Agricultural Development Fund

Agricultural Development Fund

International Women’s Day is a time to reflect on progress made, to call for change and to celebrate acts of courage and determination by ordinary women who have played an extraordinary role in the history of their countries and communities.

This is the time to uphold women’s achievements, recognize challenges, and focus greater attention on women’s rights and gender equality to mobilize all people to do their part, and envisions a world where each woman and girl can exercise her choices, such as participating in politics, getting an education, having an income, and living in societies free from violence and discrimination.

Like many other institutions ADF also celebrated International Women’s Day, a historical day which changed the role of women both in national and international levels.

Back in 2012, ADF’s High Council (the strategic decision making body) have stressed the need for the ADF to find ways to provide women with credit for agriculture-related activities.
With the purpose of overcoming this challenge and enabling women to participate in the development of Afghan agriculture the ADF launched a line of financial products aimed at addressing the needs of rural women Zahra, a Sharia compliant financial product.

Agricultural Credit leads to more than just economic growth; it promotes equality by providing opportunities to women entrepreneurs.

For the first time, eight organizations and commercial scale enterprises, over 200 individual and 1000 rural women have had access to financial services throughout Afghanistan.

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Press Release

Kabul December, 2014
E-mail: info@adf-af.org
Phone: +93 20 250 48 35

The Agricultural Development Fund (ADF) is a government owned financial institution serving the agriculture sector. The registration of the ADF as a standalone non-bank financial institution was approved through Presidential Decree 6620 dated 11/10/1390, and its bylaws were approved by the Cabinet of Ministers in December 2012.

The ADF is governed by a High Council composed by high level representatives of the Government of the Islamic Republic of Afghanistan, together with representatives from the private sector and the donor community.

The ADF is not a project; it is in fact an Afghan institution expected to provide financial services indefinitely. Thanks to contributions of various donors the ADF expects to continue expanding its portfolio serving a larger number of farmers, agribusiness entrepreneurs.

Thus far, the ADF has approved loans worth AFN 5.9 billion to some 30,000 farmers and agribusiness entrepreneurs in 33 of Afghanistan’s 34 provinces.

September 2014

Contact: Ashraf Abdullah

Phone: +93- 0202504835

E-mail: info@adf-af.org

On September 23, 2014 the Agricultural Development Fund (ADF), celebrated the potato harvest together with farmers in Bamyan. This year 1,742 farmers, members of 56 cooperatives from Bamyan province have had access to agricultural credit through the ADF.

The ADF CEO and the Governor of Bamyan province, together with the Bamyan farmers, celebrated the Potato Harvest with producer cooperatives in Bamyan. ADF has been operating in Bamyan province since 2011 in partnership with the Provincial Delegation of MAIL to serve a small number of clients. The increase in the number of loans provided in the province required of a stronger presence that resulted in the opening of ADF provincial office in June 2013.

Agricultural cooperatives from Bamyan province received ADF loans for the fourth year. In the spring of 2011, 438 potato growers’ members of 7 cooperatives were provided with loans from seed and fertilizer. Later, in the spring 2012, 700 potato growers members of 27 cooperatives accessed loans for agricultural inputs; and in 2013 1,280 potato growers, member of 44 cooperatives received over AFN 112 Million in loan and this year 1,742 potato growers, members of 56 cooperatives received over AFN 127 Million in loans.

To date ADF has approved loans for over US$ 101 million. These loans are directly benefiting over 24,000 farmers in 32 provinces. The work carried out with potato growing cooperatives in Bamyan province is one of several examples of how credit is supporting the growth of agriculture.

Press Release

Kabul, July 13, 2014

E-mail: info@adf-af.org

Phone: 0202504835

The High Council of the Agricultural Development Fund (ADF), chaired by H.E. Mohammad Asif Rahimi, Minister of Agriculture, Irrigation and Livestock, swore in Mr. Joel O. Carter as the new ADF Chief Executive Officer during the 7th meeting of ADF High Council on June 25, 2014.

Mr. Carter is a financial services professional with extensive experience in banking, credit, investments, insurance and marketing in three continents. For over 25 years, Mr. Carter has provided retail, corporate and agricultural banking products and services to clients and has knowledge of banking operations in conflict and post-conflict environments. Most recently, he served as an Advisor and Team Leader to the ADF playing an integral and strategic role in the establishment of the organization.

Mr. Carter holds a Masters of Business Administration (MBA) in Finance from Letourneau University in Houston, Texas.

The ADF is a government owned financial institution established under the auspices of the Ministry of Agriculture, Irrigation and Livestock, through a grant from the United States Agency for International Development (USAID). The ADF is one of the most successful collaborations between the US and the Afghan governments; since its inception it has processed loans worth more than US$93 million, reaching 24,000 farm households in 33 of Afghanistan’s 34 provinces.

For more information, please visit www.adf-af.org. 0202504835, or address your inquiries to info@adf-af.org

 

The Ministry of Agriculture, Irrigation and Livestock is giving thousands of Afghan farmers and agribusiness entrepreneurs the opportunity to benefit from access to credit.

Javid Afghan Thresher, a company based in the eastern city of Jalalabad is one of the beneficiaries of ADF. Its owner, Haji Malang who until 6 years ago worked as a welder for a small workshop has become the first large-scale manufacturer of wheat and rice threshers and farm trailers in Afghanistan.

The loan provided to the company will enable Javid Afghan Threshers to increase its production by 20 percent, generating 60 new jobs, as well as to manufacture components previously imported from China and Pakistan.
This increase in output will benefit over 1,200 farmers that will have access to of first-stage processing, reducing post-harvest losses and increasing their incomes.

Haji Malang is one of 5,800 farmers and agribusiness entrepreneurs supported by the ADF since its launch in July 2010. An innovation of the program is the introduction of Sharia-compliant financial products, in agreement with the religious and cultural norms of the country.

With investments like this, MAIL is supporting the growth of commercial agriculture in Afghanistan, facilitating the transition from a subsidies and grants to fully commercial financial services.

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With the beginning of the spring planting season, the ADF opened its 3 regional offices in Jalalabad, Mazar-e-Sharif and Herat.

The new offices, staffed by lending officers and Value Chain specialists are now fully operational and will serve the credit needs of farmers and other agribusiness entrepreneurs in the eastern, northern and western regions of Afghanistan. The southern region will continue to have oversight from the Kabul office.

This new infrastructure will enable the ADF to play a significant role in the provision of credit to the agricultural sector. This is particularly important considering the new offices will have customer service windows for the reception of loan applications, which will conduct a preliminary review of the requirements of loan applicants and will either channel their applications to the Kabul office, or refer them to other lending institutions.

The new network will enable the ADF to have true presence in the main agricultural areas of the country.

The vulnerability of agriculture production to a variety of factors, such as droughts, floods, pests, diseases, and volatile markets make agriculture financing a high-risk proposition. This is not only the case in developed countries, but even more so in emerging economies where guarantees and collateral are difficult to obtain and even harder to enforce in the event of default.

Financial institutions in these countries tend to stay away from this market segment preferring instead to deal with the lower risk categories of individuals, corporations, other financial institutions, and governments.

Faced with this issue, the Agriculture Development Fund (ADF) changed their strategy and started lending funds directly to small and medium sized enterprises (SME) in the agricultural sector.

The ADF in Afghanistan was set up by the Agricultural Credit Enhancement Programme, a U.S. Agency for International Development funded programme, through a USD 100 million grant to the Ministry of Agriculture, Irrigation and Livestock. Initially only set up to offer conventional financing, during the first year of their operations, the ADF experienced significant demand for Islamic financial services.

From a survey undertaken during 2013, it became apparent that the vast majority of farmers and agricultural businesses in Afghanistan prefer to deal with financial institutions for their financing needs, rather than hawala dealers, relatives, or micro finance institutions. In addition, 99% of those surveyed indicated to prefer Islamic financial solutions, provided that the offering would be competitive and meet their requirements.

Contrary to many providers of Islamic financial services for micro and SME financing, ADF's sharia compliant offering is not restricted to murabaha; instead, they made a conscious decision to explore all possible instrument types in order to ensure the requirements of their clients.

Combined with competitive pricing, policies and procedures, and a Sharia Advisory Board (SAB), their sharia compliant offering now comprises half of their outstanding portfolio. This is a significant difference with other micro and SME financial institutions where the actual demand for Islamic financial services remains far behind conventional financial services. The question that thus arises is why it is that the ADF succeeds where others don't.

The first reason for ADF's success is related to pricing. On a like for like basis, conventional financial services at ADF carry the same cost for the client as sharia compliant financial services. The second reason behind this is the flexibility of the transaction types. Contrary to most institutions the offering at ADF is not restricted to murabaha, but consists of the following:

  • Restricted wakala - typically applied to production
  • Murabaha - used for raw materials, tools, and machinery
  • Ijara - equipment lease
  • Salam - advances in the context of contract farming

These transaction types can be applied to meet all requirements in agriculture finance providing the flexibility the client requires. In addition to the above, new products are being considered, and significant effort is spend on explaining the characteristics of the instruments and how they comply with the principles of sharia to (potential) clients and their religious and community leaders.

The uptake of 50%, which is only set to increase, and many recurring clients imply that the sharia compliance offering of the ADF can certainly be considered a success story for the ADF as well as their clients. With the additional advantage that the model itself is developed in such a way that it can be imported to other locations too.

As of April 2014 the ADF has approved loans for some USD 90 million, disbursed USD 50 million directly benefiting over 23,000 farmers in 33 of Afghanistan's 34 provinces, while maintaining a default rate below 5%.

"This highly successful initiative has a direct impact on the life of the population in rural economies and agricultural growth as a whole" - H.E.M Asif Rahimi - Minister of Agriculture, Irrigation, and Livestock, Afghanisan

Bio
Dr Natalie Schoon, CFA, CAMS is a financial professional with significant experience in international conventional and Islamic financial services. She works as an advisor to a variety of organisations. Previously, Natalie has worked with Bank of London and The Middle East plc as Head of Product Development, Barclays Capital as a senior risk consultant, and other international financial institutions such as ABN AMRO Bank and Gulf International Bank. She began her career in Islamic Finance whilst working in Bahrain, Kuwait and Dubai during the 1990's. Natalie holds a PhD in financial analysis (thesis subject: Residual Income Models and the Valuation of Conventional and Islamic Banks), is an accredited trainer for the Islamic Finance Qualification, and a visiting fellow at the ICMA Centre at the Henley Business School, University of Reading.

 

Press Release

Kabul, May 10, 2014

E-mail: info@adf-af.org

Phone: 0202504835

Today the High Council of the Agricultural Development Fund (ADF), chaired by H.E. Mohammad Asif Rahimi, Minister of Agriculture, Irrigation and Livestock, hosted an event to celebrate the success of the institution serving the agriculture sector.

The celebration included a presentation of achievements of the ADF in the support of Afghan agriculture; welcoming the Government of the Kingdom of Denmark as a contributor to the ADF, and recognizing a small group of outstanding ADF clients. During the event a large number of ADF clients displayed their products to the audience.

Minister Rahimi said “I would like to end by reiterating the appreciation of the Government of the Islamic Republic of Afghanistan and, especially that of my ministry for the contribution of the US government, through USAID. I would also like to welcome the Government of the Kingdom of Denmark, that has already started to contribute funds for the capitalization of the ADF…thank you for your contributions, for the partnership and for supporting the Afghan government to launch this uniquely important and successful initiative, that is unleashing the true potential of Afghan Agriculture.”

The ADF is a government owned financial institution established under the auspices of the Ministry of Agriculture, Irrigation and Livestock, through a grant from the United States Agency for International Development (USAID). The ADF is one of the most successful collaborations between the US and the Afghan governments; since its inception it has processed loans worth more than US$90 million, reaching 23,000 farm households in 33 of Afghanistan’s 34 provinces.

For more information, please visit www.adf-af.org. 0202504835, or address your inquiries to info@adf-af.org

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PRESS RELEASE

Kabul, April 14 2014

Contact: Flouran Wali

E-mail: flouran_wali@dai.com

The Agricultural Development Fund (ADF) today confirmed that Afghan authorities this week arrested a former ADF employee, Mr. Khalil Qadery, on charges related to theft of ADF funds.

“We are delighted with this development in the investigation,” said H.E. Mohammad Asif Rahimi, Minister of Agriculture and Chairman of the High Council of the ADF. “We would like to pay tribute to Afghan law enforcement agencies and their counterparts.

Operating under the auspices of the Ministry of Agriculture, Irrigation and Livestock, the ADF is a wholesale financial institution established through Presidential Decree to make credit available to Afghanistan’s agriculture sector. The ADF’s lending capital consists of US$100 million granted by USAID directly to the Government of the Islamic Republic of Afghanistan.

The incident took place on April 18, 2013, when Mr. Qadery allegedly diverted a large sum of money from its intended recipient. Within hours of the incident, ADF alerted the USAID Inspector General and other relevant parties, and Afghan authorities launched an aggressive investigation, which led to the arrest of Mr. Qadery in Mazar-e-Sharif this week.

The ADF looks forward to cooperating fully with any prosecution brought by GIRoA in connection with this matter.

The ADF is one of the most successful collaborations between USAID and the Afghan government. Since its inception, it has processed loans worth more than US$85 million, reaching 23,000 farm households in 33 of Afghanistan’s 34 provinces. ADF clients have repaid US$23 million, allowing the institution to maintain a default rate substantially below the global average for agricultural credit.

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The Agricultural Development Fund (ADF) is a government owned financial institution serving the agriculture sector. The registration of the ADF as a standalone non-bank financial institution was approved through Presidential Decree 6620 dated 11/10/1390, and its bylaws were approved by the Cabinet of Ministers in December 2012.

The ADF is governed by a High Council composed by high level representatives of the Government of the Islamic Republic of Afghanistan, together with representatives from the private sector and the donor community.

The ADF is not a project; it is in fact an Afghan institution expected to provide financial services indefinitely. Thanks to contributions of various donors the ADF expects to continue expanding its portfolio serving a larger number of farmers, agribusiness entrepreneurs.

Thus far, the ADF has approved loans worth AFN 4.8 billion, disbursed AFN 2.5 billion to some 23,000 farmers and agribusiness entrepreneurs in 33 of Afghanistan’s 34 provinces.

This clarification is being published in response to unfounded rumors about the upcoming closure of the ADF, which contradict the design, the purpose and the nature of the institution.

 

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