Agricultural Credit Enhancement (ACE) Program Quarterly Report Q1 FY 2011

The report highlights the program's achievements and progress in enhancing agricultural credit in Afghanistan. The ACE program, implemented by Development Alternatives, Inc., has established a true partnership with the Ministry of Agriculture, Irrigation and Livestock (MAIL) and assisted the ministry in the design of the Agricultural Development Fund (ADF). The program has also established a strong presence in the country, with lending teams deployed in the western, northern, and eastern regions. The ACE program has approved loans worth $18.4 million, benefiting 5,800 direct beneficiaries, including farmers in the provinces of Kunar, Nangarhar, Helmand, Laghman, Balkh, Samangan, Kandahar, and Farah. The loans will indirectly benefit 5,600 farmers and create 466 jobs. The program has also assisted MAIL in establishing the basis for the registration of the ADF. The ACE program has launched the Agriculture Credit Technical Working Group, a forum for policy dialogue to address lending issues. The group aims to identify policy issues and develop solutions to address the limitations within agricultural lending in Afghanistan. The program has also published its first two products, market briefs on raisin and grapes, and the perspective of export growth. The delivery of credit services constitutes the core activity of the ACE project. The program partners with financial and non-financial institutions to provide farmers with credit, while managing the risks inherent to a weak institutional environment and security challenges. By December 31st 2010, the ACE program had obtained ACE/MAIL/USAID Technical Committee approval for $18.4 million in agricultural loans through financial and non-financial intermediaries. The program has identified farmer groups and agribusinesses linked to producer networks as effective conduits to channel credit. The strategic pillars of ACE lending activities for 2011 include identification of farmer groups and agribusinesses working in strategic value chains, identification of credit needs, assessment of technical and financial feasibility of loan applications, facilitation of links to financial intermediaries, grants support, and collaboration with other development programs. The ACE program has established strong partnerships and work closely with other development programs supporting agriculture in Afghanistan. Close collaboration with IDEA-NEW, ASAP, and CHAMP has resulted in an updated pipeline of approximately $19 million in potential loans for the next quarter. Some of the companies with potential prospects for ADF loans over the next quarter include the Afghan National Seed Organization (ANSOR), the Afghanistan Almond Industry Development Organization (AAIDO), and the Eastern Region Fruit Grower Association. The ACE program has also launched the first innovative financial product, factoring, in partnership with Farm Service Centers. The program has also established close collaboration with a variety of development programs supporting the agriculture sector in Afghanistan. The ACE program has made significant progress in enhancing agricultural credit in Afghanistan and has established a strong presence in the country.