WASHINGTON, April 3, 2024—A grant in the amount of $16 million from the Afghanistan Resilience Trust Fund (ARTF) has been approved to support financing for micro and small enterprises in Afghanistan, with a focus on women and women-led businesses.
The grant will support the Empowering Microfinance and Enterprises for Resilience and Growth (EMERGe) Project and will be provided directly to the Aga Khan Foundation USA.
The project will help revive microfinance providers active in Afghanistan by clearing their balance sheets of old loans that cannot be repaid due to economic conditions arising after August 2021. This will help increase their liquidity so they can provide new financing to micro and small enterprises. The project will also provide technical assistance to the microfinance providers to strengthen the micro-finance sector, digitize business proceses, and train staff to prioritize lending to women and women-led businesses.
“Supporting micro-finance providers in Afghanistan is one of the few viable options at this time to promote access to finance in Afghanistan, especially for women,” said Melinda Good, World Bank Country Director for Afghanistan. “This project aims to strengthen the microfinance sector in Afghanistan so that small business owners and women-led businesses can access the credit they need to rebuild their businesses, rebuild their lives, and help revive the private sector.”
The project will also provide business development services that focus on building a pipeline of bankable micro and small enterprises and enterprises that proactively create jobs for women. These services will help women-led small businesses transition from informal savings groups to formal credit channels.
The project will also establish a Credit Viability Fund (CVF), implemented by the Agha Khan Foundation USA’s Office in Afghanistan. The CVF will help eligible micro, small and medium-size enterprises that have benefited from the business development services to access formal financial channels.
"The EMERGe project was developed after extensive stakeholder consultations, including microfinance providers and chambers of commerce, especially those led by women. This helps to ensure it offers solutions to unlock access to finance for small businesses in Afghanistan and to make the flow of donor funds into the sector more sustainable,” said Namoos Zaheer, Senior Financial Sector Specialist and World Bank Task Team Leader for the project. “The vision is to foster and sow seeds for sustainable solutions to support livelihoods, particularly for women.”
Financial inclusion is a persistent challenge in Afghanistan, with nine out of 10 Afghan adults excluded from the financial system – meaning they have no bank account or access to credit or loans. Only 5 percent of Afghan women have some form of financial transaction account, compared to 10 percent of men. This is a tremendous barrier to women’s economic empowerment and their participation in economic life.
The EMERGe project, as with all World Bank and ARTF-supported projects since August 2021, includes specific provisions to ensure that women benefit from project activities.
The project will focus on 15 provinces (Badakhshan, Baghlan, Balkh, Bamyan, Daikundi, Faryab, Herat, Jowsjan, Kabul, Kunduz, Nangarhar, Parwan, Samangan, Sar-e-pol, and Takhar) where the Aga Kkan Foundation is currenlty working and where microfiance providers are active.
The ARTF grant is provided to the Aga Khan Foundation USA and will be implemented by two implementing partners: The Aga Khan Foundation-Afghanistan and the Afghan Credit Guarantee Foundation (ACGF). The ACGF was established in 2004 and works to enhance access to finance for Afghan micro, small, and medium enterprises by providing credit guarantees and technical assistance.
