Kabul, Afghanistan, 18 September 2003 - The Aga Khan Fund for Economic Development (AKFED) today received a banking licence for The First MicroFinanceBank (FMFB). The institution, with an initial capital of US$ 5 million, will be the first of its kind to be established under the country's new regulatory structure. AKFED, the majority shareholder in the new bank, has mobilised international resources to help create an institution focused on poverty alleviation and that has a strong regional presence. The International Finance Corporation (IFC) is expected to take a 19% share in the Bank. The Kreditanstalt für Wiederaufbau (KfW), the German Development Bank, is discussing an equity stake and other support. The institution has been receiving support from the World Bank Group-administered Norwegian Trust Fund, the Japanese Social Development Fund, the Dutch Trust Fund and from IFC's own resources. Discussions are underway for support from US Agency for International Development and the European Commission. The establishment of FMFB will strengthen AKFED's regional microfinance presence comprising a similar institution just licensed in Tajikistan, and another, an A+ rated institution, established in Pakistan last year after nearly two decades of successful rural microfinance experience. A full service financial institution, FMFB will provide credit and saving products as well as domestic and international payment services. It will focus on micro-enterprises and small businesses and on the creation of productive sources of income and employment, reaching out to the underserved and to isolated rural populations in mountainous areas, in particular, those afflicted by the scourge of the narcotics trade. Beginning in Kabul and urban centres in the north-east of the country, where AKFED is already running significant microcredit programmes to support Afghan returnees and microenterprise development in rural and urban areas, the Bank plans to achieve wide national coverage within a few years. "Reviving entrepreneurial activity in the Afghan economy is as important as rebuilding confidence within a modern regulatory structure," said Iain Cheyne, a Director of AKFED and the Chairman of the Board of FMFB. "We hope to bring to this market our many decades of experience in banking, institution-building and poverty alleviation, as well as the expertise of sound investors and technical partners." Governor Anwar ul-Haq Ahady of Da Afghanistan Bank, the country's central bank, presented the licence to Aly Mawji, the Resident Representative of the Aga Khan Development Network (AKDN) at a ceremony in Kabul. The Bank will focus on the poor and the underserved and target small businesses, which are expected to be Afghanistan's central source of economic growth and employment for the foreseeable future. Its main goals will be sustainability, broad geographical and service outreach, and maximal impact. It intends to develop a full range of services over time to best meet the needs of its clientele. The establishment of FMFB is an integral part of the AKDN's commitment to contribute to the reconstruction and rehabilitation of the economic infrastructure and civil society institutions in Afghanistan. AKFED is the lead shareholder in five commercial banks while AKDN manages 40 microfinance banks and microcredit programmes across Africa, the Middle-East, and South and Central Asia. AKFED, the commercial arm of the AKDN, promotes sustainable economic development, particularly in Asia and Africa, by investing in industry, tourism, infrastructure and financial services. AKFED has already begun to contribute to the revitalisation of the Afghan economy through its microcredit programmes, which will eventually be incorporated in the Bank, the introduction of mobile phone and GSM digital services under the "Roshan" brand name and the establishment of the Kabul Serena Hotel, a major tourism and urban redevelopment project well underway. IFC, the private sector lending arm of the World Bank group, has partnered with AKFED in projects in every sector and area of its activity since the mid-1970s. IFC's mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. The KfW Group, as the German Development Bank, gives impetus to economic, social and ecological development in Germany, Europe and on a global scale. Under the Financial Cooperation between the Federal Republic of Germany and developing countries, KfW acts on behalf of the German government and supports developing countries with investments in infrastructure, financial systems and environmental protection. This way it encourages the introduction of technical, economic and institutional innovations to improve the economic and social conditions of people in these countries. For further information, please contact: Olivier Massart The First MicroFinanceBank Kabul, Afghanistan Tel: +9379321001 E-mail: olivier.massart@akdn-afg.org The Information Department Aiglemont 60270 Gouvieux France Tel: +33.3.44.58.40.00 Fax: +33.3.44.58.11.14 E-mail: info@akdn.org Website: www.akdn.org NOTES The Aga Khan Development Network (AKDN) is a group of private, non-denominational development agencies and institutions that seek to empower communities and individuals, often in disadvantaged circumstances, to improve living conditions and opportunities. Active in over 30 countries, the Network's underlying impulse is the ethic of compassion for the vulnerable in society and its agencies and institutions work for the common good of all citizens, regardless of origin, gender or religion. Financial services institutions managed by AKFED have historical roots going back to the early years of the last century. In countries of East Africa and South Asia, a number of small credit and cooperative societies have developed into major commercial banks and insurance companies, in some cases, listed on local stock exchanges. In other instances, micro-lending programmes have expanded in rural and urban settings in environments as divergent as Madagascar, Mozambique, Egypt, India and Syria. Fully-fledged microfinance banks have been set up in Pakistan and Afghanistan and one is being established in Tajikistan.