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

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. The project also provided technical assistance so that farmers and others who borrow from the Agricultural Development Fund (ADF) 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 and agriculture-related businesses. 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 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 began the development of a new ADF website, utilizing a modern layout to raise awareness, and demonstrate professionalism of the institution.
• ACE I developed an Islamic finance toolbox to facilitate credit to farmers using culturally acceptable lending mechanisms.
• 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.