Technical Assistance to Partner Institutions
ACGF provides technical assistance to strengthen the capacity of its PIs with regards to MSME lending.
ACGF offers customized TA services to its PIs. These are dedicated to strengthening the capacity of its PIs for more efficient and more accessible MSME lending. Considering the institutional strengths and weaknesses, TA services have addressed a wide range of gaps and sustainably improved institutional and operational structures of PIs.
Historically, TA services offered by ACGF included:
Setting up of MSME lending units
Lending procedures, portfolio management (including scorecard development, risk management tools, appraisal process streamlining, set-up recovery unit, staff incentive scheme)
Staff training (credit risk assessment, financial analysis, relationship management, management capacility)
Automation and digitization
Introduction of appropriate environmental and social management systems
Product development (Islamic finance, trade finance, agriculture lending, women, solar, standing credit line)
Women branding
Due to political developments in Afghanistan since August 2021, most of the previously running TA services were suspended. Nevertheless, ACGF supported its PIs in the following core areas throughout the years 2021 and 2022:
Transitioning existing loan portfolios to Shariah-compliant lending portfolios
Developing innovative new MSME lending products tailored to the Afghan market, especially in the context of Islamic finance and gender-inclusive financing
Implementing training programs to mitigate credit default risks related to MSME loans
In the long run, ACGF TA services aim to:
Stabilize the financial sector
Optimize the lending procedures and methodologies of PIs to lower transaction costs
Facilitate a more accessible lending environment, allowing PIs to expand their outreach and to increase lending volumes to the MSME sector with the aim to generate long-term employment in Afghanistan
Support PIs in adjusting their business models and developing market responsive Shariah-compliant lending products
Improve environmental and social standards with regard to MSME lending
In the context of the reached agreement for new funding by the European Union, ACGF is foreseeing to scale up its TA operations again over the course of 2023. The TA services will mainly focus on facilitating the development of Islamic financial services and products at PIs, strengthening MSME lending methodology particularly with regards to delinquency and risk management, as well as supporting PIs at improving their product offerings and outreach approaches to female headed MSMEs. Finally, ACGF is foreseeing to enhance PIs' understanding of the needs of the agricultural sector, thereby enabling the development of suitable financing mechanisms for this target group.
Programs Implemented by ACGF:
PFI staff
trained
Number of Financial institutions supported by TA
ta projects
completed