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Human Capital

Microfinance for Poverty Reduction

Our Goal

The objective of the project was to:

(i) help the population of the Recipient#s territory to (A) improve their livelihoods, (B) make the transition from dependence on humanitarian assistance to economic independence, and (C) empower them to build on their entrepreneurial spirit and skills;

(ii) provide to low-income people, through existing microfinance facilities, a range of financial services such as (A) income-generating and enterprise loans, (B) saving services, and (C) consumer loans; and

(iii) establish the foundations of a strong and sustainable microfinance sector.

How We Deliver

The Microfinance for Poverty Reduction Project achieved its objectives through numerous activities including:

i) The Establishment and operation of a microfinance fund to provide Sub-Loans and Sub-Grants to MFIs for the funding of Sub-Projects to be carried out by eligible Beneficiaries and for capital support and capacity building;

Ii) Capacity building of microfinance fund providers (MFIs), including: the strengthening of their governance structure; the development of their management information and accounting systems; the standardization of their monitoring and/or reporting requirements; strengthening portfolio management; training of staff of the MFIs in the execution of poverty reduction programs; and Provision of implementation support to MRRD through a twining arrangement with a firm to build local capacity and strengthen MISFA as an independent and autonomous institution;

iii) Development of a sustainable microfinance sector, including  the strengthening of the capacity of selected MFIs to deliver credit and other financial services; assisting such MFIs to move towards operational and financial selfsufficiency; supporting such MFIs in the planning and carrying out of microfinance programs; and improving the effectiveness of MFIs to carry out poverty reduction programs, including the making of Grants to Beneficiaries for the carrying out of business and other income-generating projects or activities;

iV) Strengthening the capacity of the Ministry of Rural and Rehabilitation Development (MRRD) to manage and monitor grant funds as well as the conduct of study tours and training of staff of MRRD, MISFA and MFIs.


  • 435,442 active clients of MFIs: 16% of Microfinance service providers registered as Afghan companies and operating under relevant Afghan laws and supervision;
  • 60% of  active clients who are women;
  • 157% Increase in amount and percentage of loan portfolio outstanding relative to base year;
  • 27% of MFPs with PAR 30 less than 5%, 26 provinces in which MFPs are providing services