Annual

Report
March
2017

MISFA ANNUAL REPORT |

 Acronyms

Photo Credits:
Matin Ezidyar
Maleesha Safdari
MISFA ANNUAL REPORT |
 Table of Content

ACRONYMS III

THE BOARD OF DIRECTORS 1

FROM THE CHAIRMAN OF THE BOARD 3

A MESSAGE FROM MISFA’s MANAGING DIRECTOR 5

1. INTRODUCTION 7

2. THE MICROFINANCE SECTOR IN 2016: A SNAPSHOT 9

• SECTOR PERFORMANCE........................................................................................................ 9

3. MISFA CORE PROGRAMS: ACCESS TO FINANCE 13

3.1 MISFA PROGRAMS UPDATE 13

• CONTINUED SCALE UP OF THE TARGETING THE ULTRA POOR (TUP) PROJECT.. 13

• SMALL-AND-MEDIUM ENTERPRISE (SME) LOAN PRODUCT DEVELOPMENT....... 15

• COMMUNICATIONS AND PUBLIC AWARENESS.................................................. 17

3.2 MISFA SUPPORT TO PARTNERS AND THE SECTOR 18

• THE FIRST MICROFINANCE BANK-AFGHANISTAN (FMFB-A)...................................... 18

• OXUS-AFGHANISTAN............................................................................................................... 19

• FINCA-AFGHANISTAN.............................................................................................................. 21

• MUTAHID DEVELOPMENT FINANCE INSTITUTION........................................................ 22

• AFGHANISTAN MICROFINANCE ASSOCIATION (AMA)................................................. 23

4. NEXT STEPS AND CONCLUDING REMARKS 24

5. FINANCIAL OVERVIEW 25

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 Acronyms
Acronyms

AMA Afghanistan Microfinance Association

CHA Coordination of Humanitarian Assistance

CoAR Coordination of Afghan Relief

DAB Da Afghanistan Bank

IFAD International Fund for Agricultural Development

MAIL Ministry of Agriculture Irrigation and Livestock

MFI Microfinance Institution

MISFA Microfinance Investment Support Facility for Afghanistan

MoF Ministry of Finance

MoU Memorandum of Understanding

MoWA Ministry of Women’s Affairs

MRRD Ministry of Rural Rehabilitation and Development

SME Small and Medium Enterprises

TUP Targeting the Ultra-Poor

WADAN The Welfare Association for the Development of Afghanistan

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By supporting entrepreneurs, at both micro and SME levels,
MISFA is fulfilling its primary mandate of financial inclusion.
It is also serving as a catalyst to private sector development

MISFA ANNUAL REPORT |

 THE BOARD OF DIRECTORS
Acronyms
Chairman of the Board and Deputy Minister, Ministry of Rural
Rehabilitation and Development (MRRD). Mr. Shahriar has extensive
working experience at different capacities with the Government of
Afghanistan, including as the Director of Mines, for the Ministry
of Mines; CEO of the Afghanistan Land Authority (Arazi); Director
General of Private Sector Development, Ministry of Commerce and
Industries; Director of Strategic Communication, MRRD and Project
Ahmad Shaheer Shahriar Manager in the Ministry of Refugees and Repatriation. In addition,

Mr. Shahriar has worked for a number of international donors,

including the World Bank and USAID.

Vice-chairman of the Board and Deputy Minister for Revenue

and Customs of the Ministry of Finance (MoF). Mr. Qarizada
has served in different capacities at the Ministries of Education
and Public Works, and worked with international organizations,
including the United Nations, prior to joining MoF. Mr. Qarizada
has a Masters Degree in General Management from Preston
University in Pakistan.
Ahmad Shafiq Qarizada

Board Member and Deputy Minister, Ministry of Commerce and

Industries (MoCI). Mr. Haqjo has worked as CEO of Afghanistan’s
Chamber of Commerce and legal advisor to different projects
funded by the European Union in Afghanistan, as well as with the
Embassy of Italy in Kabul. He has a degree in Political Science from
Balkh University and completed a degree in International Business
Relations in Germany.
Mohammad Qurban Haqjo

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 Board Member and Managing Director of Arc Finance, formed in
the spring of 2008 to link the fields of finance, energy, water and
sanitation. Ms. Armacost has the following degrees from
institutions in Canada: a Bachelor’s degree in international relations
from the University of Toronto, an LLB from Queen’s University, and
an LLM from Osgoode Hall Law School.

Nicola Armacost

Kathryn Imboden is a Policy Advisor for bilateral and multilateral

development agencies, including CGAP. She chairs the Board of
FIDES Microfinance Senegal, and serves on the boards of Azure
Partners, and the Womanity Foundation. Ms. Imboden has a B.A.
on Economics from Mount Holyoke College, U.S.A. and a diploma
from the Institute of Political Studies in Paris, France.

Kathryn Imboden

Board Member and Independent Advisor to global donor

organizations on Financial Inclusion. Previously, Ms. Lehman was a
Program Officer on the Financial Services for the Poor team at the
Bill & Melinda Gates Foundation. She spent four years in
Afghanistan working in the microfinance sector. She is a Certified
Public Accountant and holds a Master’s Degree from the Bentley
College Graduate School of Business.
Joyce Lehman

Board Member and Director of Youth Empowerment and Promotion

organization (YEP). Ms. Wagma has more than a decade of working
experience with several international and national organizations.
She is pursuing her graduate studies in Gender and Women Studies.

Wagma Yameen Zia

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 Acronyms “Icountry,
would also like to thank the resilient women and men of our
for inspiring us with their entrepreneurial spirit,
perseverance and enthusiasm to pursue their dreams.”
- Ahmad Shaheer Shahriar
Chairman

FROM THE CHAIRMAN OF THE BOARD

Afghanistan’s economy grew marginally in 2016, with GDP growth at 1.2 percent, which was
better than 2015. Domestic revenues increased by nearly 15 percent and there was also a
small improvement in the overall trade deficit. According to the World Bank, growth is
expected to increase to 2.4 percent in 2017, which at least means we are moving in the right
direction.
Unfortunately, insecurity continued across parts of the country, with Nangarhar, Kunduz, and
Helmand provinces remaining vulnerable to insurgency groups. Ongoing insecurity challenges
our Government and security forces, and threatens the fragile growth and development of the
population. Insecurity remains the largest challenge for the development of the finance sector.
At the same time, it provides the strongest imperative for us to continue with our work, as the
economy and livelihoods of the people will only improve through access to finance,
employment and market opportunities.
MISFA’s Board of Directors and Management remain deeply committed to providing access to
finance to a larger number of Afghans. MISFA and its partners reached more people and
continued to grow in 2016, and this will continue in 2017 and beyond. MISFA engaged

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development partners and donors, to ensure ongoing support for the program.This support
will deliver access to capital and other financial resources to Afghans, who typically have
limited or no means to open up, or expand small and medium enterprises.

By supporting entrepreneurs, at both micro and SME levels, MISFA is fulfilling its primary
mandate of financial inclusion. It is also serving as a catalyst for private sector development,
an important element in Afghanistan’s recovery and long-term economic development. At
the same time, MISFA is making sure that some of the poorest, most vulnerable families are
provided a pathway to break out of abject poverty. In 2016, MISFA scaled-up its landmark
Targeting the Ultra-Poor (TUP) project to several other provinces and districts. This means
more female-headed households, with school-aged children and without a regular source of
income, are supported through this vital project.

I would like to express my gratitude to MISFA’s dedicated Board Members and staff, and
those of our partner institutions, for their continued dedication to our mandate and delivery
under challenging circumstances. It is only through their commitment that we are able to
give a voice and advocate for the Afghan people’s right to self-determination.

I would also like to thank the resilient women and men of our country, for inspiring us with
their entrepreneurial spirit, perseverance and enthusiasm to pursue their dreams. Every
small victory and success provides stimulus for others to follow their path.

2017 is an important year and I look forward to further growth, as certain program initiatives
come to fruition. I am grateful for the opportunity to contribute to their achievements and
will continue to strive to make their future and that of their families a brighter one.

Sincerely,

Ahmad Shaheer Shahriar

Chairman, MISFA Board of Directors
Deputy Minister - Programs, Ministry of Rural Rehabilitation and Development (MRRD)

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“Through our core Access to
Acronyms
Finance program and with the
continued support of our
donors, MISFA was also able
to proceed with the scale-up of
TUP in seven provinces during
the reporting year: Balkh,
Kabul, Kandahar, Kunar,
Laghman, Takhar, and Herat.”
- Bahram Barzin
Managing Director

A MESSAGE FROM MISFA’s MANAGING DIRECTOR

Against the backdrop of ongoing instability caused by insurgency in some parts of the country,
MISFA and our partners pressed ahead with our plans for the year. This is the silver lining in
what was an otherwise turbulent 2016: that MISFA and our partners managed to ensure that
under-served Afghans continue to have access to financial services, amidst heightened
insecurity and operational challenges in some key provinces.

Upon reflection, what is perhaps remarkable about this year for me, having been in the sector
through its ups and downs, is the coming to fruition of the investments we have all made
towards institutional strengthening.

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Our collective efforts to institutionalize due diligence, risk mitigation, and M&E in our processes
has paid off, such that this year, three of our partners have achieved operational self-sufficiency
and are able to weather through challenging times. This is why in 2016, MISFA started investing
more in building the technical capacity of its partners to be able to provide SME services. In the
same way that we had helped partners in the past several years to develop agriculture and
Sharia-compliant products needed by clients, MISFA is committed to enabling our partners
meet the demand for SME products and services in the coming years.

Through our core Access to Finance program and with the continued support of our donors,
MISFA was also able to proceed with the scale-up of TUP in seven provinces during the
reporting year: Balkh, Kabul, Kandahar, Kunar, Laghman, Takhar, and Herat.

I would like to take a moment to highlight the efforts and hard work of MISFA’s staff and Board
of Directors, as well as the staff of our partner institutions. As always, we count on your
continued support in the coming years as we strive harder to achieve financial inclusion for
Afghans.

Thank you!

Bahram Barzin

Managing Director

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 Acronyms
More than 8,500 productive animals were
provided to more than 6,725 TUP
participants across five provinces of
Afghanistan in 2016.

1. Introduction
This report has four main parts. Following this introduction, Section 2 provides a brief

overview of the microfinance sector through some key indicators representing the collective

portfolio of MISFA’s implementing partners, which comprise 73 percent of the development

finance sector of Afghanistan.

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Section 3 highlights the progress of some of MISFA’s core programs, including the scale-up

of its landmark Targeting the Ultra-Poor project and the support MISFA has provided to the

sector and to partner MFIs, followed by concluding remarks under Section 4. The final part,

Section 5, presents the key financial figures for 2016.

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 2. THE MICROFINANCE SECTOR IN 2016: A SNAPSHOT
Acronyms
• Sector Performance
The microfinance sector remained relatively steady amidst the insurgency threat in 2016
in some key provinces, including Kabul. For this reporting year, MISFA’s partner institutions
collectively disbursed more than 118,000 loans worth around AFN 10 billion (or US$ 150
million) for the fiscal year ending 31 December 2016. This indicates an increase in loan
disbursement compared to 127,266 loans worth AFN 9.2 billion (US$ 136.9 million)
disbursed in 2015.

Portfolio At Risk greater than 30 days(PAR>30 days ) of microfinance institutions for the year
was at 2.2 percent, compared to 3.5 percent in 2015; while Operational Self-Sustainability
(OSS) was at 116.1 percent in 2016, compared to 98.3 percent in the previous year.

The microfinance sector remained relatively steady amidst

the insurgency threat in 2016 in some key provinces, including
Kabul.

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Table 1. Sector Key Indicators 2016-2017

Key Indicators March 20165 March 2017

Coverage by no. of provinces 14 14

Coverage by no. of districts 83 80

No. of active clients 200,657 209,823

No. of active borrowers 129,588 126,908

Gross loans outstanding, in AFN 6,576,103,258 7,956,887,362

Gross loans outstanding, in USD 96,124,575 117,291,790

Women as % of total clients 30% 30%

Women as % of total borrowers 33% 31%

PAR > 30 days 3.5% 2.2%

OSS (Opertional Self-Sufficiency) 98.3% 116.1%

Total no. of staff (+ loan officers) 2,187 2,137

Robust risk mitigation strategies, applied through regular monitoring and reporting
of partners performance continued in 2016 helping sector partners reach operational
self-sufficiency. Additionally, MISFA and partner institutions now offer a more diversified
and tailor-made set of loan products catering to their client base, including: agricultural,
group, individual, housing, SME, and Sharia-compliant (murabaha) loan products (see
Table 2).

Based on the prevailing AFN-USD exchange rate in December 2016.

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 Table 2. MISFA Partners: At A Glance
Acronyms
MISFA partner Coverage Financial products
FMFB-Afghanistan • Provinces: 14 • Microcredit
• Districts: 80 • Deposit/savings services
• Branches: 38 • SME loans
• Active Clients:144,805 • Housing product, and
• Agriculture-based loans

FINCA-Afghanistan • Provinces: 11 • Individual and solidarity group

• Districts: 2 loans
• Branches: 22 • Agriculture-based loans
• Active Clients: 25,200 • Islamic finance (Murabaha)
• SME loans

Mutahid DFI • Provinces: 6 • Group loans

• Districts: 0 • Individual loans
• Branches: 8 • Islamic Finance (Murabaha)
• Active Clients: 17,556 • SME loans

OXUS-Afghanistan • Provinces: 10 • Micro-credit

• Districts:1 • SME loans
• Branches: 21 • Agriculture-based loans
• Active Clients: 22,262 • Islamic finance

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MISFA and partner institutions now offer
a more diversified and tailor-made set of
loan products catering to their client base.

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 3. MISFA CORE PROGRAMS: ACCESS TO FINANCE
Acronyms
Under the Access to Finance project, funded by the International Development Association
(IDA) administered by the World Bank, MISFA was able to continue to build on some of its core
programs in line with its multi-year Strategic Plan.

3.1 MISFA PROGRAMS UPDATE

• Continued scale up of the Targeting the Ultra-Poor (TUP) Project
More than 8,500 productive animals were provided to more than 6,725 TUP participants
across five provinces of Afghanistan in 2016: Takhar, Balkh, Laghman, Kunar, and Herat
provinces.
These beneficiaries received their productive assets, following their completion of a
comprehensive training on animal husbandry and basic health and hygiene, livelihood and
financial literacy. The provision of animals capable of breeding and milking is part of a package
of inputs and assets distributed to TUP members in a phased process through 24 months of
intervention.
MISFA started the multi-province scale-up of its landmark TUP project in mid-2015. The TUP
expansion aims to target 9,225 households to benefit more than 64,500 Afghans across the -

TUP beneficiaries are provided a package of

inputs that include livestock asset, subsistence
support, trainings in animal husbandry and
basic health and hygiene care.

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seven provinces. It was piloted successfully in succession in 2010-2011 - first in Bamyan, then in
Badakhshan. The second phase of the TUP project in Badakhshan province, targeting a total of
560 beneficiaries funded by IFAD, was completed on end of July 2016.

Its successful pilots had encouraged provincial stakeholders and donors to support the
program scale-up as a viable path to poverty reduction and national economic recovery in
Afghanistan. With continued support from stakeholders, MISFA will actively look into expanding
TUP further in the future.

TUP is a grant based, comprehensive two-year intervention that aims to support participants
escape abject poverty sustainably. They are provided a package of inputs that include livestock
asset, subsistence support, trainings in animal husbandry and basic health and hygiene care.
The intervention is designed to bring them up to a position in which they are able to start-up
a small enterprise. Participants exit or graduate from TUP following a referral system that links
them to financial service providers such as Microfinance Institutions (MFIs), Community Savings
Promoting Institutions (CSPIs), Cooperatives, Self Help Groups (SHG) etc. to further expand their
businesses and enterprises, as well as to available social services.

The TUP scale-up in all provinces, except Herat, are funded by IDA/World Bank; the expansion
to Herat is supported by the Italian Agency For Development Cooperation.

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• Small-and-Medium Enterprise (SME) Loan Product Development
Acronyms
Building on the achievements and lessons learned in rolling out microfinance across
Afghanistan, MISFA signed up SME Client Support for Afghanistan (SCSA) to work on developing
a higher tier SME loan product to address the needs of Afghan traders and entrepreneurs, who
cannot access loans from banks.

What this means is that Afghan traders and entrepreneurs, who plan to expand or open
small-and-medium enterprises (SMEs), will have better financing options. This is aligned with
MISFA’s commitment to promoting financial inclusion and contributing to private sector
development. SMEs, an under-served segment of the sector, are an engine for job creation and
economic growth.

As part of the funding agreement with MISFA, SCSA will provide a package of services to
two of MISFA’s partner institutions: OXUS Afghanistan and FINCA Afghanistan. This includes
technical assistance to both MFIs to conduct a feasibility study for an SME loan product; to
design a needs-driven SME loan product; and to establish the SME facility within OXUS
Afghanistan and FINCA Afghanistan. SCSA will also help in segmentation, targeting and
positioning of the product.

There has been a well-established, ongoing demand for SME loans for a segment of the private
sector whose financing needs are above the microcredit ceiling, but do not meet the stringent
eligibility criteria of banks. However, MISFA had to prioritize institutional strengthening of its
partner MFIs and the development of microfinance products and services that cater to Afghans
in the lowest income bracket.

“MISFA partners are in a better position now to diversify their loan products and services to
ensure that the different levels of financing needs are met,” said MISFA Managing Director,
Bahram Barzin. “Having an SME window, combined with the microfinance facility, will help our
partners reach a greater number of Afghan entrepreneurs, who will be the drivers of economic
recovery.”

The agreement with SCSA will be funded by the capacity building and innovation component of
the Access to Finance project funded by IDA/World Bank.

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There has been a well-established,
ongoing demand for SME loans for
a segment of the private sector
whose financing needs are above
the microcredit ceiling, but do
not meet the stringent eligibility
criteria of banks.

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 • Communications and Public Awareness
Acronyms
Communication and sharing information with the sector stakeholders is a key priority for
MISFA. Using different tools, MISFA has continuously and regularly shared the sector related
information and data with donor community, DFIs, Government agencies, consultants and
the general public.

In order to facilitate access to information; MISFA developed its ‘Access to Information

Guideline’ which defines the types of information and levels of access. The guideline also
proposes a monitoring mechanism which ensures proper implementation of the guideline.
On the other hand, MISFA produced its communication strategy which outlines MISFA’s key
communication objectives, messages, media tools and resources and the expected
outcomes and impacts.

During the reporting period, MISFA developed several case studies, newsletters, quarterly
reports and several other publications shared with relevant audiences.

Using different tools, MISFA has

continuously and regularly shared the
sector related information and data
with donor community, DFIs,
Government agencies, consultants and
the general public.

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3.2 MISFA SUPPORT TO PARTNERS AND THE SECTOR
In 2016, MISFA signed partnership agreements with The First MicroFinanceBank-Afghanistan,
OXUS-Afghanistan, FINCA Afghanistan, and sector partners: the Afghanistan Microfinance
Association (AMA), and SCSA. These partnership agreements are strategic to the sector’s
continued stability and MISFA’s vision for greater financial inclusion.

• The First Microfinance Bank – Afghanistan (FMFB-A)

FMFB-A renewed its commitment to increase productivity and further enhance sustainability
by investing in building the capacity of its staff.

With funding commitment from MISFA, FMFB Afghanistan will implement its succession
planning, which will eventually assign Afghan staff to senior positions currently filled by expats.
MISFA’s funding will support a series of progressive capacity building and training activities for
selected staff, designed to enhance their skills, particularly in management and leadership. In
certain cases, the staff development may include sponsoring formal higher education for the
staff.

FMFB-A will accomplish its capacity development plan by collaborating and partnering with
training providers, such as the Afghanistan Institute of Banking and Finance (AIBF), AKAM
training academy, and other relevant institutions.

FMFB-A has been a MISFA partner since 2007 and is currently the largest microfinance
institution in Afghanistan in terms of scope and outstanding portfolio size. The bank has a
network of 38 branches, covering 14 provinces. It has consistently been profitable for the past
several years. Being a bank, FMFB-A is able to offer clients, not only microcredit, but also
deposit/savings services, as well as SME loans. FMFB-A has also proven to be innovative,
introducing a housing loan product and an agricultural-based loan facility, based on client
demand.

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 • OXUS-AFGHANISTAN
Acronyms
MISFA and OXUS-Afghanistan signed a funding
agreement in 2016 worth more than AFN 130
million in loan funds. The loan will support OXUS’
portfolio growth and business expansion.

OXUS-Afghanistan is projecting a 14 percent

increase in its outstanding portfolio in 2017 with its
plan to open four new branches in Balkh and Kabul,
two of the more secure provinces of Afghanistan.

MISFA also signed an agreement with

OXUS-Afghanistan for the strengthening of its SME
function. Through this agreement, SCSA will provide
OXUS-Afghanistan technical assistance in
developing its SME facility and capability.

OXUS-Afghanistan was created in 2007 and

currently serves more than 22,000 microfinance
clients through 21 service outlets in ten provinces
across the country. It has shown profitability during
the financial year 2016 on year to date basis. The
profitability shows sustained increased over the
course of the year.

MISFA ANNUAL REPORT | 19

OXUS-Afghanistan is projecting a 14 percent
increase in its outstanding portfolio in 2017.

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 • FINCA-AFGHANISTAN
Acronyms FINCA-Afghanistan is investing in biometric
technology, which amounts to approximately AFN
5.3 million in grants fund, to provide more efficient
services to its clients and to reduce the risk of fraud.

MISFA committed to supporting this innovation by

signing a funding agreement with FINCA
Afghanistan. FINCA-Afghanistan will purchase and
operate biometric technology to capture and
securely store its clients’ data in a more systematic
way. Tablet devices and Global Positioning System
(GPS) will also be procured to tag and geo-map
clients’ place of residence. This will be
complemented by scanners programmed to
automate loan applications, and a mobile SMS
service alerting clients when their repayment is due,
or when new services are available.

FINCA-Afghanistan also signed an agreement with

MISFA to receive technical assistance through SCSA
in developing its SME facility.

FINCA-Afghanistan started operations in 2004 with

the support from FINCA International (its US-based
parent company), followed by MISFA and ARIES, a
USAID-funded project. FINCA Afghanistan offers a
wide array of credit products, including individual
and solidarity group loans all of which can be -

MISFA ANNUAL REPORT | 21

accessed through conventional lending or Islamic
financing. Headquartered in Kabul, FINCA-Afghanistan
serves more than 25,000 clients through 22 branches
in 11 provinces across Afghanistan. FINCA-Afghanistan
is helping clients in the informal economy to create
their own jobs and build small businesses. Majority of
its clients are female borrowers with fewer economic
and employment opportunities.

• Mutahid Development Finance

Institution

Mutahid is a subsidiary of MISFA. With MISFA

support, it was able to continue strengthening its
governance structure, such that during 2016,
Mutahid had a full senior management in place and
had become operationally sustainable.

Mutahid had also increased its income considerably,

through some cost-cutting initiatives. Mutahid’s
portfolio grew by 6.23% in the last twelve months.
Mutahid is expected to spin off and become a
separate legal entity in the coming financial year.

Mutahid serves more than 18,000 clients across six

provinces. It plans to open more branches, as well as
expand its product line, including Sharia-compliant
services, and strengthen its IT infrastructure.

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• Afghanistan Microfinance Association (AMA)
Acronyms
MISFA provides technical and financial support to AMA to undertake networking and coordination
activities. One of the key functions of AMA is to raise awareness among the general public and
potential microfinance borrowers about development finance; and to address misperceptions and
misunderstandings about the sector through solid messaging consistent with MISFA’s and partner
institutions.

AMA is the national network of Development Finance Institutions (DFIs) in Afghanistan

established in 2005 by MISFA, microfinance practitioners and other stakeholders. AMA is
registered with Afghanistan’s Ministry of Justice.

Currently, AMA has 11 full-time members, including microfinance Institutions (MFIs),

Community-based Savings Promoting Institutions (CSPIs), and other financial institutions; it has
one associate member, the Afghanistan Institute of Banking and Finance (AIBF).

MISFA supports AMA’s networking and coordination activities, such as program and legal
awareness seminars, general assembly meetings, and CEOs coordination meetings. The
coordination and networking activities of AMA have been effective in sharing lessons learned,
good practices amongst stakeholders, as well as in promoting efficiency and collaboration around
risk and fraud mitigation.

MISFA and its partners have laid the groundwork for

development finance and have continued to reach
under-served Afghans, despite the challenges.

MISFA ANNUAL REPORT | 23

4. NEXT STEPS AND CONCLUDING REMARKS
Some of the enduring challenges MISFA and its partners have faced over the past decade have
remained. Implementing partners continue to operate in a volatile, ever changing environment.
Misperceptions about the role of development finance also continue to linger in some
segments of society and this has had implications on partners’ staff and their ability to conduct
their work more effectively.

For the coming year and beyond, MISFA will harness the strength of its well-established
relationships with development partners and stakeholders to address some of these enduring
challenges. It will leverage its relationships with the Ministries of Finance (MoF) and Rural
Rehabilitation and Development (MRRD), the Ministries of Agriculture, Irrigation and Livestock
(MAIL) and of Women’s Affairs (MoWA), Da Afghanistan Bank, and donors, to advocate for a
national policy on financial inclusion.

MISFA and its partners have laid the groundwork for development finance and have continued
to reach under-served Afghans, despite the challenges. This is apparent in the efforts of sector
partners in recent years to strengthen their internal systems, while developing and innovating
financial products and services based on client needs and demand.

For the coming year and beyond, MISFA will leverage its relationships with stakeholders and its
achievements and those of sector partners to advocate at the highest levels for financial
inclusion to also be a national mandate.

MISFA will collaborate with DAB to craft Afghanistan’s financial inclusion policy. MISFA will
continue to build on this trust by taking a leadership role in continuing to strengthen the sector
and being a catalyst for change.

MISFA will collaborate with DAB

to craft Afghanistan’s financial
inclusion policy.

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 5. FINANCIAL OVERVIEW
Acronyms
01 Apr 2003 To
December 20, 2016

AFN’000
INCOME STATEMENT
Interest & similar income 3,621,571
Operating grants 190,243
Other income 19,218
Total operating income 3,831,032
Administrative & other expenses (2,582,687)
Operating profit / (loss) 1,248,345
Income tax expense on taxable profits (245,929)
Operating profit / (loss) after tax 1,002,416
Grant income (grants for loan funds or MFI grants) 11,494,690
Exchange gain / (loss) 39,951
Grant expenditure (grants to MFIs for operating or equity) (3,844,187)
Provision against loans and advances to MFIs & Banks (1,702,059)
Provision for MFI shut-down costs (39,638)
Finance cost (For IDA Credit) (38,290)

TOTAL COMPREHENSIVE INCOME 6,912,883

CASH FLOW

Inflows:

Total comprehensive income 6,912,883

Share capital 100

Long-term loans 800,000

Total inflows 7,712,983

Outflows:
Net Loans and advances to MFIs & Banks (2,011,956)
Loan note investments in MFIs (98,336)
Investments -
Operating fixed assets (36,868)
Working capital (amounts receivable) 915,706
Total outflows (1,231,454)

NET CASH FLOW 6,481,529

Opening cash & bank balances -
CLOSING CASH & BANK BALANCES 6,481,529

Source: MISFA audited financial statements covering the period April 1 2003 to December 20, 2016

MISFA ANNUAL REPORT | 25

MISFA ANNUAL REPORT |
 Acronyms

MISFA ANNUAL REPORT |