program Approach:

• Access to Credit for Micro, Small and Medium Enterprises (MSMEs):CNFA’s Enterprise Component focused on two central objectives: the facilitation of access to business loans for Afghan enterprises and entrepreneurs by providing technical assistance, including drafting business plans and gathering loan underwriting documents; as well as providing assistance to banks in recruiting and training loan officers in newly developed Shariah-compliant loan products.
• Access to Finance (A2F) Fair in Kabul: CNFA facilitated the organization of FAIDA’s first Access to Finance (A2F) Fair in Kabul in 2012. Over 40 financial institutions, including banks, microfinance institutions, insurance companies, and 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 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 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, and 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;
• Promoting Bank Credit through Associations:CNFA 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 and ensured their capability of advising members on methods to acquire bank credit;
• Incorporating Gender Equity:FAIDA provided targeted business development training and mobile money activities for Afghan women. CNFA’s Enterprise Component promoted loans to women 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 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.