Rural Finance Cooperative Development (RUFCOD): Annual Performance Monitoring Report

With a total value of $60.5 million over a period of approximately three years (2009-2013), RUFCOD is one of USAID's largest rural financial service projects in Afghanistan. The program is implemented by the World Council of Credit Unions (WOCCU) and focuses on providing Sharia-compliant financial services to small and medium-scale business owners, farmers, low and medium-income households, and women. RUFCOD's key goal is to establish a national apex entity, the IIFC Group, to expand the outreach of community-level Islamic Investment and Finance Cooperatives (IIFCs). The program aims to enhance the capacity of rural finance and cooperative support and infrastructure by establishing a fully sustainable cooperative apex institution. This institution will provide external oversight and supervision of individual IIFCs, training and technical support to enhance staff and leadership skills, and access to external capital to increase the volume of lending for agriculture and small businesses in rural communities. RUFCOD's technical approach is built around two key results: enhanced outreach of retail rural finance cooperative institutions and enhanced capacity of rural finance and cooperative support and infrastructure. The program will work with existing and new IIFCs to expand the delivery of financial services to priority geographic areas and increase the disbursement of loans to underserved small businesses, farmers, low and middle-income households, and women. Afghanistan's economic growth challenges are addressed by targeting key sectors and implementing activities to support Assistance Objective 4: A developed business climate that enables private investment, job creation, and financial independence. RUFCOD supports USAID/Afghanistan's activity objective through contributing towards the attainment of Intermediate Result 4.3: Competitiveness of private sector enhanced. Before RUFCOD was awarded in December 2009, WOCCU had established an extensive network of financial cooperatives with financing from USAID's ARIES program (2006-2009) and MISFA (2004-2009). The 27 IIFCs and points of service or branches had disbursed more than $22.9 million in loans and created 53,718 jobs for Afghanistan's population in rural and urban communities in the North, South, and Eastern provinces. The Islamic cooperative model being used in Afghanistan was developed and modified over a period of years to make the Islamic Investment and Finance Cooperative's (IIFCs) more acceptable to the local populace, particularly to the more conservative rural communities in the East and South. WOCCU consulted with Islamic scholars (muftis) and local mullahs in modifying its traditional credit union development methodology for application in Afghanistan. WOCCU obtained Fatwas (decrees by local muftis, or religious leaders) approving the credit products of the IIFCs. RUFCOD's progress towards its objectives is reported in the program's annual performance monitoring report for the period of December 1, 2010, to November 30, 2011. The report highlights the program's accomplishments and impact, including the establishment of a national apex entity, the IIFC Group, and the expansion of the outreach of community-level IIFCs. The report also presents key achievements, such as the disbursement of loans to underserved small businesses, farmers, low and middle-income households, and women, and the creation of jobs for Afghanistan's population in rural and urban communities. RUFCOD's results framework is presented in Annex I of the report, which outlines the program's key results and indicators. The framework includes indicators such as the number of borrowers, branches and/or financial points of service, volume of loans extended, and microfinance percentage of loan defaults (Portfolio at Risk). The report also presents a PMP Tracker Summary on RUFCOD Contract Indicators, which highlights the program's progress towards its objectives. In conclusion, RUFCOD is a significant program aimed at increasing access to financial services in southern and eastern Afghanistan. The program's progress towards its objectives is reported in the annual performance monitoring report, which highlights the program's accomplishments and impact. The report presents key achievements, such as the establishment of a national apex entity, the IIFC Group, and the expansion of the outreach of community-level IIFCs.