Where We Work : Afghanistan : Microfinance

Across Afghanistan, every week, nearly 200,000 poor women attend their local BRAC microfinance Village Organisation (VO) meeting to repay their weekly loan instalments, and receive additional support for their various small businesses. More than 11,000 men and women are also involved in BRAC’s agricultural microfinance and small enterprise schemes which provide accessible financing and business advice to sharecroppers and small traders who are excluded from mainstream banking services.

BRAC believes that community partnerships and institution building are essential in sustainable development and in spreading knowledge to future generations. We offer three different microfinance products – microloans, small enterprise loans and seasonal agricultural loans.

The microloans are specifically designed to assist poor women to undertake income generating activities. We go directly to the women and meet them in their villages, homes and places of work.
 

Programme Description

BRAC’s microfinance programme has been designed to serve large numbers of the poor, especially women, with reliable access to cost effective financial services. Once a loan is paid off, the borrower may request another larger loan.


Programme Objectives

1. Expand financial inclusion in Afghan society by lending to the poor, farmers and small entrepreneurs
2. Maintain a gender lending focus of not less than 80% women
3. Focus on extending microfinance to rural areas
4. Promote and train Afghan national employees to operate the microfinance programme


Programme Components

Women’s Groups: Community partnerships and institution building are essential for poor people if they are to change their economic, social and political conditions. We deliver our microfinance and other programmes through organising groups of poor women who come together to improve their socioeconomic position.

BRAC microfinance branch offices conduct area surveys and consult with community leaders and local elders to select the 20-30 members of each group. Prospective members must have been residents of the village or area for at least five years. Only one member of each household is considered and widows are encouraged to join.

The group is then sub-divided into smaller peer groups of five, each with its own elected leader. The members of the small groups take co-responsibility to resolve peer repayment problems. This group meets weekly with its assigned BRAC Credit Officer to make loan payments and discuss credit decisions and other topics of mutual interest.

Microloans

Microloans are exclusively for poor women participating in Village Organisations (VOs). Borrowers range in age from 18-60, with no minimum education requirement. BRAC lends to women who are not served by other microfinance institutions.

Key features of a Microloan

• Loan Range: USD 100-2,000
• No physical collateral needed
• Repayment in equal weekly instalments
• Death benefit provided

Small Enterprise Loans

The Small Enterprise Programme (SEP) offers loans to individual entrepreneurs, both male and female, seeking to expand existing small businesses. These small entrepreneurs would otherwise have limited access to the formal financial system, their needs too large for microloans but with not enough collateral for commercial banks. The SEP loans are typically invested in trading, small-scale manufacturing, service segment and agri-business.

Key features of a Small Enterprise Loan

• Loan Range: USD 1,000-14,000
• Repayment in equal monthly instalments
• Collateral in the form of a deed on the home or business property

Microfinance for Small and Marginal Farmers

In Afghanistan, we have diversified our microfinance services to respond to the needs of small and marginal farmers – two new microfinance products have been successfully introduced that support the Afghan Government’s commitment to stabilising and improving agricultural economy to achieve food security and increase employment.

As well as providing microfinance to farmers, under our Agriculture Livestock Development and Credit Support Programme (ALDCSP) we provide training in livestock, poultry, nursery and vegetable crops and grain production through our Agricultural Extension Agents. We also assist in accessing markets for agricultural crops by linking farmers with buyers.

Key features of ALDCSP loans:

• Loan range: USD 300-2,000
• Payment is flexible according to the crop cycle or market cycle for animal production.
• Loans are generally made to groups, where collateral is provided jointly.