11 February 2009
Thirty-five-year-old Nasreem is the owner of a carpet weaving and embroidery business in Afghanistan's capital, Kabul.
Today the business is a success, employing about 20 women and catering to a steady client base, including soldiers at Bagram Airbase, a major U.S. military facility outside the city.
But less than a decade ago, Nasreem and her family were living in exile in Pakistan, having fled the harsh rule of the Taliban. When the Taliban fell, the family returned to their homeland, where Nasreem just about made ends meet through casual work as a weaver.
It was only when she heard of a DFID-backed microfinance scheme operating in the area that the chance of a more stable and independent life opened up. The Microfinance Investment Support Facility for Afghanistan (MISFA) was created in 2003 to make small-business loans available to the country's poorest entrepreneurs.
After impressing MISFA's manager with a demonstration of her embroidery skills, Nasreem was rewarded with a start-up loan worth 30,000 afghanis (around £500). This enabled her to buy clothes, needles and other supplies needed to get the business off the ground.
Since then, there has been no looking back. Two further loans of 45,000 (£900) and 90,000 (£1,800) afghanis allowed Nasreem to take on new staff and turn out more carpets and handwoven items.
Profits are good, but the fact that she has created jobs is the biggest source of satisfaction for Nasreem. "It's a great honour for me," she says. "I really feel happy that I'm helping these women, that I'm providing them with some money."
Overcoming challenges
Microfinance is growing in Afghanistan (with only 12,000 people receiving loans in 2002, compared to nearly half a million today), but there are still challenges to overcome.
The most fundamental of these is to ensure that microfinance benefits the people who have the greatest need of it. Loans cannot be allowed just to go to people who find it easiest to repay them. For this reason, MISFA's services have been designed to appeal to the most vulnerable (in particular to women, widows and orphans), and it is estimated that three-quarters of its clients are on the poverty line or below it.
Security also continues to be an issue. In Afghanistan, it has often been difficult to extend microfinance services into the more volatile regions. However, a DFID-funded MISFA partner, BRAC Afghanistan, is leading the way in tackling this. Under its small-enterprise programme, 60 male shopkeepers are receiving 50,000-500,000 afghani loans (£800-£1,000), while around 90 women are receiving loans worth 20,000-30,000 afghanis (£290-£430) for tailoring, handicraft and farming businesses.
Measures are also in place to ensure microfinance funds aren't funnelled into illegal activities like the lucrative opium and marijuana industries, or the insurgency. Loan officers regularly monitor their clients, and group lending programmes encourage clients to keep an eye on one another's activities. All of these are crucial steps to ensuring that people like Nasreem and her staff, and increasing numbers of other Afghanis, are able to continue working and earning their way out of poverty.
Facts and stats
- Fifteen microfinance institutions currently serve around 500,000 people with small-and medium-sized enterprises in 24 of Afghanistan's 34 provinces. About 63% percent of microfinance clients are women and 40% live in rural areas. The average loan size is £312 per person and the average repayment rate is 96%.
- MISFA was created in 2003 by the Afghan government to oversee the microfinance sector and pool funding from international donors.
- DFID provided £40.5 million funding to MISFA between 2003 and 2009.