Developing Innovative Financial Products: Afghanistan

This brief discusses innovative rural finance products that the USAID funded Agriculture Rural Investment and Enterprise Strengthening (ARIES) project in Afghanistan offers to small and medium enterprises (SMEs). The brief states that:

• MFIs operating in Afghanistan have found it difficult to help the rural poor gain access to financial services;
• Organizations working in Afghanistan are under pressure to design financial products that are in compliance with Islamic religious law so that Afghans can enter the financial system without compromising their religious beliefs;
• The ARIES program has been successful in reaching out to rural Afghans and SMEs through innovative products;
• The program targets rural farmers, micorenterprises, small and medium firms, as well as larger agribuisnesses.

The brief also presents details of two other innovations:

• The Afghanistan Rural Finance Company (ARFC) that provides loans to cooperatives, private agribuisnesses and rural SMEs;
• The Mobile-ARIES initiative that will enable MFIs to increase their outreach and capacity by using a new mobile phone money transfer service called M-Paisa.

The brief concludes by describing future plans of the ARIES program.