IDLO Microfinance Policy and Regulation Survey: Afghanistan

This paper presents an overview of microfinance development and regulation in Afghanistan. As of August 2008, there were 15 MFIs disbursing small loans and providing savings services to more than 451,000 people across 23 provinces in the country. Microfinance in Afghanistan includes the following features:

• 69 percent of loans are disbursed in urban areas;
• Most MFIs give preference to women clients, and some work exclusively with women clients for small loans;
• Amount of loans outstanding was US $113,688,181, while client savings outstanding was only US $12,631,767;
• Microfinance services are currently provided by formal and semi-formal institutions as well as informal sources;
• Agricultural Development Bank, the Mortgage and Construction Bank and the Export Promotion Bank work in the area of development;
• In 2005, the Rural Program was institutionalized in the Afghanistan Rural Micro Credit Program (ARMP);
• ARMP provides credits to farmers and traders in rural areas;
• Microfinance Investment and Support Facility for Afghanistan Ltd pools diverse donor funding mechanisms and converts them into flexible support for MFIs.

Afghanistan does not have specific regulations to address microfinance activities. Diverse laws apply to different microfinance service providers.