Dubai, September 23, 2003 -
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, signed a Memorandum of Understanding with the Aga Khan Fund for Economic Development (AKFED) regarding IFC’s proposed participation in the capital of The First MicroFinanceBank of Afghanistan (FMBA). FMBA was recently incorporated as a full-service financial institution under the laws of Afghanistan to provide both credit and savings products.
FMBA plans to establish itself first in Kabul and the North Eastern provinces, initially serving urban micro and small businesses. It will then expand to gain national coverage, reaching out from its regional hubs to semi-urban and rural areas. AKFED is the majority shareholder in FMBA. IFC will hold shares of up to 19 percent. Germany’s development bank KfW is also considering a possible participation in the capital of FMBA on behalf of the German government. FMBA has already begun receiving some of the donor support that will be necessary to overcome such challenges as security, the need for wider gender outreach, inadequate infrastructure, and the extensive requirements for capacity building and training of professionals in the microfinance sector. Technical assistance has been contributed through the World Bank Group-administered Norwegian Trust Fund, the Japanese Social Development Fund, the Dutch Trust Fund and from IFC’s own resources.
“This project will create the first commercially sustainable microfinance institution in Afghanistan,” said Mr. Assaad Jabre, IFC’s Vice President of Operations. “IFC will help demonstrate that microfinance is a viable and attractive commercial business, while providing financial services to the poor and underserved. In making financing available to the dynamic micro and small businesses sector, we are pleased to contribute to the reconstruction and economic development of Afghanistan.”
Mr. Jacques Toureille, AKFED’s representative, said, “We are committed to assist in the reduction of poverty in Afghanistan. In this project, we expect to build upon and expand greatly our engagement in the country’s microfinance sector, through which we have been supporting the return of Afghan refugees and the resumption of economic activities in urban and rural areas. Our experience with similar projects in the region, and in several other countries in Africa and in the Middle East, will help us establish a sustainable and high-impact institution, that responds well to the needs of the Afghan people, creating employment opportunities and helping alleviate social inequities.”
AKFED, the commercial arm of the Aga Khan Development Network (AKDN), helps build economically viable enterprises through long-term equity participation combined with professional management, technical expertise, and support. Its sustainable investments in industry, tourism, and financial services projects play an important catalytic role in mobilizing foreign institutional investors, especially in Asia. AKFED will bring to FMBA its broad expertise in commercial as well as development banking operations. AKFED is currently the lead shareholder in five banks in emerging markets, while AKDN has approximately 40 microfinance banks and programs in countries of Central and South Asia, the Middle East, and Africa. AKFED's microfinance projects in Pakistan and Tajikistan, in particular, will provide valuable lessons for FMBA.
IFC has worked with AKFED in over 20 projects in Africa as well as Central and South Asia and values it as a strong and committed partner. Most recently, IFC invested alongside AKFED in the First MicroFinanceBank of Pakistan.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s committed portfolio at the end of FY03 was $16.8 billion.
