FINCA Afghanistan to Expand Rural Lending and Reach 90,000 Clients by 2009

Through a new U.S. Agency for International Development (USAID)-sponsored program, FINCA Afghanistan will expand lending to foster stability and promote alternative livelihood projects in rural areas of the country, where illegal opium poppy cultivation is a leading source of income. USAID’s Agriculture, Rural Investment and Enterprise Strengthening Program (ARIES) is providing $10 million in funding, as a part of an $80 million rural finance project, to FINCA to expand our Shariah-compliant microfinance services to promote agricultural and non-agricultural employment .

The prime implementing partner for the ARIES program is the Academy for Educational Development (AED) under the direction of its Leader with Associates (LWA) cooperative agreement. FINCA’s very successful program in Afghanistan, launched in 2003 , is currently serving nearly 35,000 Afghan clients with loans averaging $342. Their repayment rate is over 99 percent, and they have saved more than $240,000 to improve the quality of life for their families with better food, education, healthcare and housing—and to reinvest in their growing businesses. Our goal is to serve 90,000 Afghan clients by 2009, many in rural areas; some 54,000 of these clients will be reached through USAID's ARIES Program.

The need, and the potential, for microfinance are even greater in Afghanistan than in most developing countries, because the informal business sector is the backbone of the economy. As much as half the adult population – up to eight million people – makes a living from microenterprise.

Building a successful program in Afghanistan has been one of the greatest challenges FINCA has ever faced. FINCA Afghanistan’s financial products are supported with service charges rather than interest payments because Islamic law prohibits the collection and payment of interest. We worked with a senior cleric to obtain a fatwa, a religious decree, on the service charges to assuage the concerns of clients. FINCA Afghanistan focuses outreach efforts on women, ethnic minorities, and returning exiles—the people facing the greatest challenges in today’s Afghanistan.

The infusion of monies from this grant will help ensure that tens of thousands more Afghan citizens will be given a hand up, not a hand out, to carve their own pathways out of poverty.