Agricultural Credit Enhancement (ACE) Program Quarterly Report Q4 FY 2011

In August, the Ministry of Agriculture, Irrigation and Livestock (MAIL) concurred with the ADF policies and procedures manual, a significant achievement. On September 29th, MAIL hosted the inaugural meeting of the ADF Advisory Board, which issued several resolutions crucial for the future of the Agricultural Development Fund. The Credit Committee granted approval for seven new loans totaling $5.3 million USD, which will assist borrowers in the provinces of Wardak, Herat, Balkh, and Nangarhar. The Agricultural Development Fund has disbursed over $9.5 million USD to agribusinesses and intermediaries while maintaining a 0% default rate overall. At this point, ACE has directly benefitted 8,708 farmers in 23 provinces of Afghanistan. $4.76 million USD has been disbursed to 54 Seed Enterprises in 18 provinces and has benefitted 3,823 farmers up through the end of the quarter. ACE organized The Perishable Logistics Summit on September 25th in collaboration with MAIL to discuss opportunities to improve access to refrigerated transport at reasonable prices and increase the competitiveness of Afghan produce in the international market. A major outcome of the Summit was the beginning of negotiations between two shipping agencies and export companies, which is expected to result in a 25 percent decrease in shipping costs, with positive and direct effects on the competitiveness of Afghan agriculture. The program has made significant progress in delivering credit services, partnering with non-financial institutions and agribusinesses that on-lend to farmers. The ACE lending component completed the fourth quarter (FY 2011) with notable achievements, including the approval of seven new loans totaling $5.3 million USD. The program has adapted to lessons learned through the implementation process and the constantly evolving political and security situations. The Agricultural Credit Shura was launched as an instrument to enhance awareness for ADF lending opportunities and Islamic compliant financial products. ACE organized five new Agricultural Credit Shuras in the provinces of Kunar, Laghman, Bamyan, Balkh, and Paktya. The project designed a new Sharia compliant Murabahah Profit-sharing product, which will be used as a vehicle to lend to processing industries. The value chain unit organized the Wheat Value Chain and Policy Workshop in Mazar-e-Sharif on July 27th, 2011, to identify the obstacles limiting the growth of the wheat value chain. The Market Information Unit finalized the basic structure of the Knowledge Management Platform (in Dari: PAYWAND) and is in the process of finalizing the KMF website. ACE also produced the "Pomegranates Market Brief" and an overview on export potential, and disseminated these materials through MAIL. The MIS unit is preparing the quarterly trade report for Afghan agricultural products and has already started discussions with MAIL on a transition strategy for the KMF and capacity building for MIS/MAIL staff. ACE approved a new ADF-Challenge grant of $72,454 USD to support the Farm Service Center Association of Afghanistan (FSCAA) with training in accounting and accounting software for their borrowers. A new ADF Innovation Grant of $35,126 USD was processed to support the Eastern Region Fruit Growers Association (EFGA) to use M-PAISA for the facilitation of loan repayment from farmers in Nangarhar, Kunar, and Laghman. The project designed a financial product for women, ZAHRA, which will be launched in the next few months. Zahra is a Sharia compliant financial product specifically for female agribusiness entrepreneurs already operating medium-scale enterprises, individually or in groups.