A long line of women extends down the staircase of the Ariana Financial
Services Group (AFSG) office in Kabul. The women are eagerly waiting to
collect their small business loans.
"I finished paying off my first loan, and am about to collect my
second loan for 10,000 Afghani [about $200 USD]," says Maroofa. "The
loans help me to buy goods for my family's grocery store, so we can
expand our inventory. Since I took the first loan, our sales have
really improved because we can stock items that are expensive and have
to be imported."
In April 2003, Mercy Corps launched a microfinance program,
Ariana Financial Services Group, in Afghanistan to assist small
business owners and entrepreneurs increase their incomes, expand their
businesses and improve their quality of life.
"By extending small loans of $50 to $500, Mercy Corps is able to change
the lives of many poor Afghans, who are struggling to make ends meet on
a daily basis with their small businesses," says Tom Shaw, Mercy Corps'
Microfinance Program Director in Kabul. "These micro-loans are meant to
help the loan recipients take their business to the next level and
allow them to enjoy a greater percentage of the income from their
Many small or cottage businesses are forced to rent equipment, sell
products through a middleman, or rely on advances to purchase materials
for products. These types of arrangements usually result in the
business person losing up to 50% of the income that might have
otherwise been part of their profit. Thus, the cycle continues since
they have no way to get finance that will take their business to the
next level, when so much of their potential income goes to the
Mercy Corps' microfinance program was started with an initial
grant from the Bill and Melinda Gates Foundation and private funds from
Mercy Corps. Early operations were focused exclusively on women in
District 7 of Kabul, the area hardest hit by fighting during the war.
According to Shaw, Mercy Corps was one of the first organizations to
begin lending to entrepreneurs in Kabul City.
The program, now being funded by the Micro-Finance Investment
and Support Facility for Afghanistan (MISFA), which is overseen by
Ministry of Rural Rehabilitation and Development and the World Bank,
has grown over the past year to include female and male business owners
and covers all 18 districts in Kabul. The total current loan fund is
$515,000, with a possibility for an additional $500,000 in late 2004
"From these loans, we have seen clients open their own shops,
purchase generators allowing them to work when the Kabul electricity is
out, and purchase equipment and materials to expand their businesses
and product lines," says Amina Basir, a senior loan officer with AFSG.
"In just a short time, I have seen many of our loan recipients' move
away from a day-to-day existence to a more stable financial position,
for both their businesses and their families."
Mercy Corps' AFSG has extended over 3,150 loans to date (worth
almost half a million dollars USD). Over 1/3 of loan recipients are
female and AFSG is continuing to focus on marketing the service
specifically to women. In addition, AFSG is looking to create new
products for its clients, such as savings accounts and agricultural
focused loans. The introduction of these new products should have a
dramatic effect on both increasing lending to women and lowering risk,
by using savings as a form of group guarantee.
Mercy Corps' AFSG has extended loans to many traditional businesses, as well as some rather unexpected business ideas.