Afghanistan—Agricultural Credit Enhancement Program I & II (ACE)

Client: U.S. Agency for International Development

Duration: 2015-2019

Region: Eastern Europe and Central Asia

Country: Afghanistan

Solutions: Economic Growth

For more than 25 years, Afghan farmers did not have access to agricultural credit, seriously constraining the growth of farming. DAI managed a $100 million U.S. Agency for International Development (USAID) grant to the Ministry of Agriculture, Irrigation and Livestock to provide credit to farmers, who repay their loans after their harvests. We also provided technical assistance so that farmers and others who borrow from the Agricultural Development Fund are well prepared to sustain and succeed.

Islamic Finance and Conventional Loans are available to many Afghans who participate in farming, such as small commercial farmers, agriculture-related businesses, producers of high-value crops, and processors and exporters of agricultural products. The success and future sustainability of the fund rests on three fundamental pillars: solid governance; airtight policies and procedures; and human capital. Investing in people will undoubtedly contribute to the permanence and integrity of the fund, which is why capacity development is at the core of its business strategy.

Sample Activities

  • Develop tools and mechanisms to work through non-financial intermediaries.
  • In partnership with the ministry, establish a knowledge management facility, a repository of agricultural data, market information, and market intelligence.
  • Facilitate the transition of the Agricultural Development Fund into a standalone and sustainable institution.
  • Drawing other Afghan intermediaries into agriculture finance and providing a learning and advocacy platform.

Select Results

  • ACE II supported the ADF in the disbursements of more than $50 million in lending to the agricultural sector.
  • ACE II assisted 11,026 beneficiaries to gain access to agricultural lending products.
  • ACE II contributed to creation of 1,877 full-time equivalent jobs.
  • Under ACE II, the ADF portfolio, under ADF internal metrics, demonstrated 0 percent loan losses as of end of March 2019.
  • ACE II finalized the ADF Growth Plan, a strategy to ensure the expansion of the ADF’s lending portfolio to achieve sustainable growth and utilization of surplus capital, and presented it to ADF High Council.
  • ACE II began the development of a new ADF website, utilizing a modern layout to raise awareness, and demonstrate professionalism of the institution.
  • ACE II initiated exploration of a long-term lending facility through a potential partner, Afghan Growth Finance, to provide access to ADF capital for productive agricultural enterprises.
  • ACE I developed an Islamic finance toolbox to facilitate credit to farmers using culturally acceptable lending mechanisms.
  • ACE I established the Agricultural Development Fund (ADF), a nonbank stand-alone financial institution owned by the Government of the Islamic Republic of Afghanistan and governed by a Board of Directors. The ADF operates from a main office in Kabul and regional offices in Nangarhar, Balkh, Bamyan, Herat, and Kandahar, employing more than 100 young professionals.
  • ACE I processed loans worth $104 million and disbursed $60 million to financial and nonfinancial intermediaries that are directly benefiting 31,000 small commercial farmers in 33 provinces. Indirect beneficiaries exceed 150,000 rural households.
  • ACE I received repayments worth almost $37 million, while keeping the ADF’s default rate below 5 percent.
  • ACE I lent $1.6 million to women-owned enterprises through Zahra, Islamic Finance, a flagship program for women. For more about Zahra, watch this video:


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