World Bank US$50 Million Grant Aims to Improve Access to Finance in Afghanistan
November 26, 2013
WASHINGTON, November 26, 2013 — The World Bank approved today a US$50 million grant, through International Development Association (IDA), to support the government’s efforts to improve access to credit for micro, small and medium enterprises in Afghanistan.
The Afghanistan Access to Finance Project will be implemented through the Microfinance Investment Support Facility for Afghanistan (MISFA) and the Afghanistan Credit Guarantee Facility. US$32 million will provide continuing support to the microfinance sector through MISFA and to the scale up of the Targeting the Ultra Poor program which provides technical and financial support to poorest households to help them graduate out of extreme poverty.
The rest of the grant, US$18 million, will support the expansion of the Afghanistan Credit Guarantee Facility which provides partial risk guarantees to loans issued by commercial banks and microfinance institutions to small and medium enterprises.
“The new project aims to increase access to financial services for micro, small and medium enterprises, which will in turn help these enterprises grow and stimulate jobs creation,” said Robert Saum, World Bank Country Director for Afghanistan. “Afghan enterprises are labor intensive and have the potential to absorb part of the growing Afghan labor force.”
The Afghanistan Access to Finance Project aims to achieve the following results by 2018:
· MISFA's partner microfinance institutions would count over 100,000 borrowers.
· The Credit Guarantee Facility would provide guarantee coverage to over 1,500 loans to small and medium enterprises.
· Over 3,500 households would have graduated out of extreme poverty.
This project complements the World Bank engagement with Da Afghanistan Bank (Afghanistan’s Central Bank) — notably through the ongoing Financial Sector Rapid Response Project — which aims at strengthening the capacity of Da Afghanistan Bank and at establishing key building blocks of financial infrastructure.
IDA is the World Bank's fund for the poorest. Established in 1960, IDA aims to reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.