Aga Khan Development Network

AKAM home

About AKAM

Country reviews

Products for SMEs

Housing Finance

Training Academy

Agricultural Lending


Call Centre


Contact information

Other AKDN focus areas


Microfinance in Afghanistan

Microfinance in AfghanistanAKAM offers loans to carpenters throughout Afghanistan as many areas, including Kabul, are going through a building boom. Building windows and doors can be a profitable enterprise for people with the right skills.The First MicroFinance Bank Afghanistan
There are 2.6 million households living below the poverty line in Afghanistan, with about 288,000 having access to microfinance services. In 2010, the sector experienced limited growth (11 percent by the end of 2010), due to the deteriorating security environment and the overall consolidation of the microfinance sector.

The First MicroFinance Bank Afghanistan (FMFB-A) sought to consolidate its position as the leading Afghan microfinance institution, and recorded a small client growth in 2010 while other microfinance institutions were struggling to offer services to their clientele. FMFB-A is currently the largest microfinance institution in Afghanistan in terms of outstanding portfolio size with US$ 45.7 million in 2010 in microfinance loans compared to US$ 39.8 million in 2009. Of the total portfolio, 31 percent of the client base is rural. The institution’s rural portfolio represents 13,490 loans disbursed valued at US$ 22 million.

As part of FMFB-A’s focus on ameliorating the quality of life of its clients by offering them financial access, the bank has a network of 45 branches, 17 of which are in rural areas, covering 14 provinces.

FMFB-A is exploring strategies that would make access easier for clients in remote areas and to make services more efficient. Marketing offices and mobile solutions to improve access are being looked at, as is the introduction of biometric technology available for fingerprint recognition to assist in managing potential risk and speeding up the processing and repayments of clients.

The number of individual depositors went up last year, from 37,342 in 2009 to 57,841 in 2010. The purpose of saving for the individual depositors is not necessarily about accumulating assets. It is often about smoothing consumption when a family’s income is irregular. In 2011 FMFB-A is hoping to review its deposit offerings to better meet clients’ savings needs (savings for education, for housing, for cash flow smoothing); and to encourage savers to gradually increase their savings balances.

In addition to microfinance loans, since 2005 FMFB-A has been offering small and medium enterprise (SME) loans in 18 branches, based in nine cities. At the end of 2010, the outstanding SME portfolio was 466 active borrowers with a portfolio of US$ 5.9 million. These SME borrowers support over 11,000 full and part-time jobs in Afghanistan.

With the support of the International Finance Corporation, a housing microfinance loan product was developed. The product is currently available in all urban branches and FMFB-A is working on replicating and adapting the product for rural areas. The product will expand with a Construction Advisory Service, with the support of the Aga Khan Planning and Building Services. This advisory service, which covers seismic and disaster mitigation, energy efficiency, sanitation, crowding reduction and proper ventilation, will ensure that individuals who are provided with loans make smart, long lasting investments by providing technical guidance on construction and upgrades that will improve the entire family’s health and safety.

FMFB-A’s pursuit of social goals is supported by an adherence to principles of financial stability and sustainability. It is through this model that the bank will be able to help the long-term development of Afghanistan.

2008 2009 2010
Microfinance Loans Disbursed:
Value (US$ '000)
59,035 64,396 79,486
Microfinance Loans Disbursed: Number 38,055 46,765 42,015
Microfinance Portfolio Outstanding: Value (US$ '000) 28,336 39,801 51,6
Microfinance Portfolio Outstanding: Number 35,644 42,975 47,949
Average Microfinance Loan Size
(US$ unit)
795 926 1,035
Percentage of Women Borrowers 13% 13% 15%
Microfinance Portfolio at Risk (%) 1.5% 0.4% 0.5%
SMEDisbursed: Value (US$ '000) 7,786 8,52 7,728
SMEDisbursed: Number 402 425 372
SMEOutstanding: Value (US$ '000) 5,246 5,736 5,892
SMEOutstanding: Number 414 456 466
SMEPortfolio at Risk (%) 2.1% 4.3% 2.2%
Number of IndividualSavers 24,785 37,342 47,752
Value of IndividualDeposits (US$ '000) 7,379 10,867 14,065
Number of Staff 647 907 829

Find out more:
Aga Plan Planning and Building Services
AKDN in Afghanistan

Back to top