The First Micro. Finance. Bank of Afghanistan December 13 th , 2004
The First Micro. Finance. Bank of Afghanistan Issues & Challenges A Presentation to the World Bank Workshop on Rural Finance in Afghanistan By Olivier Massart, Deputy Chief Executive Officer December 13 th , 2004
Introduction • Identification & feasibility conducted in April 2002 – Findings: • 6 Governmental banks - some in difficulties / No other banks • No Micro. Finance Institutions active or with limited output – Opportunities • Need to provide financial services to Afghanistan • Experienced & first rank international partners : AKFED + IFC + Kf. W Decision to create a Micro. Finance Bank December 13 th , 2004 3
Important dates for FMFB Afghanistan • Bank License Application • Afghan Banking Law • The first private commercial bank to be licensed • Incorporated in Afghanistan as Afghan Limited Liability Company • AKFED founder, joined by IFC as shareholder • Final Banking License • Opening of the first Micro. Finance branch – launch Operations • Opening of the first Commercial branch December 13 th , 2004 (December 2002) (Sept 2003) (Dec 2003) ( February 2004) (March 2004) (May 2004) (August 2004) 4
FMFB specific positioning • The only Bank to target both Micro. Finance & commercial banking clients • A future large national coverage • A local bank with highly reputed foreign shareholders • The only Bank offering Credit Facilities to micro & very small businesses • A Modern Banking concept December 13 th , 2004 5
Commercial Banking • Targeted customers: – Embassies, International Organisations, NGOs and international companies • Services offered by FMFB: – Currents accounts – Cash handling and cash delivery – Exchange operations – International transfers (SWIFT: FMFBAFKA) and – Local transfers – through Da Afghanistan Bank – Afghan Clearing & Currency System – Term deposits and savings accounts (planned) December 13 th , 2004 6
Micro. Finance Financial Products • Current products – Solidarity Loan • Amount • Duration : USD 100 to USD 750 : 3 to 6 months – Individual Loan • Amount • Duration : USD 500 to USD 3, 000 : 6 to 18 months (actually 12 months only) • Future products – Loans - in Afghani – Savings + Time Deposit - in Afghani December 13 th , 2004 7
Micro. Finance Operations Base Indicators 2 nd December 2005 Number of clients 2 409 2 029 Number of active loan Of which 12 % for Women $ 2, 048, 000 Total Outstanding Loan Amount Of which 9 % for Women Average Loan Amount $ 1, 009 Repayment Rate @ 1 month 100 % December 13 th , 2004 8
Bank actual situation • Staffing – 54 staff • Premises – Kabul: Head Office – Shash Darak – Kabul: Micro. Finance Branch 1 – Shar-e-Naw – Kabul: Commercial Branch 1 – Shar-e-Naw – Kabul: Micro. Finance Branch 2 – Kot-e-Sangi • Equipment – Online Real Time Wide Aerial Network – Software e. Merge (Temenos) based on Globus Technology – Swift December 13 th , 2004 9
Network Development • End of 2004: – 3 Branches • End of 2005: – 7 to 8 Branches • By 2010: – 20 to 25 branches in major cities – Network of “sub-branches” in rural areas – More than 600 staff, of which 500 on the field – More than 100 000 active clients December 13 th , 2004 10
Network – 2005 / 2006 December 13 th , 2004 11
Key issues for the development • Political & civil security • Enabling technical infrastructures: – Telecommunications for Real Time Online Wide Aerial Network • Human resources critical aspect: limited availability of experienced people Creation of FMFB-Training Centre • Regulatory framework: – Tax, bank regulation, monetary policy… • Operations in Opium Production regions Vs Anti-money Laundering Law of Afghanistan + International Banking Relations December 13 th , 2004 12
Thanks FMFB Afghanistan For the Economic Development of the country December 13 th , 2004 13
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