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USAID Helps To Unlock Capital For Small Businesses

In an effort to increase access to credit for business owners, USAID Afghanistan signed a seven-year, $15 million USAID Development Credit Authority (DCA) partial credit guarantee with Ghazanfar Bank, a local commercial bank in Kabul.

The credit guarantee is collateral to partially supplement the amount that businesses need to qualify for a loan with an expectation that the lender will reduce collateral requirements in the future.

The increased access to finance will be instrumental in helping businesses participate in cross-border and regional trade to help the Afghanistan market prosper, USAID stated.

Despite sufficient market and industry knowledge, access to finance is a major challenge for small and medium enterprises (SMEs) in the country. USAID also stated that unpredictable market conditions embolden financial institutions to require higher collateral and offer short tenor loans, further limiting the availability of credit for otherwise creditworthy SMEs.

While Afghan regulators may require at least 120 percent collateral compared to the loan amount, due to market volatility, financial institutions often require collateral as high as 400 percent.

This comes after the USAID’s recent Passage to Prosperity: India-Afghanistan International Trade and Investment Show in Mumbai, India.

The aim of this was to advance regional integration by strengthening economic ties with a partnership between Afghanistan and India. The event built off the success of last year's event in New Delhi, showcased Afghan companies and Indian innovation, and launched a forthcoming single-sector event series.

The hope is for ongoing engagement in the region to spark increased Indian investment in Afghanistan and expanded Afghan commercial ties with India.

USAID Helps To Unlock Capital For Small Businesses

This collateral will help subsidize business owners needing to qualify for commercial loans.

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In an effort to increase access to credit for business owners, USAID Afghanistan signed a seven-year, $15 million USAID Development Credit Authority (DCA) partial credit guarantee with Ghazanfar Bank, a local commercial bank in Kabul.

The credit guarantee is collateral to partially supplement the amount that businesses need to qualify for a loan with an expectation that the lender will reduce collateral requirements in the future.

The increased access to finance will be instrumental in helping businesses participate in cross-border and regional trade to help the Afghanistan market prosper, USAID stated.

Despite sufficient market and industry knowledge, access to finance is a major challenge for small and medium enterprises (SMEs) in the country. USAID also stated that unpredictable market conditions embolden financial institutions to require higher collateral and offer short tenor loans, further limiting the availability of credit for otherwise creditworthy SMEs.

While Afghan regulators may require at least 120 percent collateral compared to the loan amount, due to market volatility, financial institutions often require collateral as high as 400 percent.

This comes after the USAID’s recent Passage to Prosperity: India-Afghanistan International Trade and Investment Show in Mumbai, India.

The aim of this was to advance regional integration by strengthening economic ties with a partnership between Afghanistan and India. The event built off the success of last year's event in New Delhi, showcased Afghan companies and Indian innovation, and launched a forthcoming single-sector event series.

The hope is for ongoing engagement in the region to spark increased Indian investment in Afghanistan and expanded Afghan commercial ties with India.

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