The Agricultural Development Fund (ADF)

About:

ADF is a standalone government-owned financial institution with the fundamental purpose of making credit available to the agriculture sector. The target clientele of the ADF includes small commercial farmers as well as agribusinesses engaged in distribution of agricultural inputs, producers of high-value crops, processors and exporters of agricultural products. ADF functions as a wholesale lender, channeling credit through financial and non-financial institutions.

Agricultural credit provided by the ADF is enabling farmers and other players in the agriculture sector to put in practice modern production, processing and market development practices acquired in the last decade.

MISSION:

To stimulate growth of Afghanistan’s agricultural sector by providing farmers and agribusinesses with access to financial services to increase productivity, improve the quality of their crops and harness market opportunities. This will support the MAIL’s broader goals of restoring Afghanistan’s licit agricultural economy and contributing to the growth of the rural economies.

WHAT CAN WE DO FOR YOU?

ADF provides loans to farmer through financial intermediaries. These include:

Financial Institutions

• Banks
• Microfinance institutions
• Credit Unions
• Leasing companies

Non- financial institutions

• Farm stores
• Farmer associations and cooperatives
• Large Agribusinesses

How does the ADF work?

Groups of small commercial farmers and business entrepreneurs engaged in agriculture, and who have a viable business idea can approach the ADF offices in Jalalabad, Herat, Mazar-e-Sharif, Kandahar, Bamyan and Kabul provinces. Depending on the scale of their operation, experienced lending advisors will initiate a loan application, or will refer them to some of ADF’s lending partners.

WHAT OTHER SERVICES ARE AVAILABLE?

Financial intermediaries and agribusiness entrepreneurs borrowing funds from the ADF can access a variety of services to improve productivity and produce quality, to reduce post-harvest loses and to access new markets. The ADF provide these services to ensure the success of agribusiness endeavors and thereby enable its clients to honor their obligation to repay the loans. These services include:

Technical assistance in:

• Credit management
• Crop production technologies
• Market development

Participation in:

• Trading events
• Technical training activities

WHAT MAKES THE ADF THE IDEAL OPTION FOR AFGHAN AGRICULTURAL ENTREPRENEURS?

A BROAD OFFERING OF SHARIA COMPLIANT ISLAMIC FINANCIAL PRODUCTS

The ADF takes Islamic lending seriously; as such it has a series of financial products based on Fiqh al-Muamalat to fit the specific needs of its clients. All Islamic financial products are approved by a Sharia Advisory Board to ensure compliance with religious norms.

TERMS AND CONDITIONS OF LOANS

Being a financial institution devoted to support Afghan agriculture, all financial products are adaptable to the needs of farmers and the agricultural calendar, which provides agribusiness entrepreneurs with custom made solutions.

LOWER COST OF CAPITAL

Whether using Sharia financial products or traditional lending, the cost of capital at the ADF is lower than that of traditional lending channels.

Work Plan for 2019 (1398)

ADF Mission Statement

The mission of the ADF is to contribute to Afghanistan’s economy and to improve the lives of farmers and rural populations by financing agriculture.  It has a dual objective of financing agriculture and facilitating agricultural development.

BUSINESS DEVELOPMENT

Goal: To expand a strong credit portfolio by providing credit to small commercial farmers, agribusinesses, financial and non-financial intermediaries.

Development Objectives: To focus on generating new businesses and expanding the loan portfolio while facilitating growth within the agriculture sector in Afghanistan.

Intermediate Objectives: To make agricultural credit available across the country; identify farmer communities including cooperatives, unions, and associations to meet their credit needs.

Outcome:

5. Increase the income of ADF by disbursing more loans to cover its operating costs as well as to return surplus to existing capital;
5. Create job opportunities within the organization as well as within the agribusinesses that benefit from the ADF loans.
5. Increase the sales and incomes of agribusinesses that utilize the ADF loans
5. Disburse AFN 1 billion to agribusinesses and farmer communities
5. Reach a minimum of 4,000 new farmers to benefit from the on-lending activities through the ADF-participating intermediaries by end of 2019

ADF Achievements in 2019 (1398)

5. In consideration to the assigned target set by the High Council, ADF was able to disburse AFN 1,197,026,981to agribusinesses and financial intermediaries across different provinces of Afghanistan whereas the target was AFN 1,000,000,000. ADF witnessed to exceed this target by 19%.
5. In connection to direct beneficiaries, the target for 1398 was 4,000 farmers where ADF covered 5,090 farmers.
5. As result of the ADF loans intervention, ADF through its clients (agribusinesses) provided job opportunities to 859 persons whereas the assigned target was 300.
5. Benefitting the ADF loans, the borrowers (agribusinesses) managed to increase their export sales to 163% while the target was 75%. Concerning the domestic sales, the target was also 75% whereas the borrowers were able to increase their domestic sales to 56%. The shortfall in not fully achieving of the target was due to the fact that the consumers used precaution not to spend much taking into account the unstable security situation of the country.
5. With respect to overdue loans, ADF witnessed remarkable progress. During 1398, ADF was able to collect ADFN 285,506,926. Progress against this indicator was 71.4%.
5. Concerning the written-off loans that remained unpaid since years, ADF collected AFN 42.2 million through courts whereas the assigned target was AFN 25 million.

5. During 1398, the net income from investments with the local banks reached to AFN 116,226,368. ADF not achieved the assigned target but increasingly exceeded the target.