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Interview with AUCC Chairperson Carolyn Lamm Before 2012 Uzbekistan-US Annual Business Forum

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In Afghanistan, Women Entrepreneurs Keep the Dream Alive

6 January 2021

By Zia Ur Rehman

For Selsela Nihan, coming home meant a fresh start—and a chance to live her dream.

When the 22-year-old returned to her native Afghanistan after living as a refugee for 12 years, she pursued her goal of starting her own business. But she was shocked to see that women had virtually no representation in the business sector, and only men sold clothes and owned businesses in the busy markets of the capital, Kabul. She decided to do something special.

“I wanted to provide a space for women through my clothing business and a sewing workshop to help them become comfortable and independent,” said Nihan.

“Women around me were naysayers whenever I discussed with them my intentions of going into business. They were not too excited about my idea and rather scared me talking about local security issues and cultural barriers for women. Also, I was inexperienced and struggling for finances, but I decided to accept these challenges.”

With her aunt’s initial support, Nihan registered her business in 2019. She rented a shop in Kabul city and purchased material for the shop and began her business, Zeb Boutique, a clothing business that employs women and produces clothes primarily for women.

Selsela Nihan at her business, Zeb Boutique. Photo courtesy: First Microfinance Bank of Afghanistan

Given Afghanistan’s security challenges, it was not an easy decision. The local culture and norms are often not supportive of women-owned businesses and mobility remains a persistent obstacle for women.

“First it was challenging to find a rented shop and it took me two years to get a business license. Secondly, finding professional female tailors became a challenge so I had to hire a male tailor, Besides, I had also realized how important it was to have professional women tailors,” Nihan said.

“In a male dominant society, women are not allowed to work after 5 p.m. due to social norms and family pressure, whereas I required them to work till 7 pm and I wanted to make them independent.”

So while Nihan had an ambitious plan, she had no financing to expand as she already had borrowed money from her aunt for her startup. Then COVID-19 began impacting businesses. She needed longer-term financing support to cope with COVID-19 impacts and protect her newly started business.

“I reached out to many local banks, but they refused as they were not sure I would repay given my fresh business,” Nihan said. “One day I read about the First MicroFinance Bank of Afghanistan (FMFB-A) on Facebook, I instantly applied for a loan and luckily received 500,000 Afghani, enough to buy more machines and survive COVID-19 impacts.”

Nihan is one of the thousands of talented Afghan women who received a loan from FMFB-A and succeeded in her business. Today Zeb Boutique is gaining recognition, with over 7,000 followers on social media.

As a bank with a social mission, 24 percent of FMFB-A clients are Afghan women. But FMFB-A hopes this number will grow as peace and stability take hold in Afghanistan.

“Lack of effective awareness and targeted marketing campaign for women leads to a low enabling business environment for women,” said Homayoun Nikseyar, Head of Business Development and Marketing at The First MicroFinance Bank—Afghanistan. “We believe that providing women with the required preferential financial and banking services will not only transform their own lives but that of their families.”

Established in 2004 with an equity investment by IFC and with the support of the Aga Khan Agency for Microfinance, Kreditanstalt für Wiederaufbau, and Aga Khan Foundation USA, FMFB-A largely provides support and loans to businesses, including small and medium-sized enterprises, and financing for housing and healthcare. Today FMFB-A has a network of 38 branches spread across 14 provinces and 80 districts of Afghanistan. It covers key regions including Kabul, Mazar-e-Sharif, Sheberghan, Kunduz, Badakhshan, Bamyan and Herat.

“With the help of IFC’s initial $1 million equity investment and other investors, the FMFB-A today has net assets of $154 million,” said Wagma Mohmand, IFC Senior Country Officer for Afghanistan. “IFC’s initial investment was combined with comprehensive advisory support, which demonstrates the successful case for IFC advisory services in poor, fragile and conflict-affected (IDA/FCS) countries.”

Like in many other countries, COVID-19 in Afghanistan has taken a terrible toll on people and businesses. Lockdowns, restricted business hours and border closures have all adversely impacted sales and jobs.

An IFC survey on the impact of COVID-19 on businesses in Afghanistan showed an alarming 88 percent of businesses experienced a significant drop in their sales. Thirty-seven percent of businesses laid off workers, contributing to the already high unemployment and poverty in the country.

When the private sector in Afghanistan was facing challenges because of COVID-19 impact on sales, FMFB-A was able to demonstrate resilience and sustained its portfolio during the challenging times. FMFB-A has seen economic and political crises in the past, so it’s adept at managing its portfolio operations. It has curtailed lending in high-risk areas and is focusing on recovery.

FMFB-A has over 53,000 borrowers and 193,000 active depositors. With support from IFC’s advisory services, FMFB-A prepared its initial business plan in 2015, which was then updated in 2019 with the aim of attracting more investments and expanding its portfolio, including loans targeting women, financing for energy-efficient, seismic-resistant housing and loans promoting the use of renewable energy.

And in another move, IFC in partnership with Ghazanfar Bank of Afghanistan recently launched a program to improve Afghan women’s access to financial and non-financial services. This project is expected to directly benefit more than 5,000 Afghan women in the next five years.

Successful implementation of these projects will help entrepreneurs like Nihan have the resolve to pursue their ambitions, setting examples for others.

“Now I am imparting professional training to women to hire their services and also helping them in starting their businesses,” Nihan said, “I tell my fellow women that they need to be strong and have unique business ideas. If they do the different things that others don’t, they will likely succeed.”