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Microfinance Makes a World of Difference in Afghanistan

One of the greatest, although lesser known, success stories in Afghanistan is the rebuilding of the country’s financial institutions. In the last 30 years, Afghanistan has suffered through intermittent warfare, drought, and a lack of international investment. As a result, poverty is widespread and deeply entrenched, and 70% of Afghans live on less than 2 USD a day. 

Mercy Corps is one organization that recognized the great need for financial services in Afghanistan and, with a grant from the Bill and Melinda Gates Foundation, founded "Ariana Financial Services Group", one of the first Microfinance institutions in Afghanistan, in May 2003.

Ariana Financial Service Group provides fair priced savings and loan products to poor clients in the hopes of expanding income for individuals as well as businesses. Since the beginning of the program, Ariana has supported nearly 17,000 clients with a total of over three million US dollars in loans. 82% of Ariana's clients are women; one of the most vulnerable social groups in Afghanistan. Ariana's clients run micro-enterprises in all areas of Afghan life such as such as carpentry, knitting, weaving, tailoring, hair dressing, food processing, florists, kite production, leather working or animal husbandry.

Only 0.9% of Ariana's portfolio is considered to be at risk - a very low rate that many commercial banks would be proud to achieve. Ariana's average loan size works out to be about 220 USD. Group loans start at 7500 Afghani (about 150 USD) and can go up to 14,700 Afghani (300 USD) with a flat interest rate of 2% per month. To qualify for another loan, a group must have successfully repaid their loan, which can at most be 40% higher than the previous loan. Once clients have successfully taken part in 4 group loans, they can apply for an individual loan. In November 2005 Ariana started granting loans to individuals and so far 2.5% of clients are holding individual loans.
 
Since its launch Ariana has twice received funding from MISFA (Microfinance Investment Support Facility for Afghanistan) which has helped it grow as an organization and - security permitting - will allow it to expand its operations. Storai has the vision of turning Ariana into an independent, self-sufficient financial organization with a diverse range of financial products available in all of Afghanistan.

For more stories about micro-finance making a difference in Afghanistan, click on any of the following:

Shamsia: Profile of an Ariana Microfinance Beneficiary
Life in Shashtepa Takes a Turn For The Better

A Story of Glitter and Plastic Flowers

Profile of A Modern Afghan Woman

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