RURAL FINANCE AND COOPERATIVE DEVELOPMENT (RUFCOD) 306-C-00-09-00531-00

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Rural Finance & Cooperative Development
(RUFCOD)
















306
-
C
-
00
-
09
-
00531
-
00


















RURAL

FINANCE AND

COOPERATIVE

DEVELOPMENT

(RUFCOD)

306
-
C
-
00
-
09
-
00531
-
00

MONTHLY REPORT:
MAY

2012













June 21, 2012



This publication was produced for review by the United States Agency for International Development.



This report was prepared by RUFCOD Project Communication and Public Affairs team,
Afghanistan.




WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

ii





In her own words, Aisha said, “I am very happy that I could secure required
capital (from Kandahar
IIFC) to increase my produce and hire other women.”













DISCLAIMER

The author’s views expressed in this publication do not necessarily reflect the views of the United
States Agency for International Development or the United States Government.

Covered in
Burka,
Aisha

buys cloth from a local supplier in Kandahar city to support her home
-
run
embroidery business
.


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

iii



TABLE OF CONTENTS


I.

SUMMARY

................................
................................
................................
..............

1

II.

REGIONAL ACTIVITIES

................................
................................
.........................

4

A.

Regional Command South

................................
................................
............

4

B.

Regional Command Southwest

................................
................................
.......

5

C.

Regional Command East

................................
................................
................

6

D.

Regional Command North

................................
................................
...............

9

E.

National/Central

................................
................................
............................

13

III.

IIF
C GROUP ACTIVITIES

................................
................................
.....................

14

IV.

UPCOMING ACTIVITIES


JUNE 2012

................................
................................

16





WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

iv



ACRONYMS LIST



AoO

Area of Operation

AREDP

Afghanistan Rural Enterprise Development

ARIES

Agriculture, Rural Investment & Enterprise Strengthening

AVIPA

Agriculture Voucher to
Increase Productivity in Afghanistan

BOD

Board of Directors

CIDA

Canadian International Development Agency

COP

DAB

DMFI

Chief of Party

Da Afghanistan Bank

Deposit
-
taking Microfinance Institution

DQA

Data Quality Analysis

FAIDA

Financial Access for

Investing in the Development of Afghanistan

FAF

Foreign Assistance Framework

F Indicator

Foreign Assistance Indicator (defined by Washington for worldwide
reporting)

FY

Fiscal Year

GDP


Gross Domestic Product

GIRoA

Government of Islamic Republic of

Afghanistan


ICT

Information and Communication Technology

IIFC

Islamic Investment and Finance Cooperative

IIFC Group

Afghanistan Islamic Investment and Finance Cooperative Group

IPTT

Indicator Performance Tracking Table

MDO

M&E


Membership
Development Officer

Monitoring and Evaluation

MFI


Microfinance institution

MISFA

Microfinance Investment Support Facility for Afghanistan

MOU

Memorandum of Understanding

MRR



Microenterprise Results Reporting

MRRD

Ministry of Rural Rehabilitation
and Development

PEARLS

WOCCU’s Financial Performance Monitoring system

PI



Performance Indicator

PIRS


Performance Indicator Reference Sheet

PMP

Performance Management Plan

POS

Point of Service

RC

Regional Command

RUFCOD

Rural Finance a
nd
Cooperative Development

SCF

Sharia
-

C
ompliant Financing

SCFA

Sharia
-

Compliant Financing Advance

SCFAO

Sharia
-
Compliant Financing Advance Officer

SME

Small Medium Enterprise

TA

Technical Assistance

UNOCHA

United Nations Office for Coordination and
Humanitarian Affairs

USAID


United States Agency for International Development

USG

United States Government

WOCCU


World Council of Credit Unions


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

1


I.

SUMMARY

Summary of Key Activities during the Month of
May 2012

Below is a brief summary of key activities undertaken during
the month of
May

that
have
contribute
d
to meeting the RUFCOD objectives as
outlined

in the contract with
United States
Agency for International Development
(
USAID
)
:


1.

Bring all

Islamic Investment and Finance Cooperative

(
IIFCs
)

under a national organization


the IIFC Group


that will provide supervision, technical assistance and loan capital to the
IIFCs


The IIFC Group has already been registered as a corporation in the Afghanistan In
vestment
Support Agency (AISA).


During th
e Base Year, it was decided that
the
IIFC Group would not seek a
Deposit
-
taking
Microfinance Institution
(
DMFI
)

license from Da Afghanistan Bank because draft legislation
for deposit taking microfinance institutions restricts the maximum loan amount that c
an be
provided to US$50,000.

RUFCOD
has been coordinating with
the USAID
-
funded Financial
Access for Investing in the Development of Afghanistan
(
FAIDA
)

and
has
continued
conversations

with the
Da Afghanistan Bank
. The goal
is

to modify or
improve
existing
legislation and/or develop IIFC specific laws and/or regulations that are conducive to credit
union operations and support prudency in operations
;

however,
a

satisfactory legislative
solution is u
nlikely before the end of RUFCOD
.


For the moment,
WOCCU and the IIFC Group are staying with the original federated design
for the IIFC Group and the affiliated IIFCs.


At the local level,
IIFCs will
maintain
their
independent

status

with their own leadership and management

and the
IIFC Group
is the
apex organization at the
national level
.


The IIFC Group also has money invested as
subordinated debt in all

of

the IIFCs.


Th
e
se investments give the Group the authority to
monitor and supervise the operations of the local IIFCs and to require comp
liance with the
operating standards as is stipulated in the S
ubordinated
I
nvestment

Agreements.

All IIFCs
had
tri party subordinated debt purchase
and
operating grant
agreements approved by USAID
and signed by WOCCU, IIFC Group and the IIFCs during this pe
riod.

The IIFC Group is
currently developing a
five

year strategic plan
.

RUFCOD project staff

will review those
options with the IIFC Group and make changes
as

necessary
.



In
May

2012, forty four service outlets (
34

IIFCs and
10 p
oint
s of s
ervice

[
POSs
]
) were
operating in the following
17

provinces of Afghanistan
: Uruzgan, Kandahar

(
Regional
Command
[
RC
]

South)
, Helmand (RC South
west
), Nangarhar, Laghman, Kunar, Logar,
Bamyan, Parwan and Khost (RC East), Balkh, Jawzjan, Faryab, Samangan, Baghlan and
K
unduz (RC North) and Kabul (RC Central/National).

However,
s
even IIFCs including
Shinwari, Khost, Shawali Kot, Uruzgan, Dehrawood, Chora and Baraki Barak, as well as
three
POSs
in Kandahar province (Maiwand, Arghandab and
Panjawee
) have stopped issuing
loans to their members and the focus has shifted to collecting loans.
All of these IIFCs are in
the process of being officially closed
d
own

and accounts liquidated which will occur in July.

WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

2


D
ocuments are being developed for approva
l of the USAID contracting officer as part of this
process.
T
he Surkhrod

POS

in Nanga
r
har province
, has been recommended for relocation
due to insufficient demand for its services and a lack of business potential at its current
location.
Two IIFCs in Helmand province Marjah New and

Nawa

are also under
consideration for close d
own.


Total IIFC members receiving financial services from the IIFC network reached
9
0
,
8
38

at the
end of the reporting period.


2.

Expand access to finance (credit) for primary inputs and equipment for farmers



During
May

the IIFCs disbursed US$
858,529

in loans for agriculture and related businesses
and another US$
1,815,570

in non
-
agricultural loans for t
otal volume of lending of
US$


2,927,540
.
Thirty two percent
of loans were for agriculture and
68
% were for micro and
small
businesses.

The average monthly disbursement of entire IIFC network since the start of
RUFCOD program has been
US
$

2,123,388
. The average monthly disbursement of the
network for the last one year has been US$ 2,741,336. And the average monthly
disbursement

of the IIFC network since January 2012 has been US$
3,138,885
.






Cumulatively over the past two years,
52,341

Sharia
-
com
pliant
financing
advances

(SCFA)

worth over US$2
0
.
9

million were provided to the farmer
s
/
borrowers throughout the IIFC
network

a
t
the end of
May
. Cumulative disbursements to

agriculture represent
ed

3
8.4

%
of
total
IIFC loan disbursements.


3.

Wherever feasible, increase the use of modern technology combined with traditional systems
to give rural areas broader access to basic finan
cial services
.


In December 2011, RUFCOD entered into negotiations with USAID’s FAIDA project to
pilot mobile banking services in four IIFCs.

A
subsequent
meeting
was held
between the
IIFC Group and representatives of FAIDA and MTN
1

during which participants agreed on an
action plan to launch the pilot mobile banking initiative with the Kabul IIFC by the end of
April

2012. Due to some
internal problems

all of a technical nature having to do with
coverage, signal
strength, etc.

tha
t MTN has experienced, the pilot program with Kabul IIFC
was postponed
, once the technical
issues are solved,
the IIFC Group will la
unch
a

pilot
program

in Kabul and once this

is complete, similar pilots will be launched in

Nangarhar and
Balkh provinces through the IIFCs that are operating in those locations.
Two meetings were
held during this month with FAIDA to “re start” this activity and preliminary efforts have
begun in the Kabul IIFC
to set

up a pilot project.
We will await updates from the phone
companies in order to begin the pilot program in Kabul.


4.

Cooperate with other USAID projects, coalition development platforms and GIRoA
programs to create unity and co
herence of effort, maximize the leveraging of resources and
minimize duplication and waste of effort.




1

MTN is an international telecommunication company operating in Afghanistan. Through its legal entity Areeba,
the company obtained the GSM license
and started operations in July 2006 and was later re
-
branded as MTN in
2008.


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

3



IIFC Group

senior management

went to
Helmand
province to pay separate visits to Marjah,
Greshk and Nadali IIFCs as well as
the
Marjah

branch operating in Lashkar Gah city.
Separate

meetings were held with
staff members of these
IIFC
s

and their respective board
members.
The prim
ary
purpose of these meetings was
to press

the issue of
the
high
delinquency
facing these IIFCs. The board membe
rs and staff members of the IIFCs
examined different factors and causes of delinquency and emphasized that they would
accelerate their efforts through closer collaboration with local
tribal elders and government
agencies to lower delinquency to a tolerable

level. The visiting IIFC Group delegation noted
that a
low
delinquency

rate

is extremely vital to the self
-
sufficiency and ultimate survival of
these IIFCs and thus assured the IIFCs of their full support.

A
s a result of these
discussions,

IIFC Group and

the aforementioned

IIFCs’
respective managers
agreed on
a
new
set of
targets
aimed at

improv
ing
the IIFCs’
operations
.

Progress on
IIFC
Network W
ide
Indicators




In May 2012,
44

service outlets (
34

IIFCs and
10

POSs) were operating in the
17

provinces
of
Afghanistan
2
.




1,300 new members, 149 female, joined the IIFC network bringing combined IIFC
membership to 90,838 members nationwide, including 12,002 female members.


In
May

2012
, 1,990 new
Sharia
-
c
ompliant Financing
(
SCF
)

advances (loans) worth US$2.9
million were disbursed during the month for a cumulative total of 98,953
Sharia
-
compliant
loans worth over US$86.6 million since network inception.




The total outstanding loan portfolio was US$20.5 million at the end of May r
epresenting a
1% growth during the month.




Consolidated Portfolio at Risk (PAR) was 11
%

across the IIFC network, but much higher in
the RC South and RC East where insecurity has continued to constrain growth, as well as
limit the effectiveness and regulari
ty of IIFC Group supervisory and examination visits.




Consolidated IIFC
o
perational self
-
sufficiency (OSS) is on target at 102
%
, a substantial
increase over the previous period which was a direct result of a re
versal of loan loss expenses
and other efforts

that improved delinquency and increased efficiency and control of
administration expenses. The
IIFC Group OSS reached 54
%

based on accrued income from
the IIFCs.




Total Subordinated Investment by the IIFC Group is
US
$
12,363,169.




Share savings by IIFC
members reached US$
4.56
million at the end of May demonstrating a
decrease of 3% during this reporting period;





2

S
ome IIFCs and points of service are not lending due to internal operating problems. They are only collecting
outstanding loans while corrective measures are discussed within th
e IIFC Group and with WOCCU.



WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

4




Finally, 2,985 new jobs were created or sustained during the month of May.

II.

REGIONAL ACTIVITIES

A.

Regional Command South

1.

Kandahar province:



Four IIFCs, Kandahar, Spin Boldak, Dand and Shawali Kot are operating in Kandahar
province; however, Shawali Kot IIFC has stopped disbursing loans and is only collecting
the outstanding portfolio. The IIFC is located in the highly insecure district in Nort
hern
Kandahar and key staff have been threatened by insurgents and have resigned. The loan
portfolio has seriously deteriorated with a portfolio
-
at
-
risk > 30 days of 100
%

in May.




Three branches or POSs
,
Arghandab, Maiwand and Panjwaee
,

are also located i
n high risk
districts of Kandahar province and have also encountered problems similar to those
affecting the Shawali Kot IIFC.
Steps are underway to close those outlets
.


Kandahar
Province




Month of
M
ay

Cumulative

Indicator 4
-

Number of members


114

5,
643

Indicator 5
-

Number of active borrowers


n/a

1
,
503

Indicator 6
-

Number of SCF disbursed


92

4
,
405

Indicator 7
-

Net SCF Outstanding


$
48
,
994

$
964,196

Indicator 8
-

Value of SCF disbursed


$
2
1
0,400

$
3,712,362

Indicator 9
-

Portfolio at Risk


32
%

32
%

Indicator 10
-

IIFC Operational self sufficiency


31
%

31
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator
13
-

Total IIFC Assets


$
0

$
1,624,741

Indicator 14
-

Total IIFC member share
investments



$
9,470

$
264,285

Indicator 15
-

Number of jobs created as a result
of SCF



1
3
8

6,608


2.

Uruzgan province:



The three IIFCs in Uruzgan province
,

Uruzgan, Dehrawood and Chora
,

have stopped
lending due to very serious loan delinquency and accounting problems. Examinations
have been completed and the conclusion was made that all three IIFCs must be
liquidated. Technical approval to consolidate IIFC
s has been approved by USAID

COR
.

O
nce final amounts have been determined
,

WOCCU will seek final approval from the
Contracts Officer

to approve the write off amounts
for bad

or in some cases fraudulent
loans
and
those loans

that have been determined to be

“uncollectable.”


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

5



Uruzgan

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


0

3
,
054

Indicator 5
-

Number of active borrowers


0

1351

Indicator 6
-

Number of SCF disbursed


0

3
,
014

Indicator 7
-

Net SCF Outstanding


$
0

$
480,892

Indicator 8
-

Value of SCF disbursed


$
0

$
1
,
657
,
500

Indicator 9
-

Portfolio at Risk


100
%

100
%

Indicator 10
-

IIFC Operational self sufficiency


12
%

12
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13

-

Total IIFC Assets


$
0

$
80
0
,
600

Indicator 14
-

Total IIFC member share
investments



$
0

$
193,423

Indicator 15
-

Number of jobs created as a result
of SCF



0

4
,
521

B.

Regional Command Southwest

1.

Helmand province:



Six IIFCs, Helmand, Garamser, Greshk, Nawa, Nadali and Marjah
,

are operating in
Helmand province.




One branch,
the
Marjah

POS
, provided
Sharia
-
compliant financial services and products
to its members in Lashkar

G
ah
while a full
-
service IIFC has been opened

in Marjah
district itself

and is providing services to the residents of Marjah
.


Helmand

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


1
85

14,178

Indicator 5
-

Number of active borrowers


n/a

4,150

Indicator 6
-

Number of SCF
disbursed


358

13
,
369

Indicator 7
-

Net SCF Outstanding


$
0

$
3,919,035

Indicator 8
-

Value of SCF disbursed


$
704,500

$
11,697,390

Indicator 9
-

Portfolio at Risk


1
1
%

11%

Indicator 10
-

IIFC Operational self sufficiency


133
%

133%


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

6


Indicator 12
-

Total

Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
103,107

$
4,727,415

Indicator 14
-

Total IIFC member share
investments



$
0


$601,740


Indicator 15
-

Number of jobs created as a result
of SCF



537

20
,
591

C.

Regional Command East

1.

Nangarhar province:



Two IIFCs
,
Nangarhar and Shinwari
,

were operating in Nangarhar province during the
month. Of the two IIFCs, Shinwari
,

is experiencing serious operational problems and
high delinquency

as a
result of
fraud from

last year. Three IIFC staff members are in jail
and the legal case is ongoing, but final resolution and recovery of the lost resources is
very uncertain at this time.




Two branches, Behsood and Surkhrod, provided
Sharia
-
compliant financial services and
p
roducts to its members in Nangarhar province. Surkhrod IIFC has not been able to cover
its operating costs over the past two years because of the lack of business potential in the
area where it is located. Relocation to a more active business location is p
lanned for the
month of March.


Nangarhar

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


101

6,912

Indicator 5
-

Number of active borrowers


n/a

1,208

Indicator 6
-

Number of SCF disbursed


5
8

5,135

Indicator 7
-

Net SCF Outstanding


$
0

$
1,206,790

Indicator 8
-

Value of SCF disbursed


$
1
54,900

$
5,685,134

Indicator 9
-

Portfolio at Risk


18
%

18
%

Indicator 10
-

IIFC Operational self sufficiency


111
%

111
%

Indicator 12
-

Total Subordinated Investment

in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
0

$
1,855,264

Indicator 14
-

Total IIFC member share
investments



$
0

$
395,663

Indicator 15
-

Number of jobs created as a result
of SCF



77

7,
703


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

7






WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

8


2.

Laghman province:



One IIFC,

Laghman, was operating in Laghman province during the month.




In addition, one branch office in Alishang was providing
Sharia
-
compliant financial
services to its members in the Alishang district.


Laghman Province




Month of
May

Cumulative

Indicator 4

-

Number of members


43

3,842

Indicator 5
-

Number of active borrowers


n/a

463

Indicator 6
-

Number of SCF disbursed


3
1

2,922

Indicator 7
-

Net SCF Outstanding


$
7,795

$
429,809

Indicator 8
-

Value of SCF disbursed


$
54,100

$
2,329,884

Indicator 9
-

Portfolio at Risk


8
%

9
%

Indicator 10
-

IIFC Operational self sufficiency


84
%

84
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
204

$
501,805

Indicator 14
-

Total IIFC member
share
investments



$
1,719

$
129,276

Indicator 15
-

Number of jobs created as a result
of SCF



46

4
,
3
83

3.

Kunar province:



Two IIFCs, Kunar and Sarkani, were operating in Kunar province this month.


Kunar

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


31

1,964

Indicator 5
-

Number of active borrowers


n/a

503

Indicator 6
-

Number of SCF disbursed


36

1,796

Indicator 7
-

Net SCF Outstanding


$
0

$
385,948

Indicator 8
-

Value of SCF disbursed


$
63,700

$
1,910,125

Indicator 9
-

Portfolio at Risk


1
4
%

14%

Indicator 10
-

IIFC Operational self sufficiency


49
%

49
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0


WOCCU RUFCOD Program (2009
-
2012), USAID Contract Number: 306
-
C
-
00
-
09
-
00531
-
00

Monthly Report
,
May

2012

9


Indicator 13
-

Total IIFC Assets


$
(
4,681
)

$
905,687

Indicator 14
-

Total IIFC
member share
investments



$
11,006

$
139,141

Indicator 15
-

Number of jobs created as a result
of SCF



54

2,
694

4.

Logar province:



One IIFC, Baraki Barak, was operating in Logar province during the month. The
development of this IIFC has been constrained by

being forced to operate in a security
bubble with limited coverage of the surrounding villages of the district. Insecurity is
widespread in the district, and IIFC staff is unable to visit the surrounding villages to
promote membership. The IIFC Group is

also unable to regularly visit the IIFC, and the
absence of commercial banks or Hawala dealers makes it extremely dangerous to transfer
funds from Kabul to the IIFC. The Group is now preparing a plan to close the IIFC.


Logar

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


0

317

Indicator 5
-

Number of active borrowers


n/a

60

Indicator 6
-

Number of SCF disbursed


0

2
61

Indicator 7
-

Net SCF Outstanding


$
0

$
7,301

Indicator 8
-

Value of SCF disbursed


$0

$
228,950

Indicator 9

-

Portfolio at Risk


100
%

10
0
%

Indicator 10
-

IIFC Operational self sufficiency


3
%

3
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
0

$
151,935

Indicator 14
-

Total IIFC member
share
investments



$
57

$
15,434

Indicator 15
-

Number of jobs created as a result
of SCF



0

392

D.

R
egional Command North

1.

Balkh province:



Four IIFCs, Balkh, Sholgara, Khulm and Balkh Employees, were operating in Balkh
province this month.




One branch, Balkh district, was also providing
Sharia
-
compliant financial services to
members in Balkh province.


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231 new members, 91 of them female members, joi
ned the IIFCs in Balkh province,
bringing the total membership in the province to 19,254, inclu
ding 4,748 female
members, at the end of May 2012.




Total number of active borrowers in the province is 5,248. The total number of female
borrowers increased to 1,951.


Balkh

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


231

19,254

Indicator 5
-

Number of active borrowers


n/a

5,248

Indicator 6
-

Number of SCF disbursed


551

23,
871

Indicator 7
-

Net SCF Outstanding


$
68,106

$
3,559,300


Indicator 8
-

Value of SCF disbursed


$
568,660

$
19,183,308

Indicator 9
-

Portfolio at Risk


5
%

5
%

Indicator 10
-

IIFC Operational self sufficiency


9
7
%

120
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$20,00
0

Indicator 13
-

Total IIFC Assets


$
78,962

$
4,340,216

Indicator 14
-

Total IIFC member share
investments



$
8,228

$
788,777

Indicator 15
-

Number of jobs created as a result
of SCF



826


3
6
,
633

2.

Jawzjan province:



Two IIFCs, Jawzjan and Aqcha, were operating in Jawzjan province during the month.




164 new members, including 24 female members,
joined the IIFCs in Jawzjan province
,

bringing the total membership in the province to 13,001 at the end of May.


Jawzjan


Province




Month of
May

Cumulative

Indicator 4
-

Number of members


1
64

13,001

Indicator 5
-

Number of active borrowers


n/a

3,
142

Indicator 6
-

Number of SCF disbursed


287

17,667

Indicator 7
-

Net SCF Outstanding


$
24,643

$
2,982,331

Indicator 8
-

Value of SCF disbursed


$
355,540

$
15,595,004


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Indicator 9
-

Portfolio at Risk


5
%

5
%

Indicator 10
-

IIFC Operational self
sufficiency


111
%

111
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
13,522

$
3,633,092

Indicator 14
-

Total IIFC member share
investments



$
0

$
560,268


Indicator 15
-

Number of
jobs created as a result
of SCF



430

26,500

3.

Faryab Province:




Two IIFCs, Andkhoi and Maimana, were operating in Faryab province this month.




In addition, one branch in Almar was providing
Sharia
-
compliant financial services to its
members in Faryab
province in May.




67 new members,
nine

of them female, joined the IIFCs this month. Total membership in
the province was 5,300 at the end of May.


Faryab


Province




Month of
May

Cumulative

Indicator 4
-

Number of members


67

5,300

Indicator 5
-

Number

of active borrowers


n/a

1,590

Indicator 6
-

Number of SCF disbursed


1
28

6,694

Indicator 7
-

Net SCF Outstanding


S
14,114

$
2,094,374

Indicator 8
-

Value of SCF disbursed


$
286,080

$
7,715,302

Indicator 9
-

Portfolio at Risk


3
%

3
%

Indicator 10
-

IIFC

Operational self sufficiency


1
2
4
%

1
2
4
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$0

Indicator 13
-

Total IIFC Assets


$
37,692

$
2,172,323

Indicator 14
-

Total IIFC member share
investments



$
4,997

$
484,896

Indicator 15
-

Number of jobs created as a result
of SCF



192

10,041





WOCCU RUFCOD Program (2009
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4.

Samangan Province:




One IIFC, Samangan, was operating in Samangan province this month.




40 new members,
two

female members, joined the IIFC in May. Total membership in the
province
was 6,272.
























5.

Baghlan province:




Baghlan IIFC was the

only IIFC operating in Baghlan province this month
;

however, one
branch, Doshi, was also delivering
Sharia
-
compliant financial services to members.




63 new members,
four

female members, joined the IIFC this month. Total IIFC and POS
membership reached 7,3
34.


Baghlan

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


6
3

7,334

Indicator 5
-

Number of active borrowers


n/a

1,398

Indicator 6
-

Number of SCF disbursed


139

8,383

Indicator 7
-

Net SCF Outstanding


$
4
,936

$
1,141,336

Indicator 8
-

Value of SCF disbursed


$
167,120

$
6,262,996

Samangan

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


40

6,272

Indicator 5
-

Number of active borrowers


n/a

1,479

Indicator 6
-

Number of SCF disbursed


113

7,601

Indicator 7
-

Net SCF Outstanding


$6,433

$
1,337,429

Indicator 8
-

Value of SCF disbursed


$170,220

$
6,210,480

Indicator 9
-

Portfolio at Risk


9
%

9
%

Indicator 10
-

IIFC Operational self
sufficiency


182
%

182
%

Indicator 12
-

Total Subordinated
Investment in IIFCs through the IIFC Group



$
0

$0

Indicator 13
-

Total IIFC Assets


$27,783

$
1,431,071

Indicator 14
-

Total IIFC member share
investments



$2,172

$
270,765


Indicator 15
-

Number of jobs created as a
result of SCF



169

11,
401


WOCCU RUFCOD Program (2009
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Indicator 9
-

Portfolio at Risk


2
%

2
%

Indicator 10
-

IIFC Operational self sufficiency


121
%

121
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
100,00
0

Indicator 13
-

Total IIFC Assets


$
1
3,716

$
1,470,517

Indicator 14
-

Total IIFC member share
investments


$
0

$
232,13

Indicator 15
-

Number of jobs created as a result
of SCF



209

12,
575

6.

Kundoz province:




One IIFC
, Kundoz,

was operating in Kundoz

province this month.




89 new members, 18 of them female, joined the IIFC in May and total membership
reached 2,035.


Kundoz

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


89

2,035

Indicator 5
-

Number of active borrowers


n/a

846

Indicator 6
-

Number of SCF disbursed


82

1,739

Indicator 7
-

Net SCF Outstanding


$
12,805

$
713,615

Indicator 8
-

Value of SCF disbursed


$
95,360

$
1,653,320

Indicator 9
-

Portfolio at Risk


2
%

2
%

Indicator 10
-

IIFC Operational self sufficiency


122
%

122
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
2
0,000

Indicator 13
-

Total IIFC Assets


$
6,402

$
750,615

Indicator 14
-

Total IIFC member share
investments


$
0

$
148,249

Indicator 15
-

Number of jobs created as a
result
of SCF



123

2,
609

E.

National/Central

1.

Kabul Province:




Kabul IIFC is the only IIFC operating in Kabul.




Fifty
-
three

new members, 10 of them female, joined the IIFC in May bringing total IIFC
membership to 788.


WOCCU RUFCOD Program (2009
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2012

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Kabul

Province




Month of
May

Cumulative

Indicator 4
-

Number of members


53

788

Indicator 5
-

Number of active borrowers


n/a

2
44

Indicator 6
-

Number of SCF disbursed


33

549

Indicator 7
-

Net SCF Outstanding


$
4
3,192

$
510,801

Indicator 8
-

Value of SCF disbursed


$
108,100

$
1,579,020

Indicator 9
-

Portfolio at Risk


9
%

9
%

Indicator 10
-

IIFC Operational self sufficiency


63
%

63
%

Indicator 12
-

Total Subordinated Investment in
IIFCs through the IIFC Group



$
0

$
0

Indicator 13
-

Total IIFC Assets


$
8,224

$
670,452

Indicator

14
-

Total IIFC member share
investments



$
10,6
01

$
146,950

Indicator 15
-

Number of jobs created as a result
of SCF



50

824

III.

IIFC GROUP ACTIVITIES



IIFC Group held a week

long training program in Sharjah
, United Arab Emirates in
which the heads of its regional offices as well as regional supervision and examination
officers from Helmand, Kandahar and Kabul provinces participated. The objective of this
training program was to upgrade and refine the technic
al knowledge and working skills
of the key personnel in their respective functions and areas of responsibilities. Among
several topics discussed and taught in the training was the nature and types of fraud as
well as ways to prevent it, areas of vulnerabil
ity of the IIFCs to fraud, objectives and
types of internal control, and administrative and accounting control structures.


This training program was unique in its type because it provided an enlightening and eye
-
opening exposure to most of the participants who had never had an opportunity to travel
and attend such advanced training programs outside Afghanistan. Another strikin
g
attribute of the training was that it was conducted by a highly experienced and seasoned
expert, Ms. Severa Mukhamet Alieva, who has vast experience in the field of credit
unions in Uzbekistan and is now working as a consultant for the RUFCOD project.


The skills and knowledge gained in this training program will enable participants to
improve their performance, ultimately leading to the success of the IIFC network.




IIFC Group regional examination and supervision staff in the east visited different IIF
Cs
in the provinces of Nangarhar, Laghman and Kunar as a part of their field supervision,
examination and training program. Numerous field visits have been conducted this year.

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However, the mission of these field visits was to find out and root out the und
erlying
causes of the high delinquency which has been troubling some of the IIFCs in the region
through working together with IIFCs and taking specific measures to tackle the issue.
Nangarhar (10%), Shinwari (96%), Sarkani (37%) and Baraki Barak (97%) are
the
troubled IIFCs that have been struggling with higher delinquency. The visiting
supervision and examination staff asked these IIFCs to reduce their costs while at the
same time further strengthening the collaboration with local government authorities,
t
ribal elders and

Shura

members to decrease their portfolio at risk to a level that is not
detrimental to the viability and sustainability of the IIFCs. The visiting staff committed to
carrying out regular field visits to the IIFCs and extending all possibl
e support and
cooperation to improve their operations.




Field visits by the IIFC Group technical staff to different IIFCs, some operating in highly
volatile areas in the south and east, is a positive sign of unwavering commitment and
support by the IIFC G
roup to the IIFCs, their staff and operations. In addition, these visits
have yielded greater positive outcomes across the country in finding valuable information
about the operations of the IIFCs as well as taking the right measures to improve the
operati
ons of these IIFCs.




IIFC Group senior management paid separate visits to Helmand and Kandahar provinces
in May. During the visit to Helmand province, the Group staff visited Helmand IIFC and
its Marjah Branch, Greshk IIFC, Nadali IIFC and Marjah

IIFC. Several meetings were
held with IIFC staff and their respective board members. The discussions were primarily
centered on the high delinquency ratios of the IIFCs and examining all the different
aspects and factors contributing to higher delinquency
. The Group
’s

senior management
pressed the significance of curbing delinquency and achieving the goal of self
-
sustainability for all the IIFCs. In Kandahar province
,

the Group visiting delegation went
to Spin Boldak and Kandahar IIFCs and held similar dis
cussions with the staff and board
members from those IIFCs. All IIFC staff members were urged to continue with their
hard work to achieve the targets of operational self
-
sustainability. As a result of these
meetings the IIFC Group and IIFCs’ staff agreed
on new targets to improve the IIFCs’
effectiveness and help each IIFC become a sustainable financial cooperative.




Joyce Lehman, a
strategic planning specialist with experience in Afghanistan
,

was hired
to develop a
five
year strategic plan for the IIFC Gr
oup. She interviewed over 50 persons
from such groups as:




Donors


current and prospective



Technical Assistance

p
roviders and/or trainers



Other external stakeholders
(academics,
microfinance

sector, embassy
)




IIFC Managers



IIFC Group
Board of Directors




IIFC Group Management


Q
uestions asked
included
:
Are the existing mandates appropriate?
;
What has the IIFC
Group done well and what can it do better?
;
What is missing?
; and

Are there new
initiatives the Group should undertake?


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She closed out her visit with a workshop where all those
who
participated in the
questionnaire were invited
,

as well as
partner institutions, donor agencies and
government officials. Her final report should be completed in late June

2012
.




Delays continue
d with the KPMG audit reports for the
fiscal
year end
ing

Mar
ch

3
1
, 2011
,

partly caused by significant delay in the appointment of the auditor for the 2010 audits
and the resulting data submission of the 2010 audit report.
The
2011 audit commenced
on
Jan
uary 24,

2012. KPMG continues working diligently to finalize the audit reports for
2011. Security issues have prevented the audit team from visiting the IIFCs in many
areas in a timely manner resulting in further delays. Project
t
hird
country national
f
inancial advisors left most of the field areas in late 2011 and were replaced by locals
who are still improving their financial/accounting skills especially in retrieving data and
preparing reports required by the auditors. However, all the field work is
now complete
and the draft audit reports for most of the IIFCs have been issued. There are a few
outstanding issues with some of the IIFCs and these should hopefully be resolved before
June 30, 2012.


Audit reports for the IIFCs for the
fiscal
year ending
Mar
ch

31, 2012 should be submitted
to USAID by June 30, 2012. Unfortunately we will not have the reports by
the
required
date as KPMG ha
s

yet to finalize the previous year’s audit reports. However, during the
2011 audit, all IIFCs updated their systems t
o allow for necessary data gathering and
easier information retrieval that suits the
auditor’s

requirements, hopefully making this
audit much easier and faster. KPMG will embark on this audit as soon as they finalize the
audit for the
fiscal year e
nding

Mar
ch

31, 2011. The target date for completion as per
their letter of engagement is
Sep
tember

30, 2012
,

but due to the expected delays in
commencement of the audit, Oct
ober

31, 2012 is a more probable date.

IV.

UPCOMING ACTIVITIES


JUNE 2012



Afghanistan Microfinance Association

(

AMA
)

will conduct its general assembly to elect
its new board members. IIFC Group is expected to attend the noted general assembly and
stand as a candidate to serve on AMA’s board. As a prospective board member of

AMA,
IIFC Group is expected to play a key role in advocating support for a vibrant and
sustainable microfinance industry, with particular emphasis on the IIFC network. AMA is
a national association of the whole microfinance industry including microfinance

institutions (MFIs), IIFCs and other nonbank financial service intermediaries in
Afghanistan that provides coordination/networking, knowledge management, capacity
development and lobbying/advocacy for microfinance
in Afghanistan
at national and
internatio
nal levels.




The group of participants who attended the training in Sharjah will return home and are
expected to transfer the knowledge and skills acquired in the training to their colleagues
and employees of the IIFCs
in

their respective regions throug
h presentations and face
-
to
-
face discussions. They will also apply their knowledge in their day
-
to
-
day responsibilities
to optimize staff performance and turn their IIFCs into successful financial institutions.


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IIFCs operating in Balkh, Baghlan, Faryab
and Jawzjan provinces will concentrate their
efforts particularly towards decreasing the delinquency rates of some of the IIFCs in
June. Massive loan collection

efforts

are expected to be implemented by the loan officers
with the collaboration of the
Shura

members to accelerate the collection of loans from
borrowers who have recently become delinquent. Accompanied by their respective
Shura
members, loan officers will travel to some of the far
-
flung villages in the noted provinces
and in face
-
to
-
face meeting
s encourage the delinquent borrowers to repay their advances
despite security concerns in some areas.




The IIFC Group regional staff will convene a meeting with the four IIFCs managers in
Kandahar province to assess the IIFCs’ progress towards the targets

set in the business
plan
.



WOCCU RUFCOD Program (2009
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RUFCOD PMP TRACKER SUMMARY SHEET


May

2012

Indicators

Baseline
as of Nov
2009

RUFCOD
Actual
-

Base Year
(Dec 2009
-

Nov 2010)

RUFCOD
Actual
-
Option Year
1 (Dec 2010
-

Nov 2011)

RUFCOD
Targets Option
Year 2

RUFCOD
-

May

2012
(achievement in
Option Year 2)

RUFCOD
-

May

2012
(achievement
in the month)

(%) of
Option
Year 2
target

Cumulative
Baseline Nov
2009 + Actual
Base Year +
Actual Option
Year 1 +
Option
Year 2

Indicator 1
-

Number of IIFCs

(non
-
cumulative
)


16

14

4

0

0

0

0%

34

Indicator 2

-

Number of points
of service
(
non
-
cumulativ
e
)

11

0

-
1

0

0

0

0%

10

Indicator 3
-

Number of
provinces covered

(cumulative)

11

3

3

19

0

0

89.50
%

17

Indicator 4
-

Number of
members
(cumulative)

46,243

15,958

19,729

150,000

8,908

1,300

6
1
%

9
0
,8
38

Indicator 5
-

Number of active
borrowers

0

16,006

7,074

n/a

n/a

n/a

n/a

23,759

Indicator 6
-

Number of SCF
disbursed
(cumulative)

35,812

20,695

28,647

122,315

13,799

1,990

81
%

9
8
,9
5
3

Indicator 7
-

Net SCF
Outstanding
(cumulative)

$6,546,155

$4,514,191

$
5,131,988

$30,500,000

$
4,308,938

$
211,660

67%

$
20,501,272

Indica
tor 8
-

Value of SCF
disbursed
(cumulative)`

$22,919,888

$17,081,545

$28,178,422

$94,500,000

$18,441,670

$
2,927,540

9
2
%

$
86,621,525

Indicator 9
-

Portfolio at Risk

3.6%

5.6%

14%

8%

1
1
%

1
1
%

n/a

1
1
%

Indicator 10
-

IIFC
Operational self sufficiency

59.3%

72.2%

65%

98%

102.1
%

102.1
%

104
%

102.1
%

Indicator 11
-

IIFC Group
Operational self
-
sufficiency

0.0%

0.0%

54%

100%

54%

54%

54%

54%

Indicator 12
-

Total
Subordinated Investment in
IIFCs through the IIFC Group
(
non
-
cumulative)

$0

$5,203,610

$7,019,559

$1,300,000

$140,000

$
0

11%

$12,363,169

In
dicator 13
-

Total IIFC
Assets
(cumulative)

$10,571,477

$5,329,716

$6,636,821

$39,000,000

$3,374,687

$
248,648

66%

$
25,912,701

Indicator 14
-

Total IIFC
member share investments

(cumulative)


$2,078,720

$877,750

$2,122,646

$5,500,000

$565,765

$213,825

8
3
%

$
4,566,670

Indicator 15
-

Number of jobs
created as a result of SCF
(Cumulative)

53,718

31,042

42,971

183,473

20,698

2,985

81
%

148,429


WOCCU RUFCOD Program (2009
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,
May

2012

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