The World Bank has 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.
Funded by the International Development Association the Strengthening Afghanistan’s Financial Intermediation (SAFI) project, will enhance 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. This will strengthen financial system stability and facilitate financial intermediation.
World Bank Country Director for Afghanistan, Henry Kerali said, “As Afghanistan recovers from the negative impacts of the COVID-19 pandemic, strengthening its financial sector is key to accelerating the recovery. This new financial assistance will enable 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 temporary provision of matching grants to small and medium enterprises to retrofit and retool their businesses in response to impacts of COVID-19.”
The project will 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.