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FEATURE STORY

Access to Credit Transform the Lives of Many Afghans

March 20, 2015

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Fatima, 48, has been doing beadwork and tailoring for nearly 30 years. Four years ago, she decided to secure a loan of 10,000 Afghanis (about $175) to invest in her business. This is changing her life as well as the life of her family. 

Rumi Consultancy/World Bank

STORY HIGHLIGHTS
  • Loans obtained through microfinance institutions are helping small entrepreneurs across Afghanistan increase revenues and improve living standards.
  • The Microfinance Investment Support Facility for Afghanistan (MISFA) has been supported by the World Bank and Afghanistan Reconstruction Trust Fund (ARTF) since 2003.
  • MISFA has provided, cumulatively, more than $1 billion loans to over 2 million clients, more than a third of whom are women.

KABUL CITY, Afghanistan – Sleeping next to a warm heater in a small room, the baby breathes comfortably. Only three months old, she is probably the luckiest member among the family of seven members living here. 

A few years ago, the family of the baby girl did not have the means to keep their rooms warm during the cold seasons, but everything has changed with the wise decision of Fatima, the baby’s grandmother.

Fatima, 48, has been doing beadwork and tailoring for nearly 30 years. Four years ago, she decided to secure a loan of 10,000 Afghanis (about $175) to invest in her business.

“First, I got a loan of 10,000 Afghanis. When I repaid my initial loan, I borrowed 40,000 Afghanis the second time. After that, I secured two different loans of 50,000 Afghanis each,” says Fatima. “My business thrived with every passing day, and now we have everything.” 


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Fatima used to produce five to six shirts a day, but now production has spiked to 30 shirts per day, and her income increased from 200 Afghanis ($3.50) per day to 1,000 Afghanis ($17.50). The shirts Fatima sews are sold to a local clothing company, which then supplies to handicraft markets. 

Rumi Consultancy/World Bank

" When I repaid my initial loan, I borrowed a second time. After that, I secured two additional loans. My business thrived with every passing day, and now we have everything. "

Fatima

Tailor

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The beauty of the finished product that Fatima has worked hard to complete. She is now much better equipped to provide for herself and her family. 

Rumi Consultancy/World Bank

Fatima and her husband, a 52-year-old driver, live with their family in a mud house built on a hilltop in the Dehmazang neighborhood of Kabul City. It is an informal settlement in the city center where poor people live. Fatima works from her house, together with her daughter-in-law and sister-in-law.

Boost to job creation and living standards

Fatima was able to secure the loans through a microfinance institution supported by the Microfinance Investment Support Facility for Afghanistan (MISFA), which has provided a great opportunity for her and thousands of others across Afghanistan to improve their livelihood. The program has received support from the Afghanistan Reconstruction Trust Fund (ARTF) since 2003 and World Bank’s International Development Association (IDA) since 2007.

In November 2013, IDA provided $50 million to the Access to Finance Project, which gives further support to MISFA to increase access to financial services of micro, small, and medium enterprises. To date MISFA has provided, cumulatively, more than $1 billion loans to more than 2.1 million clients, 37 percent of whom are women.

MISFA’s Managing Director, Bahram Barzin says: “An average of 1.85 jobs are created with the issuance of each microfinance loan. This program is also contributing to the economic development of the country. Our clients are people whose living standards are very low, and these microfinance loans have made tremendous contributions in improving their living standards.”

Reza, 21, Fatima’s eldest son and father of the baby, agrees that life has improved. He works as a truck driver and says that their difficult life was affected by regular crises before his mother’s investment in the sewing and beadwork business. The family had owed people a lot of money, he adds.

“When you go and ask someone to lend you an amount of money for a month or 20 days, first they refuse to lend you the money and even if they do, you will not be able to repay the money back in due time,” Reza points out. “But the microfinance lending program is wonderful, because you receive the money and pay back 5,000 ($87) or 6,000 ($104) Afghanis per month, it does not overwhelm you and you don’t feel the load.”

Significant impact on livelihoods

The impact of the microfinance loans on Fatima’s and her family’s lives is far greater than they anticipated four years ago. Fatima used to produce five to six shirts a day, but now production has spiked to 30 shirts per day, and her income increased from 200 Afghanis ($3.50) per day to 1,000 Afghanis ($17.50). The shirts Fatima sews are sold to a local clothing company, which then supplies to handicraft markets.

Saleh Asil, 18, runs a shop selling these beaded shirts in the Qala-e-Fatullah neighborhood of Kabul City. He says the market for shirts with beadwork is thriving, particularly in spring and summer.  The result is that even employees like Saleh reap a good income.

According to Saleh, he sells 7 to 10 shirts with beadwork in the warmer seasons, at prices ranging from 400 Afghanis ($7) to 1,600 Afghanis ($28) each. “I have been working in this business for one and a half years. The owner of the store pays me a salary of $200 a month,” says Sahel, who is the sole provider of his family.

Sixteen-year-old Tabish is also running a shop selling beaded shirts in the same area. He believes providing opportunities for poor women to work on handicrafts will not only help them improve their livelihood, but will also help people such as himself to find a source of good income.

“We have customers, because we sell these shirts, and most of our customers favor handicrafts made by women because they are very delicate,” Tabish observes. 


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