The First MicroFinanceBank ofAfghanistan

The First MicroFinanceBank 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 Slide 3 Introduction Identification & feasibility conducted in April 2002Identification & feasibility conducted in April 2002 –Findings: 6 Governmental banks - some in difficulties / No other banks No MicroFinance Institutions active or with limited output –Opportunities Need to provide financial services to Afghanistan Experienced & first rank international partners : AKFED + IFC + KfW Decision to create a MicroFinance Bank  Decision to create a MicroFinance Bank

December 13 th, 2004 Slide 4 Important dates for FMFB Afghanistan Bank License Application (December 2002) Afghan Banking Law (Sept 2003) The first private commercial bank to be licensed (Sept 2003) Incorporated in Afghanistan as Afghan Limited Liability Company (Dec 2003) AKFED founder, joined by IFC as shareholder ( February 2004) Final Banking License (March 2004) Opening of the first MicroFinance branch – launch Operations (May 2004) Opening of the first Commercial branch (August 2004)

December 13 th, 2004 Slide 5 FMFB specific positioning The only Bank to target both MicroFinance & 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 Slide 6 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 Slide 7 MicroFinance Financial Products Current products –Solidarity Loan Amount: USD 100 to USD 750 Duration: 3 to 6 months –Individual Loan Amount: USD 500 to USD 3,000 Duration: 6 to 18 months (actually 12 months only) Future products –Loans - in Afghani –Savings + Time Deposit - in Afghani

December 13 th, 2004 Slide 8 MicroFinance Operations Base Indicators 2 nd December 2005 Number of clients2 409 Number of active loan Of which 12 % for Women Total Outstanding Loan Amount $ 2,048,000 Of which 9 % for Women Average Loan Amount$ 1,009 Repayment 1 month100 %

December 13 th, 2004 Slide 9 Bank actual situation Staffing –54 staff Premises –Kabul: Head Office – Shash Darak –Kabul: MicroFinance Branch 1 – Shar-e-Naw –Kabul: Commercial Branch 1 – Shar-e-Naw –Kabul: MicroFinance Branch 2 – Kot-e-Sangi Equipment –Online Real Time Wide Aerial Network –Software eMerge (Temenos) based on Globus Technology –Swift

December 13 th, 2004 Slide 10 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 active clients

December 13 th, 2004 Slide 11 Network – 2005 / 2006

December 13 th, 2004 Slide 12 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  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 Slide 13 Thanks For the Economic Development of the country FMFBAfghanistan