About Afghanistan

General Information

Afghanistan, one of the poorest nations in the world, has been in turmoil for the past two decades. A series of violent events have devastated the economic and social structure. Human rights abuses under the reign of the Mujahadeen and the Taliban were pervasive and extreme and sadly, the women of Afghanistan bore the brunt of their atrocities of which the whole world is now aware. Since the new government has taken over, women’s economic opportunity and freedom has increased greatly. Yet serious challenges persist due to traditional beliefs as to the role of women, particularly in the rural areas, and the frailty of the central government. A majority of Afghan women are still struggling financially due to the lasting effects of the war and lack of employment opportunity for the educated and uneducated women of the country.

Annual per capita income is estimated to be at $250
There is rampant urban and rural unemployment calculated at 50% by the latest 2005 country reports
The literacy rate is 28% for the entire country, one of the lowest in the world
50% of Afghans can be classified as poor.
The unemployment rate is figured to be at 50%

Despite the tragedies that have befallen Afghan women in the past decades and the deep-rooted gender differences and inequalities that have always existed in Afghanistan, Afghan women have proven themselves to be among the strongest and most resilient and entrepreneurial women in the world. Time and time again after the loss of a father, brother, husband, child, the destruction of their homes and their villages they have risen above the tragedies, determined to live and to preserve what they have left.

Currently, in Kabul it is hard to miss the emergence of a thriving marketplace of small businesses in every street of the capital. Located strategically at the crossroads of Asia, Afghanistan has a long-standing tradition of tradesmen, craftsmen and a natural entrepreneurial spirit. That tradition has not been without its effect on women. Although the literacy rate has always been low in Afghanistan, Afghan women are taught vital skills such as sewing, embroidery, handicrafts, animal husbandry and others at a very young age. Those same skills are the ones that the women can use today to build a home business and feed their families. Finally, Afghanistan’s long-suffering women have a chance to vote, pursue an education, return to their careers and join the job force.

Culture

Currently there is a strong trade market in Kabul and a renewed sense of hope and optimism since the first democratic elections and the progress made so far. In addition Afghans are naturally entrepreneurial people and have learned to survive under the most difficult conditions imaginable. We have experienced an extremely high degree of integrity among the poor with respect to their obligation to repay loans, a virtue of the Islamic and Afghan culture. In spite of their condition, Afghan women have learned practical skills and, given a chance, are quick and eager to learn more.

While women in Afghanistan were relegated to the home and continue to be denied many active roles in society, Afghan women are in fact quite industrious and skilled. In their homes, they have developed craft working skills for at home enterprises. In rural areas, they have always been very active in food production and animal husbandry. Thus, while women at work may seem at first contradictory to common perception of Afghan culture, the opposite is true.

Financial Situation of Women

Currently large number of women are responsible for supporting their children and extended family because either they are either widows, their husbands have become disabled during the war, the husbands are have become addicted to heroine, or the husband is too old to work. Often young girls are bartered to settle debt with much older men to settle debts. According to a recent study, 80% of marriages in Afghanistan are arranged, majority of them without the consent of the bride. In a country with rampant unemployment, jobs are scarce for women, even if they are literate. Thus, microfinance in Afghanistan is a great tool to reduce the vulnerability of women fro all the reasons above.

About Microfinance in Afghanistan

As early as 2002, microfinance was almost non-existent in Afghanistan. The economy of rural livelihoods was, and still is, devastated and large numbers of rural poor are indebted to poppy dealers. In fact, 90% of the current economy is financed by money lenders. Although Afghanistan has established a strong banking system in the past 5 years, yet there is no credit system available for the poor to access. Microfinance has become one of the fastest growing and most successful development programs in the country mainly due to the following reasons:

Huge influx of returnees from Pakistan and Iran, each bringing with them a new skill or micro business
Unemployment rate is over 50% in the country
Afghans are naturally entrepreneurial people
Microfinance made access to credit available in both rural and urban areas
Men and women are given an opportunity to make their lives better – empowerment for the first time
Coordinated and centralized delivery of funding to MFIs working in the country
Well managed sector with accountability and transparency

The Vision for Microfinance in Afghanistan

In 2003 the Government of Afghanistan decided to actively support microfinance -- the development of a financial sector that would provide access to poor people--with the full support of international donors. Commercial banks had not yet been established and it was clear that even after beginning operations it would take a long time before they would be in a position to serve the vast majority of people in Afghanistan. The Microfinance Investment Support Facility for Afghanistan was established under the Ministry for Rural Rehabilitation and Development as the vehicle through which Government and donors would channel technical assistance and funding to build up the lower end of the financial sector. The structure was intended to

Coordinate donor funding so that the conflicting donor priorities endemic in post-conflict situations do not end up duplicating effort and distorting markets;
Help young microfinance institutions scale up rapidly, offering performance-based funding for operations and technical assistance;
Build systems for transparent reporting and instill a culture of accountability.

MISFA was clear about its role. It had to make the best use of limited public funds over a limited period of time to build up institutions that provide services to poor people and yet play by commercial rules. The three main goals for the microfinance sector were to scale up as rapidly as possible to serve poor people throughout Afghanistan, especially women; to use public funding to invest in institutions that would become sustainable and able to grow further without requiring more subsidies; and to make a transition from international organizations with microfinance expertise to Afghan organizations with local expertise.

Below are updates for the sector as of May 2007. The most updated information can also be obtained from www.misfa.org.af

Outreach - Overall
Provinces	23
Districts	100
Active Clients	364,786
Active borrowers	314,208
Client dropout (cumulative)	112,546
No. of loans disbursed (cumulative)	739,352
Amount of loans disbursed, $ (cumulative )	252,790,523
No. of loans outstanding	314,208
Gross Loans outstanding, $	83,705,846
Client Savings outstanding, $	9,176,908
Outreach - Vulnerable Section
Women Clients	247,293
Widow clients	3,782
Disabled clients	92
Returnee clients	11,925
Women as % of Total Clients	68%
MFI Resources employed
Branches	233
Male staff	2,088
Female staff	1,591
Total staff	3,679