As part of the World Bank Group's strategic priority to address the special challenges of states emerging from conflict, IFC is tailoring an integrated approach to help meet the needs of each country and private sector client.
Using a combination of investments and advisory services, we are expanding our reach in areas where we are needed most. Although the challenges vary, the goal is always the same: creating opportunities to improve the lives of people directly affected by conflict.
A Microfinance Success Story in Afghanistan
Mustafa, a young Afghan man who owns a pharmacy near the Maiwand hospital in Kabul, has been in business for the past six years. Starting and keeping his pharmacy going has been a challenge in a country that has suffered from chronic instability and conflict throughout its recent history.
When starting the business, Mustafa's primary concern was how he would finance the operating costs and purchase stock. "At the time there was virtually no place that I could go for affordable loans. The few options available, namely the moneylenders, were expensive and risky," he explained. As this implies, Afghanistan's banking system had collapsed during the war, and the country had no functioning credit cooperatives or microfinance institutions. There was a huge need for financial services, especially for poor people and microenterprises.
To help, IFC, in partnership with the Aga Khan Fund for Economic Development, created the First Microfinance Bank of Afghanistan in 2004, the first licensed postwar bank of any kind in the country. IFC provided equity capital and debt funding to help the bank expand its operations, as well as extensive advisory services to build capacity. Today, the bank has a loan portfolio of over $17 million, serving more than 20,000 clients.
Mustafa applied for his first loan from the First Microfinance Bank of Afghanistan in December 2006. Within six months his working capital had increased by 30 percent and his sales by over 15 percent. He said, "My business is growing steadily, and I am thinking about applying for a second loan once my first is all paid up. My customer base is expanding, and I am buying more stock. I have even hired someone to help me. Who knows, in a few years I may be giving more of my people job opportunities."
Increasing Impact through Advisory Services
Through this Afghanistan project, IFC is helping stimulate growth and development in the country. The project has been successful thanks in part to IFC's integrated approach of using investments and advisory services to increase our development impact.
Advisory services are a growing and dynamic business for IFC. In fiscal 2007, we had advisory activities in 97 countries, with the majority of the projects in low-income or high-risk areas. Of the 35 conflict-affected member countries, IFC has advisory projects committed in 23.
Through this program, we provide advice to the private sector and governments, and the work is organized in five business lines: business enabling environment, access to finance, environmental and social sustainability, infrastructure, and value addition to firms. Our approach in conflict-affected countries may involve:
- Launching quickly, but staying for the longer term: With about 1,100 advisory staff working in developing countries worldwide, we can develop new programs quickly and deliver them over two or more years.
- Improving access to finance: Our combination of advice and financing helps local financial intermediaries deliver the financing for trade and smaller enterprises that can rebuild businesses and raise incomes.
- Working through partnerships: IFC attracts other investors for projects in infrastructure and other critical areas. We collaborate with donors, NGOs, and other partners in our advisory work, building synergies and minimizing overlap.
Going forward, IFC will continue seeking new opportunities to expand our reach and increase development impact in the poorest countries and those affected by conflict.
For more information contact:
Thoko Moyo
IFC Communications Officer
Advisory Services
Phone: +1(202) 458-8517
E-mail: tmoyo@ifc.org | Riham Mustafa
IFC Communications Analyst
Middle East & North Africa
Phone: +202 2 461 9150 ext. 306
E-mail: rmustafa@ifc.org |
Published March 17, 2008
