Microfinance is helping poor people become economically independent, instead of relying on humanitarian assistance. As of September 2006,
- 250,000 clients reached
- 3/4 are women
- 35% of the clients live in the rural areas
- Services reached 22 of the country’s 34 provinces
- US$120 million has been disbursed in half a million loans
- 98% of loans repaid on time
- Microfinance institutions mobilized $6 million in savings by poor people
- Loans used for service businesses and trade (58%), crops and livestock (22%), and handicrafts and manufacturing (20%)
- Average loan size was $200
- 14 existing microfinance service providers (in 2003 there were only 3)
- The sector was able to cover 80% of its operating costs
Afghanistan's banking system had collapsed and there were no microfinance institutions, leaving the entire country to rely on the informal financial system. In 2003, the Government, together with donors, decided to promote the development of microfinance services to help people move away from dependence on humanitarian assistance to becoming economically independent. With a further 5 million potential clients, demand for microfinance services in Afghanistan is huge, far outstripping current supply. Read more about microfinance efforts in Afghanistan
World Bank official comments on the successes and challenges in setting up microfinance institutions in Afghanistan
- Stephen Rasmussen, World Bank Lead Specialist for Finance and Private Sector Development: Most Afghans are Self-employed; Loans Help a Spectrum of People (audio, mp3)
On the outskirts of Kabul, three different families turned to microfinance to improve their lives. Read how the money benefitted each family.
Microfinance Helps Afghans Tap their Enterpreneurial Spirit
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