A Demand-driven Microfinance Service: Rebuilding Afghan Homes and Lives

This paper explores the feasibility and suitability of a new demand-driven microfinance product that is being tried as a solution to housing problems in Afghanistan.

Housing is an acute problem in Afghanistan. After two decades of war, many homes across the country have been damaged. Overcrowding is fairly common, with household members sleeping in the same room where they cook, eat, wash and, at times, house their animals at night. In response to clients' demand, First Microfinance Bank (FMFB) piloted a housing loan program called Housing Microfinance Initiative in 2007. The project aimed to provide credit to poor families in Afghanistan to help them restore and upgrade their homes, and improve their quality of life.

Since its pilot phase, more than 1,000 housing microfinance loans have been disbursed amounting to around US$1.5 million. The loans have helped families complete construction of their homes, repair roofs, plaster and paint walls, or dig water wells. FMFB's expansion plans for 2009 include disbursing 1,500 loans worth US$1.2 million. FMFB believes that its housing microfinance initiative is a huge opportunity and a critical component to rebuilding Afghanistan's housing infrastructure.