A shariah-compliant scheme that offers farmers easy credit improves crop yields and quality
15 AUGUST 2012 | AFGHANISTAN
A simple loan changed Aminullah’s life forever. He grew almonds, plums, apricots and pomegranates for years but his yield was never particularly good and his profit was always slim. But a loan from the Afghanistan Almonds Industry Development Organization (AAIDO) changed everything. For the first time, Aminullah is able to buy fertilizer and pesticide for his 12 acres of ancestral land in northern Afghanistan. Recently, he reaped a rich harvest, which was at least one-fifth more than he ever grew before. The quality of his produce is good and Aminullah is now able to sell it to an exporter, who sells fruits and nuts to India.
Aminullah is not the only farmer to benefit from loans granted by the almond industry association. USAID’s Agricultural Credit Enhancement program has granted loans to 15,000 farmers in 28 of Afghanistan’s 34 provinces through organizations like AAIDO. The assistance enables farmers to buy modern tools to improve crop yield and quality.
The Program takes into account Afghanistan’s cultural sensibilities about loans because payment of interest is prohibited by Islam. To manage this issue, USAID developed a series of Islamic financial products that are based on murabaha principles, which means the money is given with an honest upfront declaration of cost, making the farm loans compliant with shariah.
The Program also provides technical assistance to farmers, including marketing their crops through trade offices in India and Dubai.
Agricultural credit is one of several mechanisms that USAID is using to modernize Afghan agriculture and build market mechanisms that promote rural economic growth. The Agricultural Credit Enhancement scheme supports the Afghan government’s Agricultural Development Fund, which was established with a $100-million grant from USAID in July 2010.
Last updated: January 20, 2015