WOCCU Expands Islamic Financial Services to Southern, Eastern Afghanistan

December 17, 2009

Organization: World Council of Credit Unions
Phone: (608) 395-2000
Helmand fertilizer
Farmers in Helmand province in southern Afghanistan purchase fertilizer with financing from their IIFC.

MADISON, Wis.—The U.S. Agency for International Development (USAID) has awarded World Council of Credit Unions (WOCCU) US$60.5 million to expand financial services in southern and eastern Afghanistan. The WOCCU program will establish the country's first national association for Islamic investment and finance cooperatives (IIFCs), or credit unions, and help IIFCs reach more small and medium-scale business owners, farmers and low-income households in underserved rural areas.

Afghanistan's banking and microfinance sectors have expanded and grown in the past several years with support from international donors, but financial services have yet to reach rural areas on a large scale. The Microfinance Investment Support Facility for Afghanistan (MISFA) has reported that more than 85% of the 3.5 million potential microfinance clients in Afghanistan live in southern and eastern regions of the country and still lack the financial products and services they want and need to support their families and communities.

"The most difficult challenge with broadening access to credit and savings in Afghanistan is operating in the sparsely populated, culturally conservative and highly insecure southern and eastern provinces where farming is the primary economic activity, input supply is very limited and markets are undeveloped," said Brian Branch, WOCCU executive vice president and COO. "WOCCU's program will directly address these challenges while increasing the flow of financial services."

H1N1 Awareness
The IIFCs recently supported H1N1 influenza awareness training for children in eastern Afghanistan as part of their community development programs.

Since 2004, WOCCU has worked with local leaders across Afghanistan to establish the country's first fully Shari'a-compliant financial institutions, which operate according to Islamic principles of finance. After five years of development, 16 member-owned IIFCs with 11 full service branches are currently bringing financial services to approximately 47,000 members across the country. Despite a harsh operating environment, three of the IIFCs are already self-sufficient, and overall membership is increasing by approximately 1,000 new members each month.

After just a few years of operation, the IIFCs have transformed the financial landscape in rural Afghanistan. The institutions have tested a new leadership model that places tribal elders on the boards of directors, a move that has significantly improved local acceptance of the IIFCs while helping maintain very low loan delinquency rates. The IIFCs have also obtained decrees from local religious leaders known as fatwas, indicating approval of the institutions' financial products. The IIFCs' cooperative spirit of member service, reflective of the humanistic principles of Islam, is evident through a wide variety of community projects they support. IIFC activities include rebuilding mosques destroyed in conflict, offering individual development accounts (IDAs) for educating young bombing victims and their siblings, establishing tailoring and embroidery centers for women and coordinating the delivery of basic health services in IIFC communities.

In conflict-ridden areas where opium poppy production is widespread, including the provinces of Helmand, Kandahar, Kunar and Uruzgan, 90% of IIFC loans are used for the production of alternative agricultural crops. The new WOCCU program will train IIFC loan officers in a wide variety of agricultural skills, such as lending for livestock and crop production, incorporating basic techniques to improve production and obtaining high quality seed and other agricultural inputs. The skills will better equip the IIFC to approve loans and advise members on the most appropriate farming techniques to improve productivity and maximize their returns.

WOCCU's program will continue to expand the IIFC network by adding an additional 15 IIFCs and seven branches in the south and east. It will also support the creation of a national association that will provide supervision, technical assistance and loan capital to the IIFCs to help grow Afghanistan's financial cooperative movement.

"This new program will make a significant contribution to the stabilization efforts while building institutions that can rapidly become self-sustaining and permanent Afghan-owned and governed vehicles for economic development," said Geoffrey Minott, USAID/Afghanistan Private Enterprise Officer.

World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented 300+ technical assistance programs in 89 countries. Worldwide, 68,882 credit unions in 109 countries serve 235 million people. Learn more about World Council's impact around the world at

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