The past three decades of conflict in Afghanistan have not been kind to the farming communities in the fields and vineyards of Kandahar. A series of crises has made work almost unbearable for the farmers, who struggle to modernize their methods
More than three decades of conflict have hobbled Afghanistan's economy, leaving the country of 30 million as one of the poorest in Asia.
But amid the gloom, there are signs the country could finally be on the rise. Economic growth has averaged over 9 percent for the last decade, and the mining and agricultural sectors are brimming with potential.
Afghanistan still relies heavily on foreign aid, and with the pullout of foreign combat troops underway, there are fears growth could collapse.
IFC is working to help prevent that through a integrated program of investments and advisory services. The corporation is helping to improve local infrastructure, increasing access to finance, supporting the financial sector, and working with farmers to boost their yields.
IFC's strategy in Afghanistan focuses on encouraging economic development by supporting the country’s private sector through a wide range of investments and advisory services.
In fiscal year 2013, IFC committed $66.4 million in the country, bringing its portfolio to $131 million, more than double what it was five years ago.
IFC also has an active advisory services program focused on improving the investment climate, supporting small businesses, and promoting partnerships between the public and private sectors.
IFC's investment portfolio spans five companies: First Microfinance Bank of Afghanistan ($2 million), Afghanistan International Bank (trade facility), telecos MTN Afghanistan ($60 million) and Roshan ($65 million), and the Serena Kabul Hotel ($3 million).
In the coming years, IFC is looking to expand its investment program in Afghanistan in the areas of infrastructure, finance, manufacturing and services.
IFC’s investments have had a transformational impact in the microfinance sector through the First Microfinance Bank (FMFB-A). The lender is the first licensed private sector microfinance bank in Afghanistan. It has reached out to about 45,000 borrowers (25 percent of the current market penetration) of which 16 percent are women.
Similarly, IFC has had significant impact in the telecom sector of Afghanistan through IFC’s investment in MTN, and more recently Roshan Telecom.
The telecom sector has significantly evolved over the last few years in terms of regulation, private investment, penetration and growth. From fewer than 60,000 telephones, Afghanistan now has over 15 million mobile telephone subscriptions and half of rural households own a mobile telephone.
IFC Advisory Services is very active in the country, with eight projects spread across all four business lines. During the last year, IFC:
-Advised the Afghan Ministry of Commerce and Industry as it streamlined the issuance of new trade. By merging two competing departments within the ministry and doing away with needless red tape, the project dramatically reduced waiting times for new licenses;
-Supported a new collateral registry which will increase financing opportunities for small and medium enterprises, which typically possess moveable property as their main asset;
-Signed a mandate with Da Afghanistan Breshna Sherkat, the national power utility, to develop a management support contract for its Kandahar operations center;
-Advised the city of Kabul on streamlining and simplifying construction permitting. The project will help reduce the burden on the private sector in terms of the time it takes to obtain a license and increase the predictability of the process;
-Through the Business Edge program, helped provide management training to 3,800 people last year, including women and youth. Almost 40 percent of those trained were women; and-
-Introduced modern practices to 1,500 grape and pomegranate farmers, helping them replace outdated harvesting methods. Farmers were linked to Afghan exporters, resulting in $4 million worth of sales to India.
IFC is working closely with the World Bank and MIGA to maximize its impact in Afghanistan. The collateral registry project was part of a World Bank financial strengthening program, while IFC and MIGA collaborated on the MTN investment.
IFC advisory services also collaborates closely with the World Bank in the Doing Business Indicator Reform project and the Incentive Program, supporting key private sector reforms.