Agricultural Development Fund (ADF) - Agriculture Credit Enhancement Program (ACE)

Agricultural Development Fund (ADF)
Agriculture Credit Enhancement Program (ACE)

Donor: USAID

Budget: $100,000,000.

Duration: 2010 – 2014

Location: Nationwide

Status: On-going

Objective: The Agricultural Development Fund (ADF) will act as a second-tier wholesale lending institution that will lend to intermediaries in the agricultural value chain, who will then on-lend to small commercial farmers, defined as farmers with 1-30 hectares. ADF is capitalized by a $100 million grant provided by the United States Government to the Government of the Islamic Republic of Afghanistan with the objective of increasing lending to the agriculture sector in order to create a more competitive agriculture sector through expanded agricultural production and increased incomes for agricultural households.

ADF will lend directly and indirectly to banks, non-bank financial institutions, credit unions, microfinance
institutions and non-financial intermediaries such as private farmer associations, farm stores, agricultural
depots, food processors, agribusinesses and other market participants and informal providers of finance that
support the development of agricultural value chains in Afghanistan and are able to enhance the supply of
agricultural credit to the end-borrowers at the farm level.

Until its transition to the Government of Afghanistan in 2014, the ADF is managed by the Agriculture Credit
Enhancement (ACE) program a USAID contract.


  • Lending. This is the core component of the ADF and has the fundamental objective of lending up to $100 Million to 65,000 farmers by 2013. For this purpose, the ADF has three regional offices and over 30 staff
  • Agricultural Modernization and Value Chain Development. This component has two basic objectives: a) assess the technical feasibility of loan applications and b) providing technical advice to a select number of ADF clients to address specific technological, policy and institutional constraints, help them succeed in their business operations and honor their repayment commitment
  • Coordination and Knowledge Management. The main purpose of this component is to assist MAIL in the establishment of the Knowledge Management Facility, a repository of agricultural data, studies, reports and general information. The KMF, to be launched in August 2011 will be located withinMAIL and will have analysis, dissemination capabilities

Progress/ Achievements

  • Obtained Credit Committee approvals for US$20 million in loans to financial and non-financial intermediaries and launched innovative lending products and instruments. Examples include:
  1. A loan for US$4.9 million to the Afghanistan National Seed Organization will directly benefit 93 seed companies and over 3,000 seed producers across Afghanistan
  2. Eight loans for a total of US$926,000 to potato producing cooperatives in Bamyan allowed 438 commercial potato growers to purchase high-quality seed and fertilizers, thereby improving the competitiveness of their produce
  3. 1,850 commercial fruit growers from Kunar, Laghman and Nangarhar provinces, members of the Eastern Region Fruit Growers Association received a loan for US$500,000 to purchase agricultural inputs
  4. Launched a modified version of Murabaha as a financial product aimed at the provision of credit for the purchase of agricultural inputs
  5. Signed an agreement with M-Paisa for the use of mobile banking services for loan repayment
  6. Developed an launched the concept of Credit Management Units (CMUs) as support mechanisms for non-financial intermediaries


  • Currently awaiting MAIL’s credit approval of Policies and Procedures, a requirement for USAID to approve further disbursements
  • Imminent risk derived from the absence of a registered entity