KABUL - Afghanistan’s Ministry of Finance signed a $50 million grant agreement with the World Bank (WB) on Saturday for a project that provides technical and financial support to thousands of the country’s poorest households to help lift them out of extreme poverty by 2018.

“Today’s support reconfirms the World Bank Group’s continued assistance to Afghanistan as the country takes over increasing development and security responsibilities from the international community under the ongoing transition,” said the WB Country Director for Afghanistan, Robert Saum, in a news release.

The new grant will be used in support of the Government’s efforts to improve access to credit for micro, small and medium enterprises (SMEs) through the WB-backed Afghanistan Access to Finance Project (AAFP), according to the news release.

From the grant, $32 million will be provided to support the microfinance sector and scale up the ‘Targeting the Ultra Poor’ programme, while the remaining $18 million will support the expansion of the Afghanistan Credit Guarantee Facility that provides partial risk guarantees to loans issued by commercial banks and microfinance institutions to SMEs.

“We believe the Access to Finance Project will play a critical role in the coming years in supporting households as well as small and medium enterprises to gain an increased access to financial services, notably credit,” said Mr. Saum.

Among its other objectives, the Access to Finance Project aims to see over 3,500 households graduate out of extreme poverty by 2018. The Afghanistan Credit Guarantee Facility would provide guarantee coverage to over 1,500 loans to small and medium enterprises, noted the WB news release.

Following strong economic growth in 2012 driven by “an exceptional agriculture harvest and rapid expansion of the services sector,” Afghanistan is facing a slowdown in growth since late 2013 – mainly due to uncertainty surrounding its ongoing political and security transitions, according to a WB study report released in last October.

Afghanistan is slated to hold Presidential and Provincial Council elections on 5 April. The Presidential poll will mark the transfer of power from one elected president to another for the first time in the country’s history. The political transition coincides with a security transition as Afghan security forces have taken up security responsibility from their international allies, who are ending their combat mission by the end of this year.

Afghanistan’s Finance Minister, Dr. Omar Zakhilwal, said that the WB assistance for the Government’s efforts to support the SMEs and the financial sector is “greatly appreciated,” according to the news release.

“Small and medium enterprises provide jobs and livelihoods for the underprivileged sections of the population and make valuable contribution to growth and economic development,” said Dr. Zakhilwal.

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