The MISFA SME Program engages implementing partners by offering:

• Credit lines that would allow them to on-lend to qualified SMEs;
• Guarantee arrangements designed to encourage partners to provide their own funds to lending;
• Technical assistance to banks and MFIs at various levels e.g. training and mentoring SME loan officers; and
• Advocacy for an adequate legal and regulatory environment supporting the SME financing sector.

Most loans have been disbursed in large provincial cities, including Herat, Mazar, Jalalabad, and Kabul, but a significant number of loans have also been made in smaller localities such as Kunduz, Faryab, Takhar, Jawzjan, Parwan, Baghlan, Samangan, Bamyan, Kapisa, Saripul, and towns in Badakhshan.

At the moment, very few commercial banks have shown interest in developmental finance, with many focusing their activities on corporate financing and other investments inside and outside of Afghanistan. There is also a lack of enabling environment at the policy level to encourage commercial banks to engage in developmental finance.

Given these current challenges, MISFA will work closely with MFIs to establish small enterprise lending windows or strengthen their existing individual lending products serving the upper end of microfinance or lower end of SMEs. MISFA will also pursue working with the existing and potential new banking partners fostering a developmental finance mission in Afghanistan.

[2]Includes data from MISFA partners’ SME and Small Enterprise Program (SEP) loan products.