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The First MicroFinance Bank-Afghanistan (FMFB-A)

Website fmfb.com.af The First MicroFinance Bank-Afghanistan logo
Location Afghanistan
Key figures Impact story

Vision

The First MicroFinance Bank Afghanistan’s (FMFB-A) vision is to be recognised as the leading microfinance services provider contributing to poverty alleviation and economic development through the provision of sustainable financial services by targeting micro and small businesses, and households. To reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion, the bank aims to help people become self-reliant and eventually gain the skills needed to graduate into mainstream financial markets.

Mission

The bank’s mission is encapsulated in the following six statements:

  • The bank will focus on providing sustainable microfinance and banking services to poor and vulnerable populations, particularly women;
  • The bank will be sustainable by striving to cover all of its operational costs through revenues, while also generating a modest surplus to finance expansion;
  • The bank will achieve broad geographical and service outreach by deploying in both rural and urban areas from the outset; it will aim to achieve national coverage as rapidly as possible;
  • The bank will develop and implement best practices in its procedures and systems by: drawing on the experience of the banks and programmes of the Aga Khan Agency for Microfinance; the previous experience of microfinance institutions and programmes in the region; and the experience of its management team;
  • The bank will work with the other First MicroFinance Banks, as well as the programmes of the Aga Khan Agency for Microfinance to achieve regional and global consistency in its delivery of financial services;
  • The bank will fulfill its objectives in meeting international environmental and safety standards and social obligations (including avoiding the funding of child and bonded labor), preventing the use of the bank’s services for money laundering and terrorist financing, and discouraging drug production, trafficking and use.

History

The bank is affiliated with the Aga Khan Development Network (AKDN), a group of nine development agencies working in health, education, culture and rural and economic development primarily in Asia and Africa.

Following the demise of the Taliban regime, AKDN established two microfinance programmes in the country, the Emergency Microcredit Programme and the Rural Microcredit Programme. Based in Kabul, Pul-i-Khumri and their adjoining districts, the Emergency Microcredit Programme provided a financial safety net for returnees by offering credit for start-up, restarts, and the expansion of income generating activates in those areas.

In 2004, the urban portion of the Emergency Microcredit Programme in Kabul was converted to The First MicrofinanceBank, with an initial capital investment of US$ 5 million from the Aga Khan Fund for Economic Development (AKFED), International Finance Corporation (IFC), and later, Kreditanstalt fur Wiederaufbau (KfW).

The institution was the first of its kind under the country’s new regulatory structure and was granted a banking license in the autumn of 2003. In 2005, the remaining urban portions of the Emergency Microcredit Programme in Pul-i-kumri and Mazar-e-Sharif were also absorbed into FMFB-A.

With a footprint extending across 14 provinces (76 districts) with 38 branches, and nine Loan Processing offices, FMFB-A is the only microfinance bank in Afghanistan. FMFB-A  has emerged as one of the most successful microfinance institutions in the country offering savings, loans, remittances and a host of commercial banking services.

Structure

FMFB-A is an open-joint stock company fully licensed and regulated by Afghanistan’s Central Bank, Da Afghanistan Bank (DAB). The initial capital for the bank (US$ 4 million) was subscribed to by AKFED (100%). In 2012, 28,800 new ordinary shares of US$ 100 each were issued at a premium of US$ 138 per share resulting in a total premium of AFN 206,038 million. The bank is in full compliance of DAB’s minimum capital requirement of AFA 1 billion (taking into consideration the share capital and the premium amount). AKAM together with AKF (USA) holds 51.3% of the shares. The shareholding structure of the bank as at 31st December 2015, is as below:

  • Aga Khan Agency for Microfinance (AKAM) 39.4%
  • Kreditanstalt fur Wiederaufbau (KfW) 31.9%
  • International Finance Corporation (IFC) 16.8%
  • Aga Khan Foundation, USA (AKF-USA) 11.9%

Management

  • Frank van der Poll, Chief Executive Officer
  • Faburama Ceesay, Chief Financial Officer
  • Islamuddin Zadran, Chief Compliance Officer
  • Habib Ur Rahman, Head of Microfinance

Market Focus, Products and Services

FMFB-A has been operating in Afghanistan since 2004 with the vision of contributing to poverty alleviation and economic development through the provision of sustainable financial services, primarily targeting micro and small businesses, and households. The establishment of the bank is an integral part of the Aga Khan Development Network’s commitment to contribute to the reconstruction and rehabilitation of the economic infrastructure and civil society institutions in Afghanistan.

The bank’s overarching product strategy is to affect demonstrable, measurable and lasting improvements in the quality of life (QoL) of its clients by delivering appropriate financial services to help alleviate economic and social exclusion. The bank also endeavours to develop and market products that cater to conventional customers and to generate revenue from high-income groups.

The bank’s current suite of products/services includes deposits (CA, SA and TD) and loans (micro-enterprise, small business, agriculture/livestock, personal consumption, incremental housing, SME financing), along with commercial banking services including domestic fund transfers, international remittances, foreign currency exchange, and bulk payroll processing.

FMFB-A’s values-based product strategy pursues appropriate product design and delivery mechanisms including loans targeting women; financing for energy efficient, seismic-resistant incremental housing; and loans that promote the use of renewable energy.

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Key figures for The First MicroFinance Bank-Afghanistan (FMFB-A)

* Figures in USD million
** Based on local currency
 20152014201320122011
Total Assets137144170174159
Total Loans5657727759
Total Deposits737394104107
Total Equity2425242313
Equity /Total Assets17,6%17,4%14,2%13,0%8,5%
BIS 1 Ratio31,3%31,3%23,5%19,9%15,4%
Total Revenue16,621,223,522,518,3
Net Income2,72,02,93,22,6
Total Loans/Total Assets40,6%39,8%42,7%44,3%37,4%
Total Deposits/Total Assets53,4%50,9%55,5%59,8%67,2%
Loan Growth **13,3%-17,4%1,0%37,1%28,0%
Deposit Growth**16,6%-18,8%-2,7%3,0%-0,7%
Cost/Income Ratio74,0%77,5%72,1%69,1%77,8%
Return on Assets1,98%1,38%1,72%1,83%1,63%
Return on Equity11,2%7,9%12,1%14,0%19,3%
Co-workers101910181028978883

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