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World Bank set $100M Grant for Afghan Financial Sector

by Admin Insight

The World Bank Board of Executive Directors on Monday approved a $100 million grant “to help Afghanistan stabilize its financial sector and support small enterprises as the country strives to spur its recovery from COVID-19,” the organization said in a press release.

The source of the funding is the “International Development Association the Strengthening Afghanistan’s Financial Intermediation (SAFI) project,” said the statement, which “will enhance the capacity of Afghanistan’s central bank, Da Afghanistan Bank (DAB), for financial system regulation and supervision, including by strengthening deposit insurance, financial infrastructure (e.g. public credit registry and collateral registry) and modernizing DAB’s information technology.”

The objective, according to the statement, is to “strengthen financial system stability and facilitate financial intermediation.”

The project is intended to “also help the Ministry of Finance facilitate access to finance for micro, small and medium enterprises (MSMEs), including women-owned and/or operated businesses, through risk-sharing, matching grants, and technical assistance.”

“More than half of Afghanistan’s MSMEs are financially constrained due to a weak economy, COVID-19 lockdowns, insecurity, and the political transition,” said the World Bank statement. 

“As Afghanistan recovers from the negative impacts of the COVID-19 pandemic, strengthening its financial sector is key to accelerating the recovery,” said Henry Kerali, World Bank Country Director for Afghanistan. “This new financial assistance will enable the Da Afghanistan Bank to strengthen its capacity to maintain financial sector stability. It will also support the financial institutions in expanding lending to MSMEs, in a sustainable way and facilitate the temporary provision of matching grants to small and medium enterprises to retrofit and retool their businesses in response to impacts of COVID-19.”

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