Executive Summary – Access to Finance

The overarching Development Objective of the proposed Access to Finance project for the Islamic Republic of Afghanistan is to increase micro, small and medium enterprises’ access to financial services, notably credit, to boost job creation. The program is divided into two key components which aim at improving access to financial services for micro and small enterprises in the first component and for small and medium enterprises in the second component.

The Environmental and Social Management Framework (ESMF) was prepared to define the management procedures that allow the proposed Access to Finance project to “avoid, mitigate, or minimize adverse environmental and social impacts” of supported activities and enterprises.  The ESMF was prepared in accordance with definitions provided in the World Bank Operational Manual and relating to the triggered operational policy on Environmental Assessment (OP 4.01). The other operational policies included in the World Bank safeguards procedures were not triggered by the project. The Project is indeed not expected to have any significant negative environment impact and is in fact expected to generate considerable positive social impact through provision of financial services to under-served groups (MSMEs), with a focus on the poorer section of the population (including ultra-poor households through the TUP Program), women and youth.  The project is not expected to trigger any of the World Bank social safeguards policies. The proposed interventions of the program place the overall categorization of the Access to Finance project in category “FI”.

MISFA, Afghan Credit Guarantee Foundation (ACGF) and the partner institutions will assume overall responsibility for compliance with pertinent Afghan laws and regulations on environmental protection and with the requirements of the World Bank. Commitment to ensuring environmental soundness would be included in the cooperation agreements between MISFA and its partner institutions, as well as between ACGF and its partner institutions (participating financial institutions PFIs). The Project also builds on the mechanisms established by MISFA under the previous IDA-funded project to ensure that the MSMEs supported by both MISFA and ACGF do not have significant harmful impacts on the environment. Environmental focal points in all institutions and partner institutions/PFIsare or will be established. The main tool to be used by PFIs is the activity exclusion list developed for the previous project to guide credit officers in their loan decisions. In addition, for SME loans only two types of subprojects that do not need environmental impact assessment will be considered for support (i) Subprojects that do not require full environmental Assessment; and (ii) Subprojects that only need filling out of environmental registration and screening forms. The ESMF provides all institutional procedures and mechanisms to ensure identification of environmental and social risks, mitigate, monitor and reporting on implementation and capacity building plans for MISFA and ACGF.