Agricultural Credit Enhancement (ACE) Program Quarterly Report Q1 FY 2014

The ADF provides credit to farmers and agribusiness entrepreneurs through intermediaries, with the goal of revolutionizing Afghan agriculture. The ACE Program entered Fiscal Year 2014 with a contribution of US$3.5 million from the Danish Embassy in Kabul, with the possibility of increasing to a total of US$32 million. Capitalization of the fund to a minimum of US$160 million will ensure the sustainability of the ADF. The ADF High Council has endorsed the decision to create the ADF Charitable Foundation and approved its by-laws. As of the end of the first quarter of Fiscal Year 2014, the ADF has approved US$84.3 million in loans and disbursed a total of US$41.4 million. The ADF has on-lent to 22,417 farmers across the country through financial and non-financial intermediaries. The program is actively engaged in strengthening the ADF credit policies and procedures to ensure the sustainability of the fund. The ACE Program has achieved significant milestones, including creating a total of 512 jobs in the agricultural sector, of which 241 were for women. Since the beginning of the project, the program has generated 2,499 jobs, creating economic growth for Afghan households. The team has also succeeded in engaging farmers in innovation and entrepreneurship, balanced by risk management tools. The ADF specializes in providing tailor-made financial solutions, including loans that follow the production calendars of various crops, Islamic financial products, and loans to female agribusiness entrepreneurs. The ADF has a loan portfolio of US$84.3 million, with a default rate of less than five percent. Fifty-one percent of the approved loans consist of Sharia-compliant products. The ACE Program has also provided training to its ADF clients on hygiene and sanitation improvement practices and assisted ADF female clients in Herat with optimizing their industrial processing system flows and drafting business plans. The program has approved three new ACE agricultural modernization grants for a total of US$303,580 and is currently looking to increase access to credit for farmers and agribusiness entrepreneurs. The ACE Program is working to strengthen the ADF credit policies and procedures to ensure the sustainability of the fund. The team is finalizing the ADF business plan, which takes into consideration multiple scenarios for the ADF portfolio growth while targeting several market segments. The program is also focused on effective management of the ADF transition, which will take place between January and July 2014. The ACE Program has made significant progress in achieving its goals, including increasing access to credit for farmers and agribusiness entrepreneurs, creating jobs, and promoting economic growth in the agricultural sector. The program's success is a testament to the commitment of the team and the Afghan government to establishing a financially viable business model that complements the agricultural know-how and technical assistance provided in the last 10 years of development assistance.