Under an agreement between the governments of Germany and Afghanistan, Germany’s Kreditanstalt für Wiederaufbau (KfW) signed an agreement with Afghanistan’s First MicroFinanceBank (FMFB-A). Under the agreement, KfW will lend EUR 4 million to Afghanistan’s Finance Ministry, which will then lend the funds to FMFB-A in a 15 year long term credit facility in local currency. Proceeds will be used to fund the growth of FMFB’s loan portfolio which was USD 19.8 million in loans to over 101,000 borrowers at the end of 2007.
KfW holds a 31.75 percent stake in FMFB-A. Aga Khan Agency for MicroFinance, an agency of the Aga Khan Development Network , manages the bank and holds 51.44 percent of its shares. The International Finance Corporation (IFC) holds the remaining 16.81 percent of the shares. In 2005, KfW and FMFB-A entered into a similar agreement for EUR 3.5 million. In addition, KfW provides ongoing technical support to FMFB-A.
The First Microfinance Bank of Afghanistan is part of the Aga Khan Agency of Microfinance, a unit of Aga Khan Development Network (AKDN). The bank’s main focus is to contribute to poverty alleviation and economic development by providing sustainable financial services that targets micro and small businesses and individual households. For a complete profile of AKDN, please see MicroCapital’s “Who’s Who in Microfinance” feature on this organization.
Established in 1948, Kreditanstalt für Wiederaufbau is 80 percent owned by the Federal Republic of Germany and 20 percent owned by the German federal states. As of December 2007, KfW had EUR 354 billion in total assets. Oekom Research gives the bank a Socially Responsible Investment Rating of B.
By Iyanna Holmes, Research Assistant
Additional Resources:
KfW Bankengruppe: A Two-Minute Guide
The Microfinance Gateway: KfW and First MicroFinanceBank Collaborate With Government of Afghanistan to Finance SMEs
The MIX Market: First MicroFinanceBank Afghanistan
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