Why finance the first bank to open women-only branches in a restrictive society?

Empowering Afghan women through brave financial services

The current and historical instability in Afghanistan makes it one of the world’s most high-risk countries and therefore also one of the worst in terms of underinvestment. So when FirstMicroFinanceBank-Afghanistan (FMFB-A) approached FMO with a €5 million financing request, we saw a perfect alignment with the goals of MASSIF, a fund FMO manages for the Dutch government intended for investments that are too high-risk for regular FMO funds.

FMFB-A is a financially healthy bank that provides microloans to enable people from vulnerable groups such as 18 to 24-year-olds, refugees and women to start their own small companies. They already had a good relationship with FMO and are a member of the Global Alliance for Banking on Values. So despite the risks, reflected in the fact that management meetings would have to be held outside the country and FMO wouldn’t be able to visit projects, it was decided to invest. 

Microloans with an impact

€5 million may not be an enormous amount in international investment terms, but because FMFB-A provides microloans, it can have a huge impact on a great many people. An impact that goes far beyond the purely financial.

One of FMFB-A’s goals is to give women access they would not otherwise have to financial services. It was the first bank to open a women-only branch with an entirely female staff. Allowing women to manage their own finances in a safe, enabling environment, and overcome social and cultural barriers to economic empowerment. The bank took an enormous risk here, as Afghan public opinion is that men should take care of financial matters. It also increased the chance of attacks from the Taliban, resulting in a need for higher security.

High-risk financing – in every sense

The first women-only branch was a success and FMFB-A is planning two more in other cities. The target is to give 75,000 women access to financial services by 2020, and not just in ‘safer’ areas. The bank has branches across Afghanistan, including in bunker-like buildings in dangerous regions. This requires extreme levels of security, with soldiers defending the branch and everyday money transportation a perilous undertaking.

The high security costs mean some branches don’t make a profit, but FMFB-A is determined to keep them open to ensure it continues to reach people in more remote and dangerous areas.

Reaching the vulnerable

The Dutch government is enthusiastic about the project’s high impact in a vulnerable country and the ultimate goal is to open the way for investment by regular financial institutions. Meanwhile, FMFB-A’s work is helping FMO in its quest to provide 100,000 microloans worldwide by 2020. None will add more value or be more hard-earned than those in Afghanistan.