Since September 2022, when the Murabaha and Mudrabah products were approved by the Dar-ul-Ifta of the Supreme Court, MISFA-partner microfinance institutions (MFIs) have financed over 100,000 clients. The total value of the financing is approximately AFN 10 billion (around USD 143 million), with about 43% of clients being women.
The financial sector, particularly MFIs were heavily impacted by the regime change in mid-2021, which led to a year-long suspension of new disbursements and the waiving of interest due on principal amounts. This situation placed severe financial strain on MFIs, as operational costs continued while income fell to zero.
In response, MISFA and its partner MFIs swiftly adapted to the new legal requirements by transforming into fully Sharia-compliant institutions. This transformation included developing and adopting alternative Sharia-compliant products, restructuring governance frameworks, and building staff capacity on the new products and processes.
In Afghanistan, microfinance loans are provided exclusively for business purposes, contributing to job creation and poverty reduction. Independent research conducted by the Institute of Development Studies (IDS) at the University of Sussex, Brighton, and by Microfinanza, shows that each microfinance loan creates an average of 1.5 new jobs and sustains 2.3 existing jobs.
With a growing trend in the sector, microfinance in Afghanistan is expected to expand its outreach both in terms of breadth and depth over the coming years.
