As part of the ongoing consolidation of the microfinance sector of Afghanistan, MISFA is facilitating the merging of the strengths, talents and other assets of three microfinance institutions—MADRAC, MOFAD and PARWAZ—into one new entity called Mutahid (United)Development Finance Institution.
MISFA has been an active supporter of MADRAC, PARWAZ, and MOFAD since their inception in the microfinance sector. MISFA has worked closely and in constant consultation with all of the institutions’ Senior Management and Board to strengthen operations and improve financial performance representing a significant investment in time and funds and a testament to the commitment of MISFA and the MFI Senior Management and Board to exhaust all possible means to bring these three MFIs up to a path towards viability. Despite all the joint efforts, there remains a significant capacity gap and lack of progress towards sustainability.
For MISFA, the creation of Mutahid (meaning United in English) is an opportunity to combine the best components of these three institutions and to salvage the significant investments made over the last few years to create one larger, stronger and sustainable, best practice MFI based on the core principles of ideas, ethics and hard work while incorporating the lessons learned of previous years.
It is worth noting that this situation is not unique to the three MFIs. A number of other MISFA partners are also undergoing restructuring, while a few have chosen to exit the sector. All over the world, consolidations and mergers are commonplace in financial sector. This kind of transition is part of the natural progression towards sector sustainability and maturity. According to MISFA’s Senior Management, this consolidation is not a simple undertaking. Even after the three MFIs have been combined, significant changes and improvements will be required over time
MISFA is supporting this effort directly by providing direction, capacity building and financial resources to Mutahid. Mutahid will no longer be overseen or directed by the boards of directors of the institutions and will be independent of MISFA. The management of Mutahid will ensure the orderly and judicial transfer of good clients, quality staff and other assets of the consolidating institutions over the next six months.
MISFA and its partners’ senior management met with the staff of each MFI last week to discuss the details of the consolidation process and to answer questions about their employment and the future of the sector and microfinance in Afghanistan.
“This is an exciting and unique approach,” said Ms. Fakiri, Managing Director of MISFA, in reference to the creation of Mutahid. “We believe that this will lead to a stronger, more sustainable sector, which, in turn, could contribute to job creation and economic expansion in Afghanistan.”
