MICROCAPITAL STORY: International Fund for Agricultural Development (IFAD) Grants $23.9m to Afghanistan for Rural Microfinance and Livestock Support

The International Fund for Agricultural Development (IFAD), a United Nations agency, has announced a grant of USD 23.9 million to create the Rural Microfinance and Livestock Support Program in Afghanistan. This is the first IFAD program in Afghanistan and will be implemented in the northern region. The microfinance portion of the program will tailor microfinance services to the rural population, especially farmers who lack access to microcredit. It will be implemented in partnership with the Microfinance Investment Support Facility for Afghanistan (MISFA).The Ministry of Agriculture, Irrigation and Livestock (MAIL) will be the lead agency for the livestock part of the program which will focus on women headed households and pilot various private-public partnership models. It is not clear how the funding will be split between the two sections of this program.

Microfinance in Afghanistan is provided exclusively through MISFA. As at the end of February 2009, 15 microfinance institutions (MFIs) received funding from MISFA and were the implementing partners for microfinance in the country. They provide loans in 24 of the 34 provinces, have 286 branches, and have served 439,821 clients with either loans or savings products to the end of February 2009. The cumulative Gross Loan Portfolio for these 15 MFIs was USD 103.8 million for the same period. The average outstanding loan balance was USD 306 and 62 percent of the clients were women. In addition the MFIs have created jobs by providing employment to 4,491 people. The MIX Market, the microfinance information clearinghouse, provides financial and other details on 14 of the 15 MFIs. In late 2006 MISFA partnered with five banks to provide small and medium enterprise (SME) loans. As at the end of February 2009, 641 loans had been disbursed for a total value of USD 18.1 million. Loans range from USD 3,000 to USD 300,000.

MISFA was established in 2003 to promote donor and government coordination in the microfinance arena and build the Afghanistan microfinance sector. In 2006 MISFA became a limited liability non-profit company owned by the Ministry of Finance of the Islamic Republic of Afghanistan. Organizations including the Government of Afghanistan, Canadian International Development Agency (CIDA), UK Department for International Development (DFID), World Bank, Consultative Group to Assist the Poor (CGAP), USAID, and the Australian Agency for International Development (AusAID) all provide funding to MISFA. For further information on the creation of MISFA refer to this MicroCapital article.

The IFAD is a specialized agency of the United Nations and was established in 1977 as an international financial institution following the food crisis in Africa. Its mission is to enable poor rural people to overcome poverty in developing countries by working with governments, non-government organizations (NGOs) and other partners to increase access to financial services, technology and other resources. Loans are provided at highly concessional, intermediate and ordinary terms, depending upon the borrower’s per capital GNI (gross national income). Grants are limited to 10 percent of the total loan and grant program. The IFAD currently works in 115 countries. Since its inception, IFAD has invested USD 10.6 billion in 796 programs and projects that have reached over 330 million women and men. As at 31 December 2008 the IFAD had Total Assets of USD 7.2 billion.

Sally Levy, Research Assistant

Additional Resources:

IFAD Press Release: IFAD provides US$23.89 million to Afghanistan for rural microfinance and livestock

MicroCapital Story: Islamic Microfinance – What Next? Nigeria Promotes “Non-Interest” Banking

MicroCapital Who’s Who in Microfinance: The Microfinance Investment Support Facility for Afghanistan (MISFA)

MISFA: Home

IFAD: Home

MIX Market: Afghanistan