FINCA Microloans Help Development In Afghanistan
Life-Changing Microloans Instrumental in Fighting Extremism
Mar 29, 2009
Haunted by decades of war, Afghanistan is also an extremely poor country. Most Afghans suffer from shortages of housing, clean water, medical care, electricity, and jobs. Two-thirds of all people live on less than $2 a day. The average life expectancy is 43 years, the infant mortality rate very high and the country's literacy rate of 36 percent among the lowest in the world. Security remains a significant issue since the fall of the Taliban regime in 2001.
FINCA's Village Banking Program
FINCA International (Foundation for International Community Assistance), sometimes referred to as the "World Bank for the Poor", is one of the pioneers of microfinance. It started in Bolivia in 1984, where John Hatch, a Fulbright-trained economist and the founder of FINCA , conceived a small loan program to help farmers. They could obtain loans without collateral and groups of neighbors were put in charge to collectively disburse, invest and collect loan capital.
Rebuilding Afghanistan's Infrastructure
25 years after the program's inception FINCA Afghanistan (founded in 2003) plans to reach 90,000 clients by the end of 2009. Microloans work well in Afghanistan: over 75% of the Afghan people live in rural areas where agriculture is the primary activity. Supporting small entrepreneurs is a good way to rebuild the war-torn country's infrastructure.
FINCA Success Stories
Fatima Mohammad Mussah currently lives in the village of Jebrayil in Herat Province, Afghanistan. She runs a small but successful tailoring business to help support her family.
After the Soviet invasion (1980) Fatima and her husband embarked on an odyssey. They found exile in Iran and returned to their homeland fifteen years later. While they were still living in tents, the Taliban falsely accused Fatima's husband of supporting a rebel commander. He was sent to prison in Kandahar. Fatima followed her husband with the wives of others arrested. Her children stayed in Herat, weaving carpets, under the care of her eldest son.
The men were eventually released. The departure of the Taliban in 2001 was a happy moment for the family. Fatima and five friends were among the first to receive FINCA loans. The women formed a Savings and Credit Group called "Fuladi" (or "steely," after the strength the members see in their new group). Their initial FINCA loan of 6,000 Afghanis ($125 for each of the women) allowed them to invest in tailoring, sewing, and food processing. They have been able to improve the quality of life for their families.
Listening to Local Religious Leaders
FINCA Afghanistan recently won the Pro-Poor Innovation Challenge award for its microfinance program. FINCA's success in Afghanistan is based on respecting Islamic banking principles. The FINCA program was developed after careful vetting with local religious leaders, and confirmed through a fatwa (an Islamic religious ruling) acquired from Al-Azhar Univeristy in Cairo, Egypt (the world's most respected Islamic institution of higher learning).
An Integrated Civilian and Military Effort
The new U.S. strategy for Afghanistan and Pakistan must link development, diplomacy and defense, President Obama said in March 2009. An additional 17.000 U.S. troops have been committed to fight terrorists and boost security in the region. 4,000 more troops and hundreds of civilian specialists will be charged with training the Afghan army and police force.
"I am absolutely convinced that you cannot solve the problem of Afghanistan, the Taliban and the spread of extremism in that region solely through military means... We're going to have to use diplomacy. We're going to have to use development." President Barack Obama (Interview with CBC,2/17/09)
Through a new U.S. Agency for International Development (USAID)-sponsored program, FINCA Afghanistan will expand lending to foster stability and promote alternative livelihood projects in rural areas of the country. This new effort mirrors the essential goals of the Millennium Promises.
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