1. WHAT IS THE DIFFERENCE BETWEEN ACE AND ADF?

 

The ACE program is a USAID funded activity implemented by DAI. The ACE program has 2 fundamental objectives: a) to assist MAIL establish the Agricultural Development Fund (ADF) and b) to manage the fund during the first 4 ½ years of operation. The ADF was launched with an initial contribution of US$100 million made by the US Government and it is expected that other donors will help increase the fund. It is crucial to keep in mind that the ADF is "owned" by the MAIL and should not be perceived as a USG activity. The latter is particularly important as it could negatively affect repayment.

2. ARE THERE FIELD REPRESENTATIVES FOR THIS PROGRAM?

 

ADF has offices in Kabul, Jalalabad, Mazar-e-Sharif and Herat, however the Fund has nationwide mandate. Contact details in the ADF brochure

3. WHAT ARE THE QUALIFICATIONS FOR A "FINANCIAL INTERMEDIARY" (FI) AND HOW ARE ASSESSMENTS MADE TO DETERMINE IF A FINANCIAL INSTITUTION IS CAPABLE OF ASSUMING THIS ROLE?

 

The requirements for financial institutions are:
1) Legally established in Afghanistan as a lending institution
2) Sound financial position assessed through audited financials and portfolio at risk
3) Currently engaged, or at least with a clear plan to engage in agricultural lending
4) A reasonably broad distribution of branches in the main agricultural areas of Afghanistan
Once a financial intermediary expresses interest in partnering with the ADF, the Fund conducts a thorough pre-audit and risk assessment.
FOR NON-FINANCIAL INTERMEDIARIES, E.G. FARMER AND TRADE ASSOCIATIONS:
 Membership: Growing number of dues paying members representing significant segment of market
 History: Functioning satisfactorily for at least three years with improving trends
 Financial Management: Clear, easy to follow financial statements
 Leadership: Good quality Afghan leadership, preferably one strong individual
 Donor Involvement: Long-term donor presence; donor team ready and able to work with ADF for mutually agreed goals
 Orientation: Strong commitment to free-market pricing and financial sustainability
 Standing: Supported by MAIL

4. WHAT TECHNICAL ASSISTANCE OR TRAINING IS AVAILABLE UNDER THE ACE PROGRAM?

 

Once a loan has been approved, ACE can provide technical assistance in credit administration and in some cases in production-related activities as a way to increase the likelihood of success of the borrowers' operations

5. HOW LONG WILL THE PROJECT CONTINUE, AND WHAT IS THE DURATION OF LOANS PROVIDED?

 

Once a loan has been approved, ACE can provide technical assistance in credit administration and in some cases in production-related activities as a way to increase the likelihood of success of the borrowers' operations

6. WHAT IS THE INTEREST RATE OR FEE CHARGED, AND HOW IS THE FI COMPENSATED?

 

The interest rate ranges between 5 and 17 percent, depending on the specific nature of the activity. For ADF financial and non-financial intermediaries that on-lend the ADF funds to farmers, ADF charges an interest rate that is closer to 5%. The intermediary can then charge a reasonable premium to this interest rate to recover their costs of on-lending to farmers. ADF can also structure the loan to the intermediary in a Sharia-compliant manner."

7. IS THERE ANY INVOLVEMENT OF THE FI IN THE UNDERWRITING PROCESS OR LOAN DECISIONS?

 

Yes, they are responsible for obtaining and registering the collateral.

8. WHAT IS THE PROCESS TO ENGAGE ACE? CAN APPLICATIONS COME FROM PROVINCIAL LEVEL FIS?

 

ACE/ADF welcomes expressions of interest from financial intermediaries located in any part of the country. However, in the case of organizations with more than one branch, the requests should be submitted through their headquarters. Business ideas, concept notes and questions can be forwarded to ACE/ADF regional offices, or its main office in Kabul.