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Report

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Mapping of Financial Services in Balkh

and Samangan Provinces, Afghanistan

Road to Jobs Project

April 2016

Executive Summary

The study has been commissioned by ILO under the ‘Road to Jobs’ project to understand the demand and supply of financial and non-financial services in selected Northern Provinces (Balkh and Samangan). It is envisaged that the findings will serve to inform and guide programming of the R2J project. The study is based on the review of documents and information on the financial services in Afghanistan, with specific focus on the two provinces selected. It is also based on the quantitative data collected in November 2015, targeting 125 respondents using a set of four questionnaires - (i) Rural households; (ii) urban households; (iii) financial and non-financial service providers; and (iv) rural agriculture value chains actors.

The following is a summary of key preliminary findings:

Demand of financial services in urban and rural areas

1. Ownership of account with FSP: There is a high level of unbanked population in Balkh and Samangan. The survey results shows that only 13% of the rural households had an account with formal or semi-formal financial institution. In urban areas, only 40% have accounts with financial institutions. The major reasons why people to not have account are distance to financial service providers (FSP), cost of services, lack of money , lack of trust for the institutions, and dependency on family members that own accounts.

2. Savings and borrowing: At least 40% of rural households and 35% of urban households save part of their income, mainly as cash. The income saved is mainly obtained from business activities, wage employment, farm and livestock/diary activities and remittance from family and friends. Households save to buy durable consumer goods, buying land or house, and school fees expenses. Others include savings to raise capital for business, building or renovating houses, emergency purposes, for example health expenses, performing last rites/ or marriages and for agricultural activities. The proportion of households borrowing money in urban areas is higher than rural areas. About 45% of the households in urban areas have borrowed money in the past 12 months, mainly from friends and family members (78%). Urban households borrow to purchase land, houses, construction or renovation of houses, durable consumer goods like furniture, capital for business, emergency purposes and for performing last rights or marriages. In rural areas, only 29% have borrowed money mainly from family and friends to buy farm inputs, additional herd, lease farms, buy farm assets and pay salaries. All that save are generally satisfied with forms of savings and the facility.

3. Money transfer services: About 60% of urban and 27% of rural households have send or received money from friends or relatives for the last 12 months. Majority (83%) used remittance companies or hawalas. However, sending money through friends and family members is also very common.

4. Insurance services: There is no uptake of insurance in both urban and rural

areas. However, given an opportunity, about 44% of rural households and 35% of

urban households would take an insurance cover to protect them against any form of misfortunes. Lack of money, lack of knowledge about insurance, religious issues and fear of being cheated by insurance companies are some of the main reasons why households do not take insurance. There would be need for financial literacy on insurance products to create and increase awareness; address the religious issues with religious leaders in the area to ensure that the products are sharia compliant; and enhance customer trust with insurance companies.

5. Informal Financial Services/institutions: The survey results reveals that only

9% of rural households belong to at least one ROSCA/ASCA. Majority of these (75%) make contributions weekly, with only 25% making monthly contributions. The main reasons for joining these informal financial institutions is to save and because of the high cost of maintaining formal accounts. These institutions also provide an opportunity for socializing to majority of members and would provide urgent support in cases of emergencies and unexpected events.

6. Non-financial services: Almost all households in both urban and rural have not received any form of training; and more than 60% have not heard of any training opportunities. About 70% have shown willingness to be trained in various courses should they be provided. Almost all households interviewed have not received any form of non-financial services and are not aware of organizations that provide various assistance to access market, such as formation of producer / lobby groups, Market linkages with processors/other buyers, and Linkage with input suppliers. However, given a chance more than 50% of households would be interested to participate. In urban areas, household would like to be trained mainly in financial literacy and business management. In rural areas, households would like to be trained in financial literacy and business management. Other areas that ILO would consider providing training for rural households is on the formation of producer/lobby groups, market linkages with processors and other buyers, linkages with input suppliers, agricultural extension services, agricultural and livestock production improvement, cooperative formation, facilitation of bulk buying of farm inputs and support to participate in the trade fares, exhibitions and study tours.

Access to finance services for rural agriculture

7. There is some demand for financial services by rural farmers to improve crop products despite low levels of borrowing. The major farms financial needs are mainly for buying farm inputs (47%); transportation of farm produce (44%) and payment of salaries and wages (13%). Other needs include pay for risk mitigation (insurance premiums) – 9%, buying or leasing farms (7%), and storage and warehousing (7%). About 91% of the households would be interested accessing financial services in order to improve agricultural activities. Family and friends are the major providers of financing to support agricultural activities. About 85% of respondents have sourced their financial support for farming activities from family and friends. Other sources of finance have been money lenders (5%); MFI (5%); banks (3%) and suppliers (3%), mainly on credit. There is high level of satisfaction

in family and friends to support farming activities in rural areas. The satisfaction levels are testimony for the endorsement of family and friends who are the main finance providers. The low uptake of agricultural credit by rural households from formal financial service providers is mainly attributed to (i) loan requirements that are hard to comply with, for example, FSP insistence on regular monthly payment even when the crop is not ready on market; (ii) low willingness to lend to agricultural activities by FSP (29%); and that (iii) credit products on offer do not suit farming activities (11%). The key considerations for borrowing for agricultural purposes would be grace period (28%); mode of payment (24%); and loan amount (24%). Other considerations would be the interest charged (12%) and repayment period (12%).

8. Only a few households have been trained. The training was offered by a handful of organizations. However, given a chance, between 53% and 69% of the respondents would be interested in the capacity building training. Given the low levels of training, rural households would like to be trained in financial literacy, business management, and conflict resolution and formation producer groups. They would also like to have support services in market linkages with processors/other buyers; linkage with input suppliers, trade fares, exhibitions, study tours; agriculture extension services, agriculture and livestock production improvement; cooperatives formation; and facilitation for bulk buying of farm inputs.

Access to financial services to agribusinesses:

9. The survey interviewed 33 agribusinesses involving processors, input suppliers and

traders. Majority (79%) of these businesses do not operate an account. Only 21% of the agro input suppliers operate account with formal or semi-formal banking institutions. The businesses (21%) have used mobile money transfer and Hawalla money transfer in the past 12 months. The coverage of insurance is higher amongst agribusinesses at 55%. There are various reasons why some agribusiness suppliers do not use financial services. Distance to the service providers were a main issue for 35% of the respondents. Other reasons include the fact that a family member has an account which they could use (24%); lack of trust in formal financial institutions (18%); do not have enough money to save (18%); and lack of documentation

Supply of financial and non-financial services

10. Financial service providers: The interviews were held between November 19th and 25, 2015 and covered 27 financial service providers in Balkh and Samangan

provinces1. Most of these are commercial banks, MFIs, Microfinance banks, financial cooperative; Saccos; government microcredit projects; and hawalas. About 70% of these financial institutions have at least one branch and are headquartered in Kabul. The financial service providers have been in operation for an average of 10.7years. These institutions provides a number of services, including loans and savings, money transfer, and online banking. About 63% provide loans/credit to individuals, SMEs etc; 59% provide savings and deposits; while 48% provided money transfer services. Only 4% provided safe custody services. None of the financial institutions provided insurance services in urban or rural areas.

11. Financial products: Sixty three (63%) of the institutions provide loans to various clientele, mainly microenterprises, salaried employees, small and medium enterprises, large scale corporates, individuals, agriculture value chains, and registered members of the VSLA. Each financial institution had an average of 3973 loan clients, with an average loan portfolio of AFN 30,284,260. Savings and deposits are the second most important product offered by 59% financial institutions interviewed.

12. Clientele: The main clients are micro-enterprises. Each financial institutions has an average of 217,838 clients, and total average portfolio of AFN 15,487,521 in savings and deposits. Customer deposits are the main sources of funding for most of the financial institutions (52%). Other sources include the shareholders equity (26%) and grants from the government and donors (22%). Loans from other commercial banks and retained earnings is an important source of funding for about 4% of the financial service providers.

13. Non-financial services: Only 2 institutions out of the 27 interviewed offer non-financial services. They offer financial literacy and financial management and general business and entrepreneurial skills to SMEs, medium and large entrepreneurs. Only 2 institutions provide BDS services and mostly employ exchange visits and tours and through field schools. These two institutions charge up to 17% of the cost for service delivery (non-financial services), which mainly meets the cost of service. In one instance, this fee seemed inadequate and sustain operations through donations from donor and government. In communicating to clients about products and services, the 5 institutions that responded use word of mouth and referrals from clients and previous customers, Media (print, voice, social), Website/internet. Given an opportunity, only 3 institutions have expressed willingness to and availability for financial literacy training. They would like training

1 Interviews were held in the following locations: Ajaa, Aria market, Atifaq Ali Sina, Aybak, Bandar, City center, Darwaza, Dawadabad, Hazrat Sultan, Jogee Sheran, Khair Abad, Kifayat market, Kochi, Malikan, Mazar city, Shaheed Masoud, and Siyagard Street.

in capacity building, finance and fundraising methods. The three institutions would like support in market survey.

14. Challenges faced by financial service providers: Security presents the highest challenge and risk to the operation of the financial institutions as confirmed 22% of the institutions. Other important challenges are low number of clients (19%); low financial literacy amongst clients; non-payment of loans on time and high rates of default resulting in high PAR on loans (7%). Most of the FSP have not yet adapted to emerging technologies, such as mobile money, and would require capacity building.

15. Future plans: In terms of future plans, most of the financial service provider’s intent to introduce new financing products in the near future. About 15% of the institutions would like to introduce a number of products, such as loans (personal, producer, agricultural loans, etc) to new clients comprising of enterprises, employees and individuals. About 22% of the financial institutions would open up new branches. The numbers of branches to be opened ranges from 1-5.

The study concludes that most of the people in Balkh and Samangan are poor and lack access to the range of appropriate financial services they need despite the provinces over 27 varied financial service providers. The financial services available to them include savings, loans, money transfers and insurance service. These are relatively costly or rigid, whether from formal or informal financial providers or traders and agricultural processors offering input credit. Non-financial services considered critical to assist poor and low income people access financial services are almost nonexistent. The Low income people faces numerous constraints in accessing financial services from the financial service provide. These include lack of awareness and information on the FSP and their products, low financial literacy levels to understand the financial systems, lack of collateral, inappropriate products to meet their needs, high cost of products, and lack of access to markets.

Similarly, the financial service providers too face numerous constraints in providing financial service to the poor and low income people. These range from institutional weaknesses and lack of technical capacity to plan, develop, launch, implement and monitor profitable and sustainable financial products that meet the needs, wants and aspiration of the low income and the poor.

The study therefore recommends a number of interventions to promote access to financial services by people from Balkh and Samangan. These include (i) promote decentralization of financial services by the FSP; (ii) address the cost of services, high fees and commissions charged by FSP; (iii) FSP to embrace innovative technologies; (iv) building the capacity of FSP in delivering financial services to low income people; (v) promote innovative in financial products by FSP; (vi) support FSP to provide non-financial services, such as financial literacy and education, business management and support to the agricultural value chain actors through provision of grants to these institutions; (vii) and Promote access to agriculture financial services to farmers and provide market linkages and information services.

While the study did not examine the legal and regulatory environment, and how it affects access to financial services in the two provinces. However, it is recognized that an enabling policy and regulatory environment is needed to promote the expansion of financial services in Afghanistan, and specifically, Balkh and Samangan provinces. There would be need to support the government to review and adopt or adapt flexible regulations and legislation to technologies, such as mobile banking, point of sale device networks, or electronic money, and to the roles that nonbanks can play in delivering financial services. ILO may provide technical assistance, data and analysis, financing, and other forms of support to the design and implementation of financial inclusion strategies for these provinces and Afghanistan as a whole. Other possible areas of support would include providing a risk-sharing i.e. guarantees to incentivize FSP to provide financial services, support risk assessment on financial integrity and risk profiles of households in these provinces.

List of Acronyms and abbreviations

AFN Afghan (currency of Afghanistan)

AHG Afghanistan Holding Group

AREDP Afghanistan Rural Enterprise Development Program

CARD-F Comprehensive Agriculture and Rural Development Facility

FSP Financial Service Providers

FMFB The First Microfinance Bank

GIZ Gesellschaft für Internationale Zusammenarbeit

ILO International Labour Organization

NHLP The National Horticulture and Livestock Project

NPO Norwegian Project Office

PRRD Provincial Rural Rehabilitation and Development

R2J Road to Jobs

Table of Contents

EXECUTIVE SUMMARY ------------------------------------------------------------------------------------------ 2

LIST OF ACRONYMS AND ABBREVIATIONS ------------------------------------------------------------- 8

TABLE OF CONTENTS ------------------------------------------------------------------------------------------- 9

1.0 INTRODUCTION ------------------------------------------------------------------------------------------ 12

1.1 BACKGROUND TO THE STUDY ------------------------------------------------------------------------- 12

1.2 PURPOSE AND OBJECTIVES --------------------------------------------------------------------------- 12

1.3 METHODOLOGY ------------------------------------------------------------------------------------------ 12

1.4 LIMITATIONS ---------------------------------------------------------------------------------------------- 13

2.0 DEMAND FOR FINANCIAL AND NON FINANCIAL SERVICES ---------------------------- 14

2.1 DEMAND FOR FINANCIAL AND NONFINANCIAL SERVICES IN RURAL AREAS --------------------- 14

2.1.1 Profile of rural households ------------------------------------------------------------------------ 14

2.1.2 Ownership of account with financial institution ----------------------------------------------- 15

2.1.3 Main purpose of using financial services providers ----------------------------------------- 16

2.1.4 Saving culture in rural areas ---------------------------------------------------------------------- 17

2.1.5 Borrowing in rural areas --------------------------------------------------------------------------- 17

2.1.6 Money Transfer Services-------------------------------------------------------------------------- 18

2.1.7 Insurance services ---------------------------------------------------------------------------------- 19

2.1.8 Informal Financial Services ----------------------------------------------------------------------- 20

2.2 RURAL FARMING AND ACCESS TO FINANCE --------------------------------------------------------- 20

2.2.1 An overview of rural farming ---------------------------------------------------------------------- 20

2.2.2 Supply for agriculture financial services in rural areas ------------------------------------- 22

2.2.3 Non financial services ------------------------------------------------------------------------------ 25

2.3 DEMAND FOR FINANCIAL AND NON-FINANCIAL SERVICES BY URBAN RESIDENTS ------------- 27

2.3.1 Profile of urban households in Balkh and Samangan -------------------------------------- 27

2.3.2 Income and expenses for urban households ------------------------------------------------- 27

2.3.3 Ownership of account with financial institutions --------------------------------------------- 29

2.3.4 Purposes of getting services from financial service providers ---------------------------- 30

2.3.5 Savings ------------------------------------------------------------------------------------------------ 30

2.3.6 Borrowing --------------------------------------------------------------------------------------------- 31

2.3.7 Money transfer --------------------------------------------------------------------------------------- 32

2.3.7 Insurance services ---------------------------------------------------------------------------------- 32

2.3.8 Non-financial Services ----------------------------------------------------------------------------- 33

2.4 AGRO PROCESSORS, INPUT SUPPLIERS AND TRADERS ------------------------------------------- 34

2.4.1 Profile of agribusinesses -------------------------------------------------------------------------- 34

2.4.3 Description of Agro-businesses ----------------------------------------------------------------- 34

2.4.4 Agriculture traders ---------------------------------------------------------------------------------- 36

2.4.5 Providers of farm inputs suppliers/agrochemicals ------------------------------------------- 37

3.0 SUPPLY OF FINANCIAL AND NON FINANCIAL SERVICES -------------------------------- 39

3.1 FINANCIAL SERVICE PROVIDERS ---------------------------------------------------------------------- 39

3.2 FINANCIAL PRODUCTS ---------------------------------------------------------------------------------- 40

3.3 SOURCES OF FUNDING --------------------------------------------------------------------------------- 41

3.4 PORTFOLIO AT RISK------------------------------------------------------------------------------------- 42

3.5 RISKS AND CHALLENGES ------------------------------------------------------------------------------- 42

3.6 FUTURE PLANS ------------------------------------------------------------------------------------------- 43

3.7 NON-FINANCIAL SERVICES ----------------------------------------------------------------------------- 43

4.0 CONCLUSIONS AND RECOMMENDATIONS---------------------------------------------------- 44

5.0 LIST OF PUBLICATIONS ------------------------------------------------------------------------------ 49

6.0 ANNEXES -------------------------------------------------------------------------------------------------- 50

List of figures

FIGURE 1: PROPORTION OF HOUSEHOLDS USING INFORMAL FINANCIAL SERVICES................................................... 20 FIGURE 2: PROPORTION (%) OF RURAL HOUSEHOLDS WHO HAVE RECEIVED CAPACITY BUILDING TRAINING .......... 26 FIGURE 3: PROPORTION (%) OF URBAN HOUSEHOLDS WITH ACCOUNTS .................................................................. 29 FIGURE 4: SERVICES FROM NON-BANK INSTITUTIONS IN THE LAST TWELVE MONTHS............................................... 29 FIGURE 5: PROPORTION OF HOUSEHOLDS IN URBAN AREAS THAT HAVE BORROWED ............................................... 32 FIGURE 6: PROPORTION OF FARM INPUT PROVIDERS WITH BANK ACCOUNTS ........................................................... 37

List of tables

TABLE 1: DISTRIBUTION OF RESPONDENTS IN BALKH AND SAMANGAN, AFGHANISTAN ............................................ 13 TABLE 2: DISTRIBUTION OF RURAL HOUSEHOLDS INTERVIEWED ............................................................................... 14 TABLE 3: AGE OF THE RESPONDENT (YEARS) ............................................................................................................ 14 TABLE 4: THE LEVELS OF LITERACY OF RESPONDENTS IN RURAL AREAS .................................................................. 15 TABLE 5: OWNERSHIP OF ACCOUNTS .......................................................................................................................... 15 TABLE 6: ACCESS TO FINANCIAL SERVICES ................................................................................................................ 16 TABLE 7: REASONS FOR NOT HAVING ACCOUNTS WITH FINANCIAL INSTITUTIONS ..................................................... 16 TABLE 9: PROPORTION OF RURAL HOUSEHOLD’S SAVINGS PART OF THEIR INCOME ................................................. 17 TABLE 11: PROPORTION OF HOUSEHOLDS THAT HAVE BORROWED FROM FINANCIAL INSTITUTIONS ........................ 17 TABLE 12: MAIN REASONS FOR BORROWING ............................................................................................................. 18 TABLE 13: REASONS FOR NOT BORROWING ............................................................................................................... 18 TABLE 14: PROPORTION OF RURAL HOUSEHOLDS THAT USE MONEY TRANSFER SERVICES ..................................... 19 TABLE 15: HOW RURAL HOUSEHOLDS MITIGATE AGAINST MISFORTUNES ................................................................. 19 TABLE 16: PROPORTION OF RURAL HOUSEHOLDS THAT WOULD TAKE INSURANCE COVER ...................................... 19 TABLE 17: AGRO-INPUT NEEDS FOR RURAL HOUSEHOLDS ........................................................................................ 21 TABLE 18: WHERE RURAL HOUSEHOLDS SOLD THEIR FARM PRODUCE ..................................................................... 21 TABLE 19: PAYMENT ARRANGEMENT .......................................................................................................................... 21 TABLE 20: CHALLENGES FACED BY RURAL FARMERS ................................................................................................ 22 TABLE 21: SUMMARY OF MARKETING CHALLENGES ................................................................................................... 22 TABLE 22: FINANCIAL SERVICES THAT FARMERS PERCEIVE WOULD BEST HELP IN IMPROVING CROP PRODUCTION 23 TABLE 20: FINANCIAL NEEDS FOR FARMS ................................................................................................................... 23 TABLE 23: MAIN SOURCE OF FINANCE FOR AGRICULTURE ACTIVITIES IN RURAL AREAS ........................................... 24 TABLE 24: SATISFACTION LEVELS OF CURRENT FINANCE PROVIDERS TO SUPPORT AGRICULTURAL ACTIVITIES ..... 24 TABLE 25: CHALLENGES RURAL FARMERS ENCOUNTER IN ACCESSING FINANCIAL SERVICES .................................. 25 TABLE 26: KEY CONSIDERATIONS FOR BORROWING .................................................................................................. 25 TABLE 27: INTEREST IN THE NON-FINANCIAL SERVICES BY RURAL HOUSEHOLDS ..................................................... 26 TABLE 28: SOURCES OF INCOME FOR URBAN RESPONDENTS ................................................................................... 27

TABLE 29: MEAN INCOME FOR URBAN RESIDENTS ..................................................................................................... 28 TABLE 30: AVERAGE MONTHLY HOUSEHOLD EXPENSES ............................................................................................ 28 TABLE 31: AVERAGE EXPENSES FOR BUSINESS PREMISES ....................................................................................... 28 TABLE 32: REASONS FOR SEEKING FINANCIAL SERVICES FROM PROVIDERS ............................................................ 30 TABLE 33: REASONS FOR SAVING ............................................................................................................................... 31 TABLE 34: STATUS OF CAPACITY BUILDING TRAINING ................................................................................................ 33 TABLE 35: AGE OF RESPONDENTS.............................................................................................................................. 34 TABLE 36: LEVELS OF EDUCATION FOR AGRIBUSINESS DEALERS .............................................................................. 34 TABLE 37: OWNERSHIP OF AGRIBUSINESSES IN BALKH AND SAMANGAN .................................................................. 35 TABLE 38: AGE OF AGRIBUSINESSES .......................................................................................................................... 35 TABLE 39: FORMS OF AGRIBUSINESS ......................................................................................................................... 35 TABLE 40: AGRIBUSINESS ACTIVITIES ......................................................................................................................... 35 TABLE 41: FINANCING NEEDS FOR AGRIBUSINESSES ................................................................................................. 36 TABLE 42: REASONS FOR LACK OF USE OF FINANCIAL SERVICE PROVIDERS ............................................................ 38 TABLE 43: TYPE OF FINANCIAL INSTITUTIONS INTERVIEWED ...................................................................................... 39 TABLE 44: NUMBER OF YEARS IN OPERATION ............................................................................................................ 39 TABLE 45: CHARACTERISTICS OF FINANCIAL SERVICE PROVIDERS .......................................................................... 40 TABLE 46: PRODUCTS OFFERED BY FINANCIAL SERVICE PROVIDERS ........................................................................ 40 TABLE 47: MAIN CONSUMERS OF LOAN PRODUCTS OFFERED BY FINANCIAL INSITUTIONS (%) ................................. 41 TABLE 48: MAIN SAVINGS AND DEPOSIT CLIENTELE .................................................................................................. 41 TABLE 49: SOURCES OF FUNDING FOR THE FINANCIAL INSTITUTIONS ....................................................................... 42 TABLE 50: RISKS AND CHALLENGES FACED BY FINANCIAL INSTITUTIONS .................................................................. 42

1.0 INTRODUCTION

1.1 Background to the Study

The study has been commissioned by ILO under the ‘Road to Jobs’ project to understand

the demand and supply of financial and non-financial services in selected Northern

Provinces (Balkh and Samangan). The aim of the project is to unleash the economic

potential of expanding rural road network in Afghanistan, and that more and better jobs

contribute to improve livelihoods and poverty reduction.

The project will cover up to eight rural districts and two provincial capitals of the two

northern provinces of Samangan and Balkh, with focus a) on rural areas where the road

construction have opened up year-round access to product and job markets, and b) on

addressing opportunities and challenges of the urban economy that absorb the products

and labour coming from the rural economy. The ultimate beneficiaries are the rural

households and their income earners who work either in rural communities or in urban

and other major centers of employment.

One of the proposed outcome of the project is that ‘the financial management of the poor

and disadvantaged group is improved’. Given that the microfinance market in Afghanistan

is still at nascent stage of development and that relevant organizations are not yet ready

to address financial education nor product diversification beyond microcredit, this project

will focus on collecting and disseminating information of financial services and explore

partners for financial education including beyond the MFI community in search of the

outreach capacity to the rural communities. Therefore, as part of the inception phase, the

project contemplates a financial demand and supply mapping so that the emerging

recommendations can be reflected in the final detailed work plan of the project.

1.2 Purpose and Objectives

The overall purpose of this assignment is to conduct a mapping of financial services in

the two districts of Balkh and Samdan that will provide a baseline indicators of supply and

demand for financial and non-financial services and their detailed characteristics. This

information will serve to inform and guide programming of the R2J project.

1.3 Methodology

The study is based on the review of documents and information on the financial services

in Afghanistan, with specific focus on the two provinces selected. In addition, the

consultant held a mission in Afghanistan in October and November 2015, and quantitative

data was collected targeting 125 respondents using a set of four questionnaires - (i) Rural

households; (ii) urban households; (iii) financial and non-financial service providers; and

(iv) Rural agriculture value chains. The respondents are distributed as follows:

Table 1: Distribution of respondents in Balkh and Samangan, Afghanistan

Number of respondents

Balkh Samangan Total

1 Rural respondents 28 17 45

2 Urban respondents 10 10 20

3 Financial and non-financial service providers

14 13 27

4 Agro processors, agro-input suppliers and traders

18 15 33

Total 70 55 125

Each set of questionnaire was analyzed separately using SPSS. Detailed methodology

is annexed to this report.

1.4 Limitations

A number of challenges were faced during the study, which include small sample size.

Given the number of responses, the analysis findings are presented more as tendencies

and observations. Other challenges in the data collection were the inaccessibility to sites

due to security issues, limited time for the consultant to cover the whole scope, low

financial literacy of respondents, and limited level of development of the finance industry.

The lead consultant was taken ill and it has been a challenge analyzing and preparing

the report without his input. Nevertheless, the report addresses most of the scope as

demanded.

2.0 DEMAND FOR FINANCIAL AND NON FINANCIAL SERVICES

2.1 Demand for financial and nonfinancial services in rural areas

2.1.1 Profile of rural households

The interviews were conducted with 45 rural households in Balkh (62%) and Samangan

(38%). The main locations are Balkh, Darah, Dawlalabad, Feroz, Hazart Sultan, Hazrat,

Joye Shiran, Kadow Khana, Marteaz, Mazart, Mazer e Sharif, Qarache, and Zargan.

Table 2: Distribution of rural households interviewed

Frequency Percentage (%)

Balkh 28 62.2

Samangan 17 37.8

Total 45 100.0

Majority of the respondents were male (96%), while female are only 4%. Married

respondents were 84% while unmarried were 16%. Most of the respondents were head

of the households (78%), while 22% were not. A typical rural household size has an

average of 10 members, 5 males and 5 females. The table below is a summary of the

age of respondents. The respondents with 18-30yrs were 20%; 31-40years were 31%;

41-60years were 42%; those above 60 years were 7%.

Table 3: Age of the Respondent (years)


18-30 9 20.0

31-40 14 31.1

41-60 19 42.2

Above 60 3 6.7

Total 45 100.0

The literacy status of the respondent is summarized in the table below. About 27% of

respondents have at least secondary level of education; 24% have up to primary school

level. About 16% have tertiary or university level of education. The proportion of

respondents without any formal education is about 33%. The study acknowledges that

the levels of education for other members of the households could be higher than the

heads of households.

Table 4: The levels of literacy of respondents in rural areas


Primary 11 24.4

Secondary 12 26.7

Tertiary 3 6.7

University 4 8.9

None 15 33.3

Total 45 100.0

Ownership of land: most rural households interviewed owned the land on which they farm.

About 76% of the land is self-owned, 13% leased, while 11% is leased from relatives.

All households are involved in crop farming and livestock rearing. About 89% are involved

in crop farming, while only 11% are involved in livestock rearing (majority keeping dairy

cows – 31%; poultry – 30%; - shoats – 15%; and buffalos – 4%).

A lower proportion of respondents produce crops for self-consumption. About 24% of

rural households interviewed grow mainly wheat, grapes and onions as food crops (self-

consumption); while about 80% grow cotton in addition to grapes, wheat, onion and

almond as cash crops. A few households are involved in melon cultivation for cash crop.

On average, 6.9 jeribs2 is under crop cultivation.

Rural households have employed an average of 3 employees to help on the farms. About

33% use family labour; casual labour (73%); and 47% have permanent laborers.

2.1.2 Ownership of account with financial institution

There is a high level of rural respondents who are unbanked. The survey results

shows that only 13% of the rural households interviewed had a bank account with formal

or semi-formal financial institution. The accounts owned are mainly both savings and

current accounts, mostly with commercial banks. None of the households had any

account with microfinance banks, MFIs, SACCO or village banks (FSA).

Table 5: ownership of accounts

Frequency Percentage

Own account 6 13.3

Do not own account 39 86.7

Total 45 100.0

2 1 ha is equivalent to 5 jeribs (2000m2)

In addition, only 16% of rural households have been able to access financial services/

transactions from non-bank institutions for instance mobile money transfers (4%), NGOs

(2%), and hawalas money transfer (9%). None received financial services from

government micro credit projects.

Table 6: Access to financial services


Mobile money transfer 2 28.6

NGOs 1 14.3

Hawalla money transfer 4 57.1

Total 7 100.0

For those without accounts, various reasons were provided why they do not have

accounts with any of the financial institutions. The major reasons are that the financial

institutions are distant (39%), and that they do not have enough money to use their

services (25%), and that someone in the family already has an account (9%); and

perceived to be expensive (11%). Other reasons include rate charged on the accounts

(7%), lack of trust of the financial institutions (2%) and lack of necessary documentation

2%.

Table 7: Reasons for not having accounts with financial institutions


They are too far 17 39

They charge interest 3 7

I do not have enough money to use them 11 25

Someone else in the family already has

account 4 9

They are too expensive 5 11

Lack necessary documentation 1 2

You do not trust the institutions 3 7

Total 44 100

2.1.3 Main purpose of using financial services providers

There are various reasons why respondents use financial service providers. The major

reasons are to access loans, savings, receiving payments from farm produce sales,

sending money to family members living elsewhere, receiving or sending payments for

work or selling of goods and services, as well as personal transactions.

2.1.4 Saving culture in rural areas

The survey results reveals that at least 40% of all rural households interviewed

save part of their income. The main source of savings are mainly farm produce (56%);

livestock/dairy activities (17%) and business activities (17%). Other main sources include

remittances from family and friends (11%). Wage employment (11%) is a secondary

source of savings for some families as well.

Table 8: Proportion of rural household’s savings part of their income


Save part of income 18 40.0

Do not save part of income 27 60.0

Total 45 100.0

The reasons why households save part of their income are varied, and these include:

savings to acquire agricultural inputs, school fees and related expenses, buy land/houses

and household expenses, Other reasons are to acquire capital to start or expand

business, building extension or renovation purposes, purchase of durable consumer

goods and services and for emergency purposes and for performing marriage or last rites.

All households are generally satisfied with the savings arrangements, however, for those

not fully satisfied, they expressed lack of confidentiality, safety assurance of their savings

and the inability to leverage loan/other services.

2.1.5 Borrowing in rural areas

Majority of the rural population in Balkh and Samangan have not borrowed money from

the formal financial institutions. The survey results show that more than 79% of rural

population have not borrowed money. The proportion of rural households that have ever

borrowed money from banks/saccos/MFIs to finance business activities in the last one

year is about 22%.

Table 9: Proportion of households that have borrowed from financial institutions


Have borrowed 10 22.2

Have not borrowed 35 77.8

Total 45 100.0

For those who have borrowed money from financial service providers, the main purpose

was acquire farm inputs (56%); and buy or lease farm (19%). About 13% bought

additional herd of animals, 6% bought farm assets and another 6% paid salaries.

Table 10: Main reasons for borrowing


Buying farm inputs 9 56.25

Bought additional herd 2 12.5

Bought/leased farm 3 18.75

Bought farm assets 1 6.25

Paid salaries 1 6.25

16 100

The main reasons for the majority that have never tried to borrow finances are varied.

About 42% expressed no need for borrowing; 19% claimed not to have the capacity to

borrow (i.e. inability to raise collateral required); 19% were not aware of finance providers

and 16% did not borrow due to high interest charged by financiers. Only 3% that did not

borrow attributed it to providers not being sharia compliant (i.e. Islamic banks).

Table 11: Reasons for not borrowing


There was no need 13 41.9

Did not have capacity to borrow 6 19.4

Not aware of financial providers 6 19.4

High interest rates by financiers 5 16.1

It is not an Islamic bank 1 3.2

Total 31 100.0

All loans borrowed attracted interest rates; had a grace period; repayment period, and

required membership with the financial institutions. About 70% of the borrowers are

satisfied with the loan terms and conditions. Despite satisfaction with the loan conditions,

households preferred long grace period of 3-12 months; interest rates of 2-5%; and longer

repayment periods of about 12 months.

2.1.6 Money Transfer Services

About 27% of rural households have sent or received money from friends or relatives for

the last 12 months. About 80% of these household that have send or received money

have used remittance companies or hawalas to send money within and outside

Afghanistan. About 25% have used family and friends to send money within and outside

Afghanistan.

Table 12: Proportion of rural households that use money transfer services


Yes 12 26.7

No 33 73.3

Total 45 100.0

2.1.7 Insurance services

Out of the 45 rural households interviewed, 58% have confirmed that they have faced

misfortunes in life over the past 12 months. Examples of misfortunes encounter include

destruction of houses by floods, drought and famine, loss of livestock, insecurity, huge

medical cost, theft or fires, death of main bread winner resulting into loss of income.

In order to mitigate against these misfortunes, household used various means. The table

below is a summary of various copying mechanisms employed by households to mitigate

against risks. ,

Table 13: How rural households mitigate against misfortunes


Use up savings 11 39.3

Sale of assets 3 10.7

Borrow money 5 17.9

Depend on charity mosque, NGO 3 10.7

Received donations from friends/family 5 17.9

Paid by insurance 1 3.6

Total 28 100.0

Given an opportunity, about 44% of all households would take an insurance cover to

protect them against these misfortunes. However, majority (56%) would not. For those

who would not take insurance, the main reasons advanced is that they have no money to

purchase an insurance (50%); lack of knowledge about insurance (36%) and it’s against

the religion for about 14% of these households.

Table 14: Proportion of rural households that would take insurance cover


Would take insurance 20 44.4

Would not take 25 55.6

Total 45 100.0

2.1.8 Informal Financial Services

The survey results reveals that only 9% of rural households belong to at least one or two

ROSCA/ASCA. Majority of these (75%) make contributions weekly, with only 25% making

monthly contributions.

The main reasons for joining these informal financial institutions is to save and because of the high cost of maintaining formal accounts. These institution also provides an opportunity for socializing to majority of members and would provide urgent support in cases of emergencies and unexpected events. One of the major informal lending is through friends and relatives, as this is one of the key access to financial resources by Afghanistan rural households.

Figure 1: Proportion of households using informal financial services

2.2 Rural farming and access to finance

2.2.1 An overview of rural farming

All most all households that participated in the study require agro inputs such as

seedlings, fertilizer, pesticides and preservatives. A few households also use diesel for

irrigation. Households spend an average of AFN 9,936 on agro inputs per crop season.

Table 15: Agro-input needs for rural households


Seeds/seedlings 30 68.2

Fertilizer 12 27.3

Pesticides 1 2.3

Preservatives 1 2.3

Total 44 100.0

Rural households that participated in the study make an average of AFN 397,732 (US$

5806) 3per season from selling crops. The crops are sold mainly to local wholesalers

(38%), retailers (33%) and processors (16%). About 9% of rural households sold their

farm produce to local exporters.

Table 16: Where rural households sold their farm produce


Local retailers 15 33.3

Processor 7 15.6

Local exporters 4 8.9

Wholesale traders 17 37.8

Individual consumers 2 4.4

Total 45 100.0

Besides selling, about 71% of the rural households are involved in the value addition for

their crops. The value addition activities include: repackaging (86%); rebrand and export

(7%) and transportation (2%).

The modes of payment is mainly cash on delivery (82%). Other forms of payments such

as delivery and payment on invoices is less common, and consist of 2% for payments in

14 days; and payments in 30 days (7%).

Table 17: Payment arrangement


Cash on delivery 37 90.2

Deliver, invoice and paid in 14 days 1 2.4

Deliver, invoice and paid in 30 3 7.3

3 1 USD = 68.4599 AFN, source: www.xe.com/

http://www.xe.com/

Total 41 100.0

The major challenge faced by rural farmers is the pest and diseases as indicated by 80%

of rural households interviewed. High costs of inputs is also a major problem to 11% of

households. Other challenges are lack of finance (5%), lack of labour (2%) and

transportation (2%). The table below ranks the main challenges as prioritized by rural

households. Lack of financing is the third priority.

Table 18: Challenges faced by rural farmers

Rank 1 Rank 2 Rank 3

N (%) N (%) N (%)

Pests and diseases 35 79.5 - - - -

High cost of inputs 5 11.4 17 37.8 - -

Lack of labour 1 2.3 4 8.9 1 2.2

Lack of finances 2 4.5 8 17.8 15 33.3

Transport 1 2.3 - - - -

Lack of specialized tools - - 3 6.7 3 6.7

In terms of marketing, low demand of products, lack of preservation and processing

facilities are the main challenges faced by 40% of the respondents. Inaccessible markets

as a result of poor rural infrastructures is a major challenge to 20% of the households.

The table below is a summary of the highest priority challenges faced by farmers in

marketing.

Table 19: Summary of marketing challenges

N Percentage (%)

Inaccessible markets as a result of poor rural

infrastructure 5 20.0

Lack of preservation and processing facilities 10 40.0

Low demand of the market products 10 40.0

Total 25 100.0

2.2.2 Supply for agriculture financial services in rural areas

There is demand for financial services4 by rural farmers to support agricultural

activities. About 91% of the rural farmers interviewed would be interested accessing

different financial services. About 60% would take loans to acquire farm inputs and

equipment; saving facilities (18%), fast and convenient payment system (4%); and Islamic

banking (7%). The table below is a summary of financial services that farmers perceive

would best help in improving crop production.

Table 20: Financial services that farmers perceive would best help in improving crop production


Loans to acquire farm inputs and equipment 27 65.9

Payment system to enable you get paid fast and

conveniently 2 4.9

Savings 8 19.5

Insurance against crop failure and other agricultural risk 1 2.4

Islamic banking 3 7.3

Total 41 100.0

For those interested in loan facilities, their major financial needs would be buying farm

inputs (47%); transportation of farm produce (44%) and payment of salaries and wages

(13%). Other needs include pay for risk mitigation (insurance premiums) – 9%, buying or

leasing farms (7%), and storage and warehousing (7%).

Table 21: Financial needs for farms


Transport of farm produce 20 44.4

Buying farm inputs 21 46.7

Storage/Warehousing 3 6.7

Payment of salaries and wages 6 13.3

Buy/Lease farm 3 6.7

Storage/Warehousing 2 4.4

pay for risk mitigation(insurance premiums) 4 8.9

Currently, family and friends are the major providers of financing to support

agricultural activities. About 85% of respondents have sourced their financial support

4 For example loans, payment systems, savings and insurance

for farming activities from family and friends. Other sources of finance have been money

lenders (5%); MFI (5%); banks (3%) and suppliers (3%), mainly on credit.

Table 22: Main source of finance for agriculture activities in rural areas


Family/Friends 34 85.0

Money lender 2 5.0

Bank 1 2.5

MFI 2 5.0

Supplier 1 2.5

Total 40 100.0

There is high level of satisfaction with the family and friends as a source of financial

support for farming activities in rural areas. The satisfaction levels are testimony for the

endorsement of family and friends who are the main finance providers. However, this is

not a formal practice and not available for everyone because not everyone has a relative

or friend who is able to pay to others. About 60% are satisfied; 21% very satisfied; and

16% fairly satisfied. Only less than 3% are unsatisfied.

Table 23: Satisfaction levels of current finance providers to support agricultural activities


Very unsatisfied 1 2.6

Fairly satisfied 6 15.8

Satisfied 23 60.5

Very satisfied 8 21.1

Total 38 100.0

The low uptake of credit from formal financial providers is mainly attributed to a

number of factors. About 44% of respondents have challenges with service provider’s

insistence on regular monthly payment even when the crop is not ready on market. Lack

of willingness to lend by financial service providers is a challenge to 29% of the

respondents. About 11% feel that no credit products on offer suit their farming activities.

About 11% have challenges with stringent loan requirements that are hard to comply with.

The further analysis of this would be required to understand the underlying conditions, and also pave the way for suggestions on how should FSPs communicate with their clients and pave the way for product diversification, which has been a major challenge in rural Afghanistan in the past 10 years.

Table 24: Challenges rural farmers encounter in accessing financial services


No financial services providers is willing to lend 13 28.9

No credit products that suit the farming activity 5 11.1

Service providers insist on regular monthly payment

even when the crop is not on market 20 44.4

Loan requirements are hard to comply 5 11.1

Financial service providers require an insurance

against the crop 1 2.2

No control of the farm 1 2.2

Total 45 100.0

Rural households were asked about what they would consideration if they were to

borrow for agricultural purposes. The key considerations would be when to pay (28%);

mode of payment (24%); and loan amount (24%). Other considerations would be the

interest charged (12%) and repayment period (12%).

Table 25: Key considerations for borrowing


Loan amount 6 24.0

repayment period 3 12.0

When to pay 7 28.0

Mode of payments 6 24.0

If there is interest charge 3 12.0

Total 25 100.0

2.2.3 Non financial services

Figure below shows the proportion of rural households that have received non-financial

services such as training in a number of areas. Only a few households have been trained.

The training was offered by a handful of organizations. However, given a chance,

between 53% and 69% of the respondents would be interested in the capacity building

training.

Figure 2: Proportion (%) of rural households who have received capacity building training

Table 26: Interest in the non-financial services by rural households

I have never

heard about

it

Am aware

of an

organizatio

n that

provides it

Given a chance I

would be

interested to

participate

Yes No

Financial literacy (how to make, save and

invest money)

84% 16% 69% 31%

Business management (planning, pricing,

costing, record keeping)

84% 16% 64% 35%

Group formation organization and

leadership

84% 16% 58% 42%

Conflict resolution and peace building 97% 3% 60% 40%

Civic awareness and mobilization 97% 3% 56% 44%

Basic literacy/numeracy 80% 20% 53% 47%

Formation of producer/lobby groups 80% 20% 62% 38%

Market linkages with processors/other

buyers

80% 20% 67% 33%

Linkage with input suppliers 80% 20% 69% 31%

Trade fares, exhibitions, study tours 82% 18% 71% 29%

Agriculture extension services 76% 24% 66% 34%

Agriculture/livestock production

improvement

76% 24% 67% 33%

Cooperatives formation 76% 24% 67% 33%

Facilitation for bulk buying of farm input 82% 18% 67% 33%

2.3 Demand for Financial and non-financial services by urban residents

2.3.1 Profile of urban households in Balkh and Samangan

Interviews were held between the November 19th and 30th, 2015 targeting 20 respondents

drawn from urban centers in Balkh and Samangan. Urban centers visited includes: Abyak,

Agbak, Aybak, Center, Darbar, Madawi Chakh, Mazar, Mazar city, Mazar e Sharif, and

Sarwar. All respondents were male, mainly married (90%), with only 10% being single.

The age of the respondents varied greatly, 55% aged between 31-40 years; 22% aged

18-30 and 22% above 41years. Each household has an average of 8.9 members.

Majority of the respondents (85%) have gone to school at different levels, and therefore

literate. More than 50% have post-secondary education (tertiary or university); about 20%

have secondary level of education 15% have primary school education.

2.3.2 Income and expenses for urban households

Urban respondents in Balkh and Samangan have varied sources of income. Close

to half of the respondents engage in business activities (45%); while formal employment

and casual work account for 35% respectively. Urban farming contributes income to about

30% of the respondents; while remittances and livestock/diary activities are

complimentary income for 10% of respondents respectively. Though not considered in

this study, some household are likely to be getting contributions from rural farm activities.

Table 27: Sources of income for urban respondents


Formal employment 7 35

Casual work 7 35

Business activities 9 45

Crop farming 6 30

Remittance 2 10

Livestock/diary 2 10

The average monthly income for urban households that participated in the study

is about AFN 304,687 (US$ 4,448). Formal employment contributes monthly mean

income of about AFN 66,429 to household. Business activities contributes AFN 155,989;

casual work contributes AFN 38,671, crop farming contributes AFN 60,233. Remittance,

and livestock activities contributes mean annual income of AFN 135,000 and AFN 40,000

respectively. The table below is a summary of mean incomes from various sources.

Table 28: Mean income for urban residents

Frequency Percentage (%) Average income

Formal employment 7 35 66429 monthly

Casual work 7 35 38671 monthly

Business activities 9 45 155989 monthly

Crop farming 6 30 60233 monthly

Remittance 2 10 135000 Annually

Livestock/diary 2 10 40000 Annually

The average monthly expenses for urban households is AFN 36,519; and AFN

143,667 on business activities. This means that urban respondents have a surplus of

about AFN 124,501 from their average monthly incomes. About 45% of the respondents

save part of this income. The table below is a summary of an expense for urban

households that participated in the study in Balkh and Samangan.

Table 29: Average monthly household expenses

Expenses Frequency Percentage (%) Average

Rent 4 20 7125

Food stuff/groceries 20 100 11660

School fees 11 55 4536

Utilities (electricity and water) 19 95 3116

Energy (charcoal, kerosene etc) 19 95 9558

Health care 19 95 3984

Mobile phone communication 20 100 1232

Transport 13 65 1946

Wages for domestic workers 4 20 2450

Outstanding loan repayment 1 5 5000

Table 30: Average expenses for business premises

Expenses on the businesses Frequency Proportion (%) Mean

Rent for business premises 11 55 7955

Purchase of goods and services 6 30 134750

Salaries for employees 4 20 5500

Utilities (electricity and water) 13 65 1277

Market/government licenses 8 40 3138

2.3.3 Ownership of account with financial institutions

Out of the 20 households in the urban centers interviewed, only 40% have accounts with

financial institutions, out of which one half operate only savings account, while the other

half operates both current and savings account, mainly with commercial banks, MFI and

Saccos.

Figure 3: Proportion (%) of urban households with accounts

For those not having an account with a financial services provider, several reasons were

given. These include lack of money (50%); they services are expensive (20%); rates

charged (20%); and that someone in the family has an account (10%), therefore no need

for them to open another account.

The survey results reveals that besides formal banking institutions, there are other non-

bank institutions that have provided them with financial services and transactions in the

last 12 months. These are Hawala money transfer (70%), NGOs (6%) and others (24%),

e.g. family and friends.

Figure 4: Services from Non-bank institutions in the last twelve months

2.3.4 Purposes of getting services from financial service providers

Besides savings and loans, there are varied reasons why urban households seek

services from financial service providers. The table below is a summary of the reasons

why households did use the financial service providers.

Table 31: Reasons for seeking financial services from providers

Frequency Proportion (%)

Receiving payments for selling farm produce 3 15.0

Receiving and sending payments for work or selling of goods/services

6 30.0

Receiving payments from employer 1 5.0

Receiving money from family members 1 5.0

Savings 3 15

Personal transactions 2 10.0

No response 6 30.0

Receiving payments from government 1 5.0

Sending money to family members living elsewhere 2 10.0

Personal transactions 1 5.0

2.3.5 Savings

The proportion of households in urban areas that save part of their income is

relatively low. The survey results indicates that 35% of the urban households interviewed

saves part of their income while 65% do not. The income saved is mainly obtained from

business activities, wage employment, farm produce, livestock/diary produce and

remittance from family and friends. About 30% of the households save money in the bank,

while 5% keep at home. The main banks where money is saved are Azizi and Kabul

banks. All that save as generally satisfied with forms of savings and the facility.

There are varied reasons why households in urban areas save money. They save to buy

durable consumer goods, household expenses, buying land or house, and school fees

expenses. Others include savings to raise capital for business, building or renovating

houses, emergency purposes, for example health expenses, performing last rites/ or

marriages and for agricultural activities.

Table 32: Reasons for saving

Frequency Proportion (%)

Buying a house/Land 2 10.0

Buying durable consumer goods/services 3 15.0

To pay school fees and other school related expenses 2 10.0

Capital to start/expand business 1 5.0

For building extensions or renovation of house 1 5.0

Household expenses 3 15.0

Emergency/Health purposes 1 5.0

Agricultural activities 1 5.0

For performing last rites/marriage 1 5.0

2.3.6 Borrowing

About 45% of the households interviewed in urban areas have borrowed money in the

past 12 months. Friends and family members were the main source of credit to about

78% of those who borrowed in the last 12 months, while microfinance was the main

source of money borrowed by 22% of households that borrowed in the past one year.

There are varied purposes for borrowing. About 44% of the borrowers in urban settlements borrow to buy goods and services, 33% borrow for household expenses while 11% would borrow for purchasing land or house, and another 11% for agricultural activities. Other reasons for borrowing are for building, extension or renovation of houses; business activities (business capital etc.); health purposes or emergencies. A major concern here is that majority are borrowing for consumptive, as opposed to productive purposes which may lead to over indebtedness.

Figure 5: proportion of households in urban areas that have borrowed

Out of the 45% of the urban households that borrowed, majority (78%) repaid back the same amount of money borrowed, while 22% repaid with a service charge (cost above the loan). However, only 11% are not satisfied with the borrowing arrangements in place, but majority (89%) are satisfied. For those not satisfied, the main reasons are due to the interest charged/service charge on the loan and the distance to the facility.

2.3.7 Money transfer

About 60% of households interviewed in urban centers have received money from friends

and relatives in the last twelve months. About 40 have not received any money. For those

that received the money, majority (83%) used remittance companies and hawalas.

However, 8% send money through friend and family members.

2.3.7 Insurance services

About 45% of the urban households have experienced various misfortunes, ranging from

theft, fire or loss of house/property/business; loss of income of main income earner as a

result of death; loss of livestock, and large medical costs due to family members’ ill health.

About one third of the households have mitigated this trough using their savings and the

sale of assets. Others resorted to borrowing and depending on charities from mosques

and non-governmental organizations.

However, if given an opportunity to pay a little money to a company that could protect

them against these misfortunes, only 35% of the total households interviewed would be

willing to take advantage of the service. The rest (65%) would not take the service, the

main reason being that they have no money to pay for the services (54%); it’s against

their religion (27%), and fear of being cheated by companies providing the services

(18%).

2.3.8 Non-financial Services

The respondents were asked if they have ever received any form of non-financial

services, like training in various aspects. Almost all households (95%) have not received

any form of training; about 60% all urban households interviewed have not heard of any

training opportunities. More than 60% have shown willingness to be trained in various

courses, such as financial literacy, business management, group organization and

leadership, conflict resolution and peace building, civic awareness/mobilisation, and basic

numeracy/literacy.

Table 33: Status of capacity building training

Not received any form of

training

Not heard of training

opportunities

Willingness to be trained

Percentage (%) Percentage (%) Percentage (%)

Financial literacy(how to make, save and invest money)

95 60 70

Business management(planning, pricing, costing, record keeping)

95 60 70

Group organization and leadership 95 60 60

Conflict resolution and peace building 95 60 60

Civic awareness and mobilization 95 60 60

Basic literacy/numeracy 95 60 60

Almost all households interviewed in urban centers have not received any form of non-

financial services and are not aware of organizations that provide various assistance to

access market, such as formation of producer / lobby groups, Market linkages with

processors/other buyers, and Linkage with input suppliers. However, given a chance

between more than 50% of urban households interviewed would be interested to

participate.

2.4 Agro processors, input suppliers and traders

2.4.1 Profile of agribusinesses

Thirty three agro input suppliers and processors were interviewed in the provinces of Balkh (55%) and Samangan (45%). About 55% of the respondents were drawn from the rural areas, while 45% from urban areas. In terms of specific locations, respondents were drawn from Agbak, Aybak, Balkh Bandar, Center, Charsoq, Cotton Market, Dawtabael, Dry fruit market, Feroze, Grapes Market, Guzar Pakhta, Habad, Hazart Sultan, Main Market, Malican, Mandawi Market, Markaz, Mazar, Mazer e Sharif, Sar sofa, Village Malikan. All the respondents were male and mainly married (88%). Respondents with single status were 12%. The table below is a summary of the age of the respondents, which varied greatly. Table 34: Age of respondents

Age Frequency Percentage (%)

18-30 8 24.2

31-40 9 27.3

41-60 12 36.4

Above 60 4 12.1

Total 33 100.0

The literacy level of the agribusiness respondents is high, with more than 75%

having received different levels of education. The table below is a summary of the

highest level of education of respondents. About 32% have secondary education; 31%

have tertiary or university education; 13% have primary education. Those without any

formal education are 13%.

Table 35: Levels of education for agribusiness dealers


Primary 4 12.5

Secondary 10 31.3

Tertiary 6 18.8

University 4 12.5

None 8 25.0

Total 32 100.0

2.4.3 Description of Agro-businesses

Most of the businesses interviewed are owned by individuals (79%), while about 18% are

in partnership. About 70% of the business interviewed are legally registered, while 30%

are operating illegally.

Table 36: Ownership of agribusinesses in Balkh and Samangan


Sole proprietorship 26 78.8

Partnership 6 18.2

No response 1 3.0

Total 33 100.0

The businesses interviewed have been in the operations for about 15 years. Most of the

had been in operation for between 5-10 years (46%); 11 – 15 years (18%) and above 15

years constituted about 32% of the 27 respondents.

Table 37: Age of agribusinesses


< 5 years 1 3.6

5 - 10 years 13 46.4

11 - 15 years 4 17.9

> 15 years 9 32.1

Total 27 100

The following table is a summary of the forms of the businesses the respondents were engaged in. About 58% were involved in the buying and selling farm produce; 23% in the provision of farm inputs and agrochemical supply; about 19% were involved in selling raisin.

Table 38: Forms of agribusiness


Farm inputs and agrochemicals supply

6 23.1

Buy and selling farm produce

15 57.7

Sell raisin 5 19.2

Total 26 100.0

About 7% were involved stocking and selling seedlings/seeds; stocking and selling fertilizers (21%); buying fresh produce (21%); buying and processing fresh produce (24%); transportation of fresh produce (14%); selling raisin (7%); and selling cotton (7%)

Table 39: Agribusiness activities


Stock and sell seeds/seedlings 2 6.9

Stock and sell fertilizers 6 20.7

Buy fresh produce 6 20.7

Buy fresh produce and process 7 24.1

Transport fresh produce 4 13.8

Sell raisin 2 6.9

Processing cotton 2 6.9

Total 29 100.0

Months when business experience good sales varied greatly, but October is the most lucrative month for 22% of the businesses. Other lucrative months for the businesses are April (11%); December (11%) and July (7%). Other months are only lucrative for a few of the businesses.

2.4.4 Agriculture traders

Out of the 33 respondents, 16 were mainly involved in the trading businesses, where they mostly buy and sell grapes (38%), and sale vegetables (25%); cotton oil (19%); raisin (6%) and cereals (6%).


Cereals 1 6.3

Vegetables 4 25.0

Roots and tubers 1 6.3

Buying and selling grapes 6 37.5

Raisin 1 6.3

Sell cotton oil 3 18.8

Total 16 100.0

Each of the businesses market agro based goods of value AFN 9457 per month, or about

AFN 118211 annually. The main expenses on these traders is electricity (34%) and taxes

(15%). Other expenses are labour (3%); renting stock (3%) and buying boxes (3%).

These businesses use about AFN 2190 per month as expenses.

The first major financing need for the trading business are labour as indicated by 45% of the respondents; machineries and equipment (27%); capital for business expansion (45%); transportation cost (45%) and building fixtures and fittings (9%).

Table 40: Financing needs for agribusinesses


Labour cost 10 45.5

Stock and inventories 1 4.5

Machineries and equipment 6 27.3

Capital for business expansion

10 45.5

Buildings fixtures and fittings 2 9.1

Transport cost 10 45.5

2.4.5 Providers of farm inputs suppliers/agrochemicals

About 7 enterprises are providers of farm inputs and suppliers of agrochemicals, mainly supplying seeds, fertilizers and other agrochemicals. They often buy these from manufacturers and suppliers on cash basis. Most customers buy from them on cash basis, though to very limited extend, some would be given on credit, payable within 30 days. The major challenges are mainly lack of credit to buy seeds and other inputs in time; the price fluctuation of farm inputs, and also the market is small and uneconomical. Only 21% of the agro input suppliers operate bank account with formal or semi-formal banking institutions. More than half of the respondents operate both savings and current account; 28% current account; while 14% operate only savings account.

Figure 6: Proportion of farm input providers with bank accounts

The businesses have used mobile money transfer and Hawalla money transfer in the past 12 months. Besides savings and loans, the businesses use the financial service to receive payments for selling farm produce; Receiving /sending payments for work or selling of goods/services; and receiving money from family members elsewhere and

personal transactions. There are various why some agribusiness suppliers do not use financial services. Distance to the service providers were a main issue for 35% of the respondents. Other reasons include someone else in the family having an account (24%); lack of trust in financial institutions (18%); lack of enough money to enable savings (18%); and lack of necessary documentation (6%). Table 41: Reasons for lack of use of financial service providers


They are too far 6 35.3

Lack necessary documentation

1 5.9

You do not trust the institutions

3 17.6

I do not have enough money to use them

3 17.6

Someone else in the family already has account

4 23.5

Total 17 100.0

Only 9% of 33 claim there are financial institution providing financial services for agricultural activities in this area. These institutions are Balika, Islamic Cooperative investment and FMFB. However, majority claim that there are no financial services providers for agricultural activities in the area. 2.4.6 Insurance Most of the agribusinesses receive insurance services as indicated by 55% of the respondents. The rest do not have.


Have received insurance services

18 54.5

Have not received insurance services

15 45.5

Total 33 100.0

3.0 SUPPLY OF FINANCIAL AND NON FINANCIAL SERVICES

3.1 Financial service providers

The interviews were held between November 19th and 25, 2015 and covered 27 financial

service providers in Balkh and Samangan provinces5. The respondents were mainly male

(85%) and the rest female (15%) at management level.

Table 42: Type of financial institutions interviewed


Commercial Bank 6 22.2

Microfinance Institution 6 22.2

Microfinance Bank 2 7.4

Financial Cooperative 2 7.4

SACCO 3 11.1

Government Microcredit Project 2 7.4

Hawallas 6 22.2

Total 27 100.0

About 67% of the financial institutions interviewed have headquarters in Kabul. Others

have their headquarters in Agbak, Aredp, district, Mazar city, Mazar el sharif, sharay sada

Kabul, and shirpar square. Seventy (70%) of the institutions have at least one branch.

Those with 2 branches were 7.4%, 3 branches (7.4%) and more than 3 branches were

15%.

The financial service providers have been in operation for an average of 10.7years,

ranging between 1-76 years old. The table below is a summary of the number of the years

for the institutions that participated in the survey.

Table 43: Number of years in operation


0 - 5 9 33

6 - 10 9 33

11 - 15 7 25.9

> 15 2 7.4

5 Interviews were held in the following locations: Ajaa, Aria market, Atifaq Ali Sina, Aybak, Bandar, City center, Darwaza, Dawadabad, Hazrat Sultan, Jogee Sheran, Khair Abad, Kifayat market, Kochi, Malikan, Mazar city, Shaheed Masoud, and Siyagard Street.

Total 27 100

The Financial services providers visited have on average of 26 employees each, ranging between

1 and 170. They have an average of 4 branches, with more than 70% having at least one branch.

Each operate in about 8 districts.

Table 44: Characteristics of Financial Service providers

Frequency Mean

Number of branches 27 4

Number of employees 20 26.2

Male 26 13.7

Female 19 10.8

Number of districts of operation 16 7.8

Number of provinces 27 12.5

3.2 Financial Products

The financial services providers interviewed provides a number of services, including

loans and savings, money transfer, and online banking. About 63% provide loans/credit

to individuals, SMEs etc; 59% provide savings and deposits; while 48% provided money

transfer services. Only 4% provided safe custody services. None of the financial

institutions provided insurance services.

Table 45: Products offered by financial service providers

Products offered Frequency Percentage (%)

Loans 17 63

Savings and deposits 16 59.3

Insurance agency 0 0

Mortgages 0 0

Safe custody 1 3.7

Money transfers 13 48.1

Insurance 0 0

3.2.1 Loans

Sixty three (63%) of the institutions provide loans to various clientele, mainly

microenterprises, salaried employees, small and medium enterprises, large scale

corporates, individuals, agriculture value chains, and registered members of the VSLA.

Each financial institution had an average of 3973 loan clients, with an average loan

portfolio of AFN 30,284,260.

Table 46: Main consumers of loan products offered by financial insitutions (%)


Microenterprises 3 13.0

Employees 3 13.0

Small and Medium Enterprise 3 13.0

Large Scale Corporates 2 8.7

Individuals 2 8.7

Agriculture VCs 2 8.7

Registered members of VSLA 2 8.7

N/A 6 26.1

Total 23 100.0

3.2.2 Savings and deposits

Savings and deposits are the second most important product offered by 59% financial

institutions interviewed. The main clients are micro-enterprises. Each financial institutions

has an average of 217,838 clients, and total average portfolio of AFN 15,487,521 in

savings and deposits.

Table 47: Main Savings and deposit clientele

3.2.3 Money transfer

As mentioned earlier, about 48% of the financial institutions are involved in the money

transfer services. The most important clientele include the micro-enterprise, small and

medium enterprises, salaried employees, large corporates, individuals and agriculture

VCs.

3.3 Sources of funding

Customer deposits are the main sources of funding for the financial institutions as

indicated by 52% of the respondents. Other sources include the shareholders equity

0 10 20 30 40 50 60

Microenterprises

Employees

Individuals

Agriculture VCs

Registered members of VSLA

(26%) and grants from the government and donors (22%). Loans from other commercial

banks and retained earnings is an important source of funding for about 4% of the

financial service providers.

Table 48: Sources of funding for the financial institutions


Customer deposits 14 51.9

Owners’ equity 7 25.9

Grants from donors/government 6 22.2

Loans from other commercial banks 1 3.7

Retained earnings 1 3.7

3.4 Portfolio at Risk

Out of the 27 institutions interviewed, 6 provide lending services. The current portfolio at

risk for these lending institutions is as follows.

Age of the loan PAR (%)

PAR 30 days 0.6%

PAR 60 days 0.5%

PAR over 1 year 1.0%

3.5 Risks and challenges

Security presents the highest challenge and risk to the operation of the financial

institutions as confirmed 22% of the institutions. Other important challenges are low

number of clients (19%); low financial literacy amongst clients; and high rates of default

resulting in high PAR on loans (7%).

Table 49: Risks and challenges faced by financial institutions


Low number of clients 5 18.5

High rates of default resulting in high PAR on

loans 2 7.4

Low financial literacy among clients 4 14.8

Security 6 22.2

No response 10 37

27 100

3.6 Future plans

The survey sought to know whether the institutions intend to introduce new financing

products in the near future. About 15% of the institutions would like to introduce a number

of products, such as loans (personal, producer, agricultural loans, etc) to new clients

comprising of enterprises, employees and individuals. About 22% of the financial

institutions would open up new branches. The numbers of branches to be opened ranges

from 1-5.

3.7 Non-financial services

Only 2 institutions out of the 27 interviewed offers non-financial services. They offer

financial literacy and financial management and general business and entrepreneurial

skills to SMEs, medium and large entrepreneurs. Only 2 institutions provide BDS services

and mostly employ exchange visits and tours and through field schools.

In communicating to clients about products and services, the 5 institutions that responded

use word of mouth and referrals from clients and previous customers, Media (print, voice,

social), Website/internet.

Three institutions responded on the feedback mechanism question, saying that they

receive feedback through social media and the evaluation sessions after trainings.

Only 2 institutions charge for service delivery. They charge between 2-17%, which mainly

meets the cost of service. In one instance, this fee seemed inadequate and sustain

operations through donations from donor and government.

Challenges faced in service provision include, security and emerging technologies. Given

an opportunity, only 3 institutions have expressed willingness to and availability for

financial literacy training. They would like training in capacity building, finance and

fundraising methods. The three institutions would like support in market survey.

4.0 CONCLUSIONS AND RECOMMENDATIONS

4.1 Conclusions

Most of the people in Balkh and Samangan are poor and lack access to the range of appropriate financial services they need despite the provinces over 27 varied financial service providers. The financial services available to them include savings, loans, money transfers and insurance service. These are relatively costly or rigid, whether from formal or informal financial providers or traders and agricultural processors offering input credit. Non-financial services considered critical to assist poor and low income people access financial services are almost nonexistent.

The Low income people faces numerous constraints in accessing financial services from the financial service provide. These include lack of awareness and information on the FSP and their products, low financial literacy levels to understand the financial systems, lack of collateral, inappropriate products to meet their needs, high cost of products, and lack of access to markets.

Similarly, the financial service providers too face numerous constraints in providing financial service to the poor and low income people. These range from institutional weaknesses and lack of technical capacity to plan, develop, launch, implement and monitor profitable and sustainable financial products that meet the needs, wants and aspiration of the low income and the poor.

The study therefore recommends a number of interventions to promote access to financial services by people from Balkh and Samangan.

4.2 Recommendations

i. Promote decentralization of financial services: A high level of the population in Balkh and Samangan do not have accounts, with only 13% of the rural and 40% urban households have an account with formal or semi-formal financial service provider (FSP). The major reasons why people to not have own account are: (i) distance to financial service providers, (ii) cost of services, lack of money, (iii) lack of trust for the institutions, (iv) high fees and commissions charged; and (v) dependency on family members that own accounts. The study recommends the need by ILO should con FSP to decentralize services through field offices. These could be low cost service outlets mainly comprising of small offices, minimum staff and equipment offering basic and essential services to household in remote locations where there is high population. Since they are low cost units it is possible to set up several of them in strategic locations so as to reduce travel cost and time for the remote based customers. The FSP should also explore the feasibility of providing agency banking and mobile banking services as options. ILO could conduct feasibility studies to establish the viability of these units as a prompt for the FSPs to consider these options.

ii. Address the cost of services, high fees and commissions charged: The study recommends that ILO provides technical assistance to enable FSP to conduct costing of their products to determine the exact cost of offering the products and determine the extent to which they can lower the price without subsidy or making losses. The ILO could also conduct a customer survey to determine what the customers can be able or willing to pay for the services. ILO may support FSP to introduce low-value savings accounts by encouraging FSP to provide Low-cost “no-frills” or “basic” accounts that have less burdensome opening requirements. In addition, ILO may work with government in promoting financial products i.e. saving, credit, money transfer, insurance etc. for low-income people.

iii. Embrace innovative technologies: Advances in ICT are driving down costs of financial service delivery by doing away with brick and mortar branch to electronic banking, mobile banking ATM. This is enabling financial institutions to access financial services to remote areas without high cost branch structures and staff costs. ILO should assist in creating awareness of these ICT advancements by facilitating study tours for FSP key decision makers for them to see firsthand in other part of the world. This will allow to embrace new business models (such as mobile phone banking and electronic money, linking bank accounts to government payments and benefits, index-based insurance, and financially accessible or “basic” bank accounts), and delivery mechanisms that expand access to and usage of financial services. Mobile Money has the potential to help bring about a dramatic increase in the reach of electronic payment services to broader segments of the population. This potential can be fulfilled through: i) greater competition by bringing in additional players, including none traditional ones, to the provision of payment services; ii) creating a new business model based on variable costs recoverable through affordable fees (as compared with traditional payment products which may have higher fixed costs); and iii) creating channels that are more familiar and convenient to first-time users of payment products. As users become familiar with Mobile Money and develop trust in the product, access to other products like deposits, investment, and insurance could be offered. ILO may support FSP to adapt to the innovative and disruptive technologies to promote access to financial services.

iv. Building the capacity of FSP: ILO should encouraging greater interaction between financial sector and rural development staff to ensure that financial sector expertise is included on any rural project that has a finance component. A special training programme can be arranged for the staff working with various development organization to equip them with the information and knowledge of the financials products and services available. They can thereafter be used to disseminate the financial services provider’s products whenever they interact with the local people in various forums.

v. Innovative financial products. Almost all financial products being provided do not

meet the needs of the households. There would be need for ILO to support a Market Research and develop savings products that would address the needs of

the savers that are not currently saving with the FSP; develop loans products that meet the needs and wants of potential borrower; develop attractive terms and conditions for money transfers. These being a predominantly Muslim regions, there is need to make the product sharia compliant. The uptake of insurance on the other hand is insignificant in both urban and rural areas. The uptake of insurance is hindered by the lack of knowledge about the insurance, religious issues, lack of money and fear of being cheated by insurance companies. The study recommends that FSP with support of ILO and government undertake financial literacy on insurance products to create and increase awareness; address the religious issues with religious leaders in the area to ensure that the products are sharia compliant; and enhance customer trust with insurance companies.

vi. Non-financial services: Many FSP around the world offer a coordinated combination of microfinance and other development services (nonfinancial services) to improve the individual low people their businesses, income and assets, health, nutrition, family planning, education of children, social support networks, and so on. In general, these FSP and organizations that offer an integrated approach to poverty alleviation offer a more well-rounded approach that best serves their clients. However, the cost of non-financial services is prohibitive and many FSP are not able to finance on their own. On the other hand they cannot pass the cost to their clients because they too cannot afford. ILO may support FSP to provide non-financial services, such as financial literacy and education, business management and support to the agricultural value chain actors through provision of grants to these institutions.

vii. Policies and Regulation: The survey did not examine the legal and regulatory environment, and how it affects access to financial services in the two provinces. However, it is recognized that an enabling policy and regulatory environment is needed to promote the expansion of financial services in Afghanistan, and specifically, Balkh and Samangan provinces. Sound legal and regulatory frameworks that are effectively enforced promote market development and competition, while subjecting financial institutions and agents to sound and appropriate prudential regulation and rules of conduct in order to protect consumers and depositors as well as to ensure market stability. ILO may support the government to review and adopt or adapt flexible regulations and legislation to technologies, such as mobile banking, point of sale device networks, or electronic money, and to the roles that nonbanks can play in delivering financial services. ILO may provide technical assistance, data and analysis, financing, and other forms of support to the design and implementation of financial inclusion strategies for these provinces and Afghanistan as a whole. Other possible areas of support would include providing a risk-sharing i.e. guarantees to incentivize FSP to provide financial services, support risk assessment on financial integrity and risk profiles of households in these provinces.

viii. Promote access to agriculture financial services: ILO as an organization has a number of options and alternative interventions to enhance the low income people

access to financial services by addressing the constraints faced. There are a number of intervention that ILO can engage at the farmer level to enhance access to financial services by addressing key issues

(a) Farmer to produce for the Market through market linkages - The farmers tend to sell what they can produce based on their technical knowledge and production capacity instead of what the market demands. They typically lack the resources or skills to conduct market research on the preferences of domestic and international consumers. They also have limited access to information about market prices and other important market data. This has tremendous implications for both farmers and the FSP supplying finance to farmers. If the gap between production and market demand is too large, the business can experience declining profits and may be in danger of defaulting on its bank loan. ILO may finance market surveys and value chain studies to determine the preference of the market and encourage the farmers to produce for the market. Through coordinated links between farmers, processors, retailers and others, particularly for the export sector and for supplies to local processors and supermarkets is the way to go. As incomes increase consumers are becoming more demanding in terms of quality and safety and demographic and income trends are leading to increased demand for convenience foods, together with assurances of product safety. New “value chains” are emerging to meet these demands. Under the “Linking Farmers to Markets” approach the development of long-term business relationships rather than support for sales, is stressed and donors and NGOs are providing the catalyst for farmers to work more closely with the private sector

(b) Market Information Services - The poor farmers usually lack market information or intelligence on market prices and trends in the market for purposes of making informed decisions. This lack of knowledge lead to exploitation by brokers and other middlemen. ILO may support the development of Market information services to gather, analyse, and disseminate market information about prices and other information relevant to farmers, livestock keepers, traders, processors and others involved in handling agricultural products. Up-to-date market information enables farmers to make informed decisions about what to grow, when to harvest, to which markets produce should be sent and whether or not to store products and also negotiate with traders. Well-analysed historical information helps farmers make decisions about new crops to grow and helps traders make decisions about the viability of inter seasonal storage. Market information can also be used by planners to help monitor food availability and to identify shortages. If farmers are to effectively use market information, they need to be able to fully understand it; for example, they need to understand the qualities to which quoted prices refer and the costs of transferring produce from their farms to the relevant market. Extension workers need to be in a position to advice farmers on this. So it will also be necessary that ILO invests in training Marketing Extension officers and farmers alike.

5.0 LIST OF PUBLICATIONS

Altai Consulting, 2013. Market Research on Mobile Money in AFGHANISTAN. A report prepared for FAIDA, AMMOA AND USAID. AHG, 2014. Mortgage market assessment in 5 major cities of Afghanistan prepared for Harakat – Afghanistan Investment Climate Facility organization. Kabul, Afghanistan Fishstein, Paul; Amaki, Islamuddin; and Qaasim Mohammed; 2013. Balkh’s Economy in Transition. Afghanistan Research and Evaluation Unit. USAID, 2014. Audit of USAID/Afghanistan’s Financial Access for investing in the development of Afghanistan project. A Memorandum from Office of the Inspector General to USAID Afghanistan Mission Director, Audit report no. F-306-14-002-P, March 29, 2014, Kabul, Afghanistan.

Online publications

Balkh Provincial Profile. http://www.mrrd-nabdp.org/attachments/article/229/Balkh%20Provincial%20Profile.pdf. Accessed on December 27, 2015

Samangan Provincial Profile. http://www.mrrd-nabdp.org/attachments/article/265/Samangan%20Provincial%20Profile.pdf. Accessed on December 27, 2015.

http://www.mrrd-nabdp.org/attachments/article/229/Balkh%20Provincial%20Profile.pdf

http://www.mrrd-nabdp.org/attachments/article/229/Balkh%20Provincial%20Profile.pdf

http://www.mrrd-nabdp.org/attachments/article/265/Samangan%20Provincial%20Profile.pdf

http://www.mrrd-nabdp.org/attachments/article/265/Samangan%20Provincial%20Profile.pdf

6.0 ANNEXES

6.1 Data Collection tools

6.1.1 INTERVIEW GUIDE FOR FINANCIAL SERVICE PROVIDERS (FORMAL AND SEMI-FORMAL)

MAPPING OF FINANCIAL SERVICES IN BALKH AND SAMANGAN PROVINCES

FINANCIAL SERVICE PROVIDERS (FORMAL AND SEMI-FORMAL) INTERVIEW GUIDE

Enumerator Name………………………………………………………………..Tel…………………. Start Time………..

PART 1: INTERVIEW DETAILS SECTION A: GENERAL INFORMATION

NO. QUESTIONS ANSWER CATEGORIES

A.01 Date of interview ……….…./11/2015

A.02 Name of Province [1] Balkh [2] Samangan

A.03 Name of Location __________________________ (Specify)

A.05 Name of respondent Tel:

A.06 Gender [ 1] Male [2] Female

A.09 Position of respondent in the organization

A.10 Head office Physical address

A.13 Mobile Phone of respondent

A.14 Email address of respondent

PART 2: ORGANIZATION INFORMATION

2.1 Category of the Organization 1. Commercial banks 2. Microfinance institutions 2. Microfinance Bank 3. Financial cooperatives 4. Insurance companies 5. SACCOs 7. Government microcredit projects 8. Hawala 9. Other (specify)_____________________________

2.2 Please tell me more about your Institution (interviewer should obtain company profile, including vision, mission, history, organogram etc)

2.3 How many years have the institution/organization been in operation in Afghanistan? (Years)

_____________________ Yrs

2.4 How many branches does your institution have

Number of branches_______

2.6 In how many provinces do you operate in the country

Number of provinces where institution has operations_______

2.7 In how many districts do you operate in the country

Number of districts where institution has operations _______

2.8 How many employees does your organization have?

Number of Male employees _______ Number of Female employees _______

PART 3: PRODUCTS AND SERVICES

3.1 What products does your organisation currently offer and who do you target with these products? (List up to 5 main products)

Product type Target clients

1. Loans

2. Savings/Deposits

3. Insurance agency

4. Mortgages

5. Safe Custody

6. Money Transfers

7 Insurance

8. Other (Specify)

Codes for Target clients: 1. Micro enterprises 2. Employees 3. Small and medium enterprise 4. Large scale corporates 5. Individuals 6. Agriculture VCs 6. Others (Specify) _____________________

3.2 How many clients/customers does your financial institution currently serve?

Type of clients Number

1. Number of Loan Clients

2. Number of savings/deposits clients

3. Number of insurance clients

4. Number of mortgage clients

5. Other clients (Specify)

Total clients

3.3 What is the organisations total deposits and outstanding loan Portfolio

Portfolio In Afghani USD

1.

Deposits/ Savings

2. Loan portfolio outstanding

3.4 What is the organisations current portfolio at Risk (PAR) under the following categories(Applicable for lending institutions only)

Age of the loan PAR (%)

PAR 30days

PAR 60 days

PAR over 1 year

3.5 What are the organisations sources of Funding/finances(More than 1 option possible)

1. Customer deposits 2. Owner’s Equity 3. Loans from other commercial Banks 4. Retained earnings 5. Grants from donors/government 6. Other sources (Specify)______________

PART 4: FUTURE PLANS

4.1 Does your institution intend to introduce new financing products in the near future (next 1year)?

1. Yes 2. NO

4.2 If Yes above, which products and for which target clients

New Product type Target clients

Codes for Target clients: 1. Agricultural value chain actors/ Agri-businesses 2. Micro and small enterprises 4.Employees 5. Business people 6. Organizational/cooperate clients 7. Individuals 8. Others (Specify)

4.3 Does your institution intend to open new branches in the near future (1-2 years)?

1. Yes 2. NO

4.4 If Yes above, how many? Number of new Branches ________________

PART 5: CHALLENGES AND RECOMENDATIONS

4.6 What risks/challenges do you face in providing financial services to your clients?

1.Low numbers of clients 2. High rates of default resulting to high PAR on loans 3.High costs of Loan/mortgages recovery 3. Low financial literacy amongst clients 4 Others (Specify) _________

Part 6: Non-Financial Services 6.1 Does your institution offer non-financial services? Yes No

If yes,

6.2 Who are

your target

clients and

what

products

or

services

do you

offer to

them?

# Category of target Clients Services Offered (use codes below)

i People in business: -

SMEs small and microentrepreneurs,

medium and large entrepreneurs

i

ii

iii

ii Value Chain Actors (Businesses involved

in input supply, commodity trading, agro-

processing etc)

i

ii

iii Agricultural producers and producer

organizations (individuals, groups,

cooperatives, associations etc)

i

ii

iv Others (specify

Codes for services offered

1= General business and entrepreneurial skills (e.g. business planning, communication skills, record keeping,

budgeting etc.);

2=Market research, development and market linkages (demand and supply analysis, market information

systems, certifications, standards and compliance etc)

3=Organizational development and management

4= Management training (leadership skills, roles, responsibilities, governance, ethics etc)

5=Financial literacy and financial management training (Making, saving, investing and borrowing money;

Planning record keeping and linkages to fiance etc)

6= Other(specify)…………………..

3.2 What is the number of clients/beneficiaries in each category

who have benefited from your services in the last one year?

Target Clients Number of

Beneficiaries

1 Financial institutions

2 Value chain actors

3 Agricultural producers

and producer groups

4 Individuals

(entrepreneur/employee

s/others)

5 Others (specify)

3.3 What approaches or methodologies do you use to provide

BDS services?

1. Classroom set up

2. Technical assistance and mentoring

3. Exchange visits and tours

4. Field schools

5. Organized forums and workshops

6. Others (specify)

3.4 How do you communicate/ provide information to your target

clients on the products and /services that you offer?

1. Word of mouth

2. Referrals - from clients and previous

customers

3.Competitive bidding procedures

4. Media (print, voice, social)

5. BDS networks and forums

6.Website/internet

7.Others (specify)

3.5 Through which means do you get feedback and

input/contributions from your clients and/or customers?

1. Evaluation sessions after trainings

2. Social media

3. Emails/letters

4. Others (specify)

3.6 Do you charge for your services? 1=Yes; 2= No

3.7 If yes in 3.6 above, please expound on how this works? What

are the rates? How do clients pay for services?

3.8 Does the fees/payments for services by the clients cover the

costs of the services you provide?

1=Yes; 2= No

3.9 If No in in 3.6 and 3.8 above, how do you sustain your

operations and service delivery to your clients?

3.10 What challenges/constraints is your organization currently

facing in providing the services to your target clients?

3.11 Given an opportunity would you be willing and available to

provided financial literacy training

1=Yes; 2= No

3.12 If yes, What kind of support and capacity building would you

need? Please List

1. 2. 3.

3.11 Is there anything else that you would like to share/suggest to

us regarding this survey that we did not ask?

Thank you for giving us your time. Is there a question you would like to ask us? Enumerator Signature………………………………………………. Time interview ended……...... Supervisor Name …………………………………………………. Signature ……………………..…… Date………

6.1.2: AGRO-PROCESSORS, AGRO-INPUT SUPPLIERS AND TRADERS

MAPPING OF FINANCIAL SERVICES SURVEY IN BALKH AND SAMANGAN PROVINCES AGRO-PROCESSORS, AGRO-INPUT SUPPLIERS AND TRADERS

Enumerator Name……………………………………………………Tel……

SECTION A:


A.01 Date of interview ……./11/2015





A.06 Marital Status [ 1] Married [2] Single [3] Widowed [4] Divorced

A.07 Age of the Respondent (yrs) [ 1] 18 - 30 [2] 31 – 40 [3] 41 – 60 [4] Above 60

A.08 Level of education of respondent [ 1] Primary [ 2] Secondary [3] Tertiary [4]University [5] None

A.09 Location of Organisation/business premises

[1] Rural [2] Urban

A.10 Province respondent originated from?

[1] Balkh [2] Samangan [3] Other (Specify)____________

SECTION B: GENERAL INFORMATION

B.01 When did this business/organization start business?

Year__________________________________

B.02 What is the form of Ownership of the Business

[ ] 1. Sole proprietorship [ ] 2. Partnership [ ] 3. Group based (E,g SHG) [ ] 4. Limited Liability company [ ] 5. Association/Cooperative society [ ] 6. Others (specify)

B.03 Is the organization/business legally registered [1] Yes [2] No

B.04 How many years has the business been in operation? (Years)

Number(Years) ____________

B.05 How many branches does the business/organization have?

Number of branches_______

B.06 In how many provinces does the business operate in the country

Number of provinces where you have your operations_______

B.07 In how many districts does the business operate in the country

Number of districts where you have your operations _______

B.08 How many employees does your business employ?

Number of Male employees_______ Number of Female employees_______

B.09 Which month(s) is business at peak?

B.10 What business do you do?

1 [ ] Farm inputs and Agrochemicals supply 2 [ ] Buy farm produce 3 [ ] Both 4 [ ] Other (Specify)

B.11 Specify what you do in this business?

1. [ ] Stock and sell seeds/seedlings 2. [ ] Stock and sell fertilizers, agrochemicals 3. [ ] Buy fresh produce 4. [ ] Buy fresh produce and process 5. [ ] Transport fresh produce 6. [ ] Other (Specify)

SECTION C: AGRICULTURAL TRADERS (Ask Traders Only)

C.01

What product(s) does your Organization deal with

1. Cereals (Specify) 2. Vegetables (Specify) 3. Livestock and livestock products (Specify) 4. Roots and Tubers (Specify) 5. Other (specify)

C.02

What is the type, Quantity and value of commodities Marketed in a Month Codes for Market outlet 1. Supermarkets 2. Wholesalers/Aggregators 3.Institutions (Schools,

Hospitals,Hotels) 4. Home owners (Individual

Consumers) 5.Organizational/cooperate

clients 6.Others(Specify)_____

Type of Commodity Marketed

Quantity Marketed /Month

Units/Tons

Marketing Outlet

Price/ton (Afghani/)

Value of Commodity (Afghani)

C.03

What are the major business expenses

Type of Expense Amount/Month in Afghani

Value per Annum in Afghani

C.04

What are TWO of the Major financing needs of your business that you face? (Two Major needs only)

Organizations Financial Needs

1. [ ] Labour Costs

2. [ ] Stocks and Inventories

3. [ ] Machineries and equipment’s

4. [ ] Capital for business expansion

5. [ ] Buildings, Fixtures and fittings

6. [ ] Repairs and Maintenance

7. [ ] Transport Costs

8. [ ] Others(Specify)

SECTION D: PROVIDERS OF FARM INPUTS SUPPLIERS/AGROCHEMICALS (To Ask only Farm Input Supplies)

D.01 Which of these products do you sell?

1. [ ] Seeds/seedlings 2. [ ] Fertilizers, 3. [ ] Agrochemicals 3. [ ] Sprayers and other farm tools 4. [ ] Farm machinery 5. [ ] Other (Specify)

D.02 Where do you get your products? 1 [ ] Manufacturer 2. [ ] Distributor 3 [ ] Others(Specify)

D.03 How do you buy your products?

1. [ ] Cash 2. [ ] Credit, < 30 days 3. [ ] Credit, > 30 day 4. [ ] Others (specify:

D.04 How do your customers buy from you?

1. [ ] Cash only 2 [ ] Cash and times Credit limited to 30 days 3. [ ] Check off at harvest 4 [ ] Other (specify)

D05 Which type of customers of customers buy on credit?

D.06 Why do such customers buy on credit

D.06 How do such customers pay you for your goods?

D.05 What are your major challenges in dealing with this business?

1. [ ] The market is small and uneconomical (unsustainable) 2. [ ] The prices farm inputs changes a lot 3. [ ] Lack of credit to buy seeds and other inputs in time 4. [ ] Farmers not able to buy for seeds in time 5. [ ] Seeds are not available in time 6. [ ] Agrochemicals are not effective/poor quality/counterfeits 7. [ ] Lack technical skills & knowledge on chemicals & inputs 8. [ ] Other (specify)

SECTION E: AGRO PROCESSORS (To ASK only the Agro Processors)

E.01 What products does your Organization deal with

1. Cereals 2. Vegetables 3. Livestock and livestock products 4. Roots and Tubers 5. Other (specify)

E.02 Where do you buy the fresh commodities from?

1 [ ] Directly from farmers 2 [ ] From brokers/middlemen 3 [ ] Others business people 4 [ ] Transporters 5 [ ] Others (Specify)

E.03 How do you buy your fresh commodities?

1. [ ]Cash 2. [ ]Credit, < 7 days 3. [ ] Credit, 7-14 days 4. [ ] Credit, > 14 days 5. [ ]Others (specify:

E.04 What are your main challenges in buying these commodities?

1. [ ] Production varies (affected by weather) 2. [ ] Farmers are not reliable 3. [ ] Poor quality of produce 4. [ ] Unreliable market for fresh produce 5. [ ] Transport challenges 6. [ ] After harvest wastages (storage) 7. [ ] Lack of credit 8. [ ] Weak payment system 9. [ ] Lack of insurance against loss 10 [ ] weak policy framework to support production of the crop 11 [ ] Others (specify)

E.05 Do you process or do anything to the commodities?

1 [ ]Yes 2 [ ]No

E.06 If YES in E.O5 above, what value do you add to the commodities?

1. [ ] Process it to juice or other 2. [ ] Repackage 3. [ ] Rebrand and export 4. [ ] Other (specify)

E.07 Of the commodities you deal with, how much do you process per day?

Product type (specify product)

Quantity processed per day (in tons)

Codes for food Crops: 1. Maize/Corn 2. Wheat 3. Rice 4. Grapes/Raisins 5.Tomatoes Codes for Cash crops: 2 Barley 2. Cotton 3. Apples 4. Apricot 5.Dates 6. Grapes 7. Berries 8. Pomegranate 9. Peach Codes for Livestock and Livestock Products: 1. Beef 2.Skins and Hides3.Poultry and poultry products 4.Dairy products (Milk, Cheese) 5.Camel Milk 6. Other (Specify)

E.08 What is the target market for your produce?

1. [ ] Wholesalers/Aggregators 2. [ ] Institutions (Schools, Hospitals, Hotels) 3. [ ] Other Agro-processors 5 4. [ ] Individual Consumers) 5. [ ] Organizational/cooperate clients 6. [ ] Others (Specify)

SECTION F: FINANCIAL SERVICES PROVISION

F.01 Does the Business/ Organization maintain an account with a formal/semi-formal financial institution? [ ] 1. YES [ ] 2. NO (if not go to F.05)

F.02 If Yes in (F.01) above, what type of accounts do you maintain in which financial institutions?

Savings Current Both Saving and Current

Neither

Commercial Bank

1

2 3 4

Microfinance Bank

1

2

3

4

Microfinance Institution

1

2

3

4

SACCO 1

2

3

4

FSA (Village Banks)

1

2

3

4

Other (Specify) 1

2

3

4

F.03 Which of these non-bank institutions have provided you with financial services/transactions in the last twelve months? (TICK ALL MENTIONED)

INSTITUTION Specify Name

[ 1] mobile money transfer organization(MTO)

[ 2] NGOs

[ 3] Government microcredit projects

[ 4] Others (specify)

F.04 Besides savings and loans, for what other purpose did you use the financial services provider mentioned (F.02 & F.03)

above? (tick as appropriate)

Purpose

[ 1] Receiving payments for selling farm produce

[2 ] Receiving/sending payments for work or selling of goods/service

[ 3] Receiving payments from Government

[ 4] Receiving payments from employer

[5 ] Receiving money from family members elsewhere

[ 6] Savings

[ 7] Sending money to family members living elsewhere

[ 8] Receiving loans

[ 9] Personal transactions (paying bills etc)

F.05 If answer to (C. 02) above is no, why don't you have

Reason

[ 1] They are too far

account with any of the financial institutions mentioned?

[ 2] They are too expensive (service fees /premium)

[ 3] Lack necessary documentation (ID card, wage slip)

[ 4] You do not trust the institutions

[5 ] They charge interest/riba

[6 ] I do not have enough money to use them

[ 7] Someone else in the family already has account

[ 8] Other(specify)

SECTION G: DEMAND FOR FINANCIAL SERVICES

G.01 Are there any financial institution (or other organization) providing financial services for agricultural activities in this area?

[ ] Yes [ ] No, If No, go to G.04

G.02 If Yes in G.01 above Please LIST THE INSTITUTIONS that offer financial services for agricultural activities in this area

1. 2. 3. 4.

G.03 What special services do these institutions offer alongside the financial services?

1. [ ] Market linkage for the farm produce

2. [ ] Check-off system during payment 3. [ ] Credit arrangements for input

supply 4. [ ] Technical support and advice 5. [ ] Competitive interest rates 6. [ ] Other financial services bundled together in a package 7. [ ] Others (specify)

Give name of the institution:

1. [ ]

___________________________________________________

2. [ ] ___________________________________________________

3. [ ] ___________________________________________________

4. [ ] ___________________________________________________

5. [ ] ___________________________________________________

6. [ ] ___________________________________________________ 7. [ ] Others (as specified)__________________________________

G.04 Have you received credit from any of the following over the last 2 years? Consider all types of credit – family, moneylenders, rotating credit societies, banks, etc. – for any purpose

[TICK THESOURCE USED AND RANK AS APPROPRIATE]

Source RANK

1 [ ] Family/friends

2 [ ] Money lender

3 [ ] Bank (specify ___________

4 [ ] MFI (specify ____________

5 [ ] FSA/Village bank

6 [ ] SACCO (specify _________

7 [ ] ROSCA/ASCA ________-

8 [ ] Employer

9 [ ] NGO (specify ___________

10 [ ] Government program

11 [ ] Supplier/Promoter

12 [ ] Other (specify ___________

G.05

What were the conditions for the loan?

1 [ ] Service (or any other) charges (%) ______________________ 2 [ ] Grace period (Months)_______________________________ 3 [ ] Repayment period (Years) ____________________________ 4 [ ] Collateral requirement ________________________________ 5 [ ] Others (specify) _______________________________________

G.06

How did you use the loan?

1 [ ] Business expansion 2 [ ] Bought additional stock 3 [ ] Bought assets 4 [ ] Invested in a business(diversification) 5 [ ] Paid Salaries 6 [ ] Bought office furniture’s 7 [ ] Other(specify)__________________

G.08 To what extent are you satisfied with the borrowing arrangements you currently have?

1 [ ] Very unsatisfied 2 [ ] Not satisfied 3 [ ] FAIRY SATISFIED

4 [ ] Satisfied 5 [ ] Very satisfied

G.09 IF NOT satisfied, what aspects of the borrowing arrangements don’t you like?

1 [ ] charging interest/Riba 2 [ ] The group arrangement 3 [ ] Loan security requirement 4 [ ] Forced nature of group savings 5 [ ] Long distance to facility 6 [ ] No Confidentiality 7 [ ] Other (specify) ____________________________________

SECTION H: MONEY TRANSFER SERVICES

H.01 Have you sent or received any money from friends or relatives using any medium for the last 12 months? YES [ ] NO [ ] (if NO go to section I)

H.02 Which of these services have you used to receive/ send money to someone living within Afghanistan in the past 12 months?

[1 ] Remittance companies /Hawala

[2 ] Mobile phone money transfer service (MTO)

[3 ] Send money with friend/family member

[4 ] Others (specify)

H.03 Which of these services have you used to receive/ send money to someone living outside of Afghanistan in the past 12 months?




[8 ] Never remitted outside Afghanistan


H.04

To what extent are you satisfied with the money transfer services currently available to you?

1 [ ] Very unsatisfied 2 [ ] Not satisfied 3 [ ] Fairy satisfied


H.05

IF NOT satisfied, what aspects of the money transfer arrangements don’t you like?

1 [ ] charging service fee 2 [ ] Mobile phone requires ability to read and write 3 [ ] No money to send 4 [ ] Friends/family not reliable 5 [ ] Long distance to facility 6 [ ] No Confidentiality 7 [ ] Other (specify) ____________________________________

SECTION I: Informal Financial Services

I.01 Does this business/organization transact with any savings groups? YES [1] [2 ] NO (if NO go to Section J)

I.02 If yes, how many savings groupsare you participating in?

1 [ ] 2 [ ] 3[ ] [ ] More than 3

I.03 What is the frequency of the farm/business/organization transacting with the savings groups?

[ 1] Daily

[ 2] Weekly

[ 3] Monthly

[ 4] Annually

I.04 For what reasons does the farm/business/transact with the savings groups?

[1] To save on a periodic basis

[2] Located far from formal financial institutions

[3] High cost of maintaining formal accounts

[4] Buy inputs

[5] Purchase fixed assets - land, houses, car

[6] Provides an opportunity for fund raising

[7] Raise money needed for business

[8] Unexpected events/emergencies

9 Others (specify)

SECTION J: INSURANCE

J.01 What kind of misfortunes has the farm/business/organization faced in the last 12 months? (tick as appropriate)

[1] Flood destroys house or property

[2] Theft, fire or loss of house/property/business

[3] Theft, fire or loss of vehicle/machinery/other property

[4] Drought/famine

[5] Loss of income of main income-earner as a result of death

[6] Loss of livestock

[7] Loss of savings

[8] Bad or deteriorating political situation in country

[9] Insecurity - concern for your personal safety

[10] Large medical costs due to family member's ill health

[11] Others (specify)

J.02 How did the farm/business/organization get out of these misfortunes?

[1] Use up your savings

[2]Sell your assets e.g. car, business, household goods, livestock

[3] Borrow money

[4] Depend on charity mosque, NGO

[5] Received donations from friends/family members

[6] Paid by insurance (Insurance name_____________________)


J.03 If the farm/business/organization had an opportunity to pay a little money to a company that could protect you against these misfortunes, would you be willing to take advantage of the service?

[1] YES [2] NO

J.04

If Not in question G.03 above what are the reasons for not willing to take it?

[1] I have no money to pay for it

[2] I fear to be cheated by such a company

[3] It is against my religion

[4] I do not know much about insurance

[5] Any other (specify)

SECTION K: NON-FINANCIAL SERVICES

K1 Have you ever received any form of Non-financial services as listed here below?

K1.01 Training in: -

Yes NO If yes, Name the provider

[1]Financial literacy (how to make, save and invest money)

[2Business management (planning, pricing, costing, record

keeping)

[3] Group formation organization and leadership

[4] Conflict resolution and peace building

[5] Civic awareness and mobilization

[6] Basic literacy/numeracy

[7] Other (Specify)_________________

K1.02 Assistance to access markets e.g.

Yes No If yes, Name the provider

[1] Formation of producer/lobby groups

[2] Market linkages with processors/other buyers

[3] Linkage with input suppliers

[4] Other (Specify)_________________

K1.02 Production improvement/competitiveness e.g.


[1] Trade fares, exhibitions, study tours

[2] Agriculture extension services

[3] Agriculture/livestock production improvement

[4] Cooperatives formation

[5] Facilitation for bulk buying of farm input

[6] Other (Specify)_________________

K2 Tell us more about your interest in non-financial services

K2.01 Training in: -

I have

never

heard

about it

Am aware of

an

organization

that provides

it

Given a chance I

would be

interested to

participate

Yes No



keeping)





[7] Other (Specify)_________________

K.02 Assistance to access markets e.g.

I have

never

heard

about

it

Am aware

of an

organization

that

provides it

Given a chance I

would be interested

to participate

Yes No




[4] Other (Specify)_________________

H.02 Production improvement/competitiveness e.g.

I have

never

heard

about it

Am aware of

an

organization

that provides

it

Given a chance I

would be

interested to

participate

Yes No






[6] Other (Specify)_________________

Thank you for giving us your time. Is there a question you would like to ask us? Supervisor Name ………………………………………………… Signature ………………………………. Date……………….. Time Interview completed: ---------------------------------------------

THANK YOU FOR YOUR TIME!

6.1.3 Questionnaire for the rural households

MAPPING OF FINANCIAL SERVICES SURVEY IN BALKH AND SAMANGAN PROVINCES

RURAL HOUSEHOLD (INDIVIDUALS) INTERVIEW GUIDE Enumerator Name………………………………………………………………………………..Tel………………………. Start Time………….

SECTION A: GENERAL INFORMATION


A.01 Date of interview ……….…./11/2015



A.04 Location of the Household [1] Rural [2] Urban






A.10 Number of members within Producers HH? Number [ ] Female [ ] Male [ ]

A.11 Number of HH members per age [ ] Below 5 [ ] 6-17 [ ]18 - 30 [ ] 31 – 40 [ ] > 40

A.12 Are you the Head of the household

[1] Yes [2] No

A.13 Location of employment/business premises of Household Farm

[1] Rural [2] Urban

A.14 Province Respondent originated from?


SECTION B: FARMING EXPERIENCE

B.01

What is the ownership arrangement of the land on which you farm?

1 [ ] Self owned 2 [ ] Leased 3 [ ] Borrowed/relative 4 [ ] Other (Specify) __________________________

B.02 In what agricultural activities are you engaged in?

1 [ ] Crop farming 2 [ ] Livestock rearing 3 [ ] Fishing/fish farming 4 [ ] Bee keeping 5 [ ] Other (specify)__________________

B.03 If in livestock farming, what do you keep? (You can tick more than one)?

Livestock kept for food Livestock kept for cash

Livestock Type Number Livestock Type Number

CODES 1. Sheep/goats 2..Poultry and poultry products 3..Dairy cows (Milk, Cheese) 4. Camel 5. Buffalos/cows 6. Other (Specify)_____________

B.04 Which are the main four food crops and four cash crops that you grow in your farm?

Food Crop Cash Crop Jirib under cultivation

2.5jirib =?acres

B.05

What are the main inputs that you use in your farm?

Inputs Quantity per season

Cost per Season

1 Seeds/seedlings

2 Fertilizer

3 Pesticides/ Fungicides /insecticides

4 Preservatives

5 Diesel for irrigation

6 Other services (specify)

B.06 What Farming activities and services do you undertake in production of this crop (s)?

1. [ ] Ploughing/tilling 2. [ ] Weeding 3. [ ] Pruning 4. [ ] Harvesting 5. [ ] Grading 6. [ ] Other (Specify)

B.07

Where have you been selling your crop?

Buyer Units Kg Unit Price AFS

Total

Use Buyer code :

Local Retailers e.g. supermarkets and shops -----1 Government agency ----------------------4 Processor--------------------------------------------------2 Wholesale Trader--------------------------5 Local Exporters-------------------------------------------3 Other (Specify) --------------------------------- 6

B.08 What is the payment arrangement?

1. [ ] cash on delivery 4. [ ] deliver, invoice and paid within 7 days 2. [ ] deliver, invoice and paid in 14 days 5. [ ] deliver, invoice and paid in 30 3. [ ] deliver, invoice and paid after 30 6. [ ] payment varies with buyer

B.09 Are you [or any player in the crop value chain] involved in any value addition processes when dealing with your crops?

[ ] Yes 2. [ ] No

B.10 What Value addition activities are you involved in?

1. [ ] Process it to juice or other 2. [ ] Repackage 3. [ ] Rebrand and export 4. [ ] Other (specify)

B.11 How many employees (farm workers) do you have in your farm?

Type of Farm Worker Men Women Total

1. Family labour

2. Casual

3. Permanent

Total

B.12 What Challenges do you face in agricultural production

1. Pests and diseases

2.High costs of inputs

3.Lack of labour

4.Lack of finances

5.Lack of specialized tools and equipments

6.Others (specify)

B.13 What challenges do you face in Marketing your produce

1.Poor/low market prices 2.Inaccesible markets as a result of poor rural infrastructures 3.Lack of preservation and processing facilities 4.Low demand of the market products 5.Delayed payments by buyers 6.Others (specify)

SECTION C: SUPPLY FOR AGRICULTURAL FINANCIAL SERVICES

C.01 What financial services do you think will best help you improve you crop production?

[RANK THEM]

1. [ ] Loans to acquire farm inputs and equipment 2. [ ] Payment system to enable you get paid fast and conveniently 3. [ ] Savings 4. [ ] Insurance against crop failure and other agricultural risk 5. [ ] Other (specify)

C.02 Which of the following Financial Institutions are you using in support of your farming activity? (Please Tick on the Institutions currently using) To what extent are you satisfied with the services you are receiving?

Source Level of

satisfaction Source

Level of satisfaction

1] Family/friends 7 ] Savings group

2] Money lender 8 ] Mobile Money (Mpesa) ____________

3 ] Bank (specify ) ________________

9 ] NGO

4] MFI (specify ) _________________

10] Government

5 ] SLA/Village bank ____________

11 ] Supplier

6 ] SACCO (specify ) _________________

12] Other (specify _____________

Codes

1 Very unsatisfied 2 Not satisfied 3 Fairly satisfied 4 Satisfied 5 Very satisfied

C.03

What challenges do you encounter regarding access to financial services to support your agricultural activity?

1 [ ] No financial services providers is willing to lend 2 [ ] No credit products that suit the farming activity 3 [ ] Service providers insist on regular monthly payment even when the crop is not on market 4 [ ] loan requirements are hard to comply 5 [ ] Financial service providers require an insurance against the crop 6 [ ] Don’t own land (title) and other assets for loan security 7 [ ] No control of the farm income 8 [ ]Others (specify)______________________________

C.04

What would be your key considerations if you were to borrow for agricultural purposes

1. [ ] Security 2. [ ] Loan amount 3. [ ] Repayment period 4. [ ] Loan purpose 5. [ ] When to pay 6. [ ] Mode of payments 7. [ ] Other conditions like to be in a group 8. [ ] If there is interest (Riba) charge 8. [ ] Other (Specify)

C.05 What is the Major Farm’s financial needs (Only tick the applicable ones)

1.Transport of Farm produce

2.Buying farm inputs (Fertilizer, Seeds,

3.Pay for Risk Mitigation(Insurance premiums)

4.Transport and Marketing of produce

5.Payment of Salaries and Wages

6. Buy/Lease farm

1. Storage/Warehousing

7.Others(specify)

SECTION D: FINANCIAL SERVICES PROVISION

D.01 Do you have an account with a formal/semi-formal financial institution? [ ] YES [ ] NO (if not go to D.03)

D.02 If Yes in (D.01) above, what type of accounts do you maintain in which financial institutions?

Savings Current Both Saving and Current

Neither

Commercial Bank 1

2 3 4

Microfinance Bank

1

2

3

4

Microfinance Institution

1

2

3

4

SACCO 1

2

3

4

FSA (Village Banks)

1

2

3

4

Other (Specify) 1

2

3

4

D.03 Which of these non-bank institutions have provided you with financial services/transactions in the last twelve months? (TICK ALL MENTIONED)



[ 2] NGOs



D.04 Besides savings and loans, for what other purpose did you use the financial services provider mentioned (D.02 & D.03) above? (tick

as appropriate)

Purpose






[ 6] Savings




D.05 If NOT having an account with a financial services provider, why don't you have with any of the financial institutions above (D.02)?

Reason








[ 8] Other(specify)

SECTION E: SAVINGS AND BORROWING SERVICES

E.01 Do you set aside some part of your income? YES [ 1 ] [ 2 ] NO (if NO go to E.06)

E.02 What is the main source of your savings?

1 [ ] Business activities 2 [ ] farm produce 3 [ ] livestock/dairy produce 4 [ ] Wage employment 5 [ ] Remittances from family/friends 6 [ ] aid from NGO/Government 7 [ ] pension 8 [ ] Other (specify)____________________

E.03 If you set aside some money as savings, for what purpose are you saving for?

[ 1] Buying a house and/or land

[ 2] Buying durable consumer goods/services

[ 3] For building extension or renovation of house

[4 ] To pay fees and other school related expenses

[5 ] Agricultural activities (farming/buy livestock/farm inputs/farm implements)

[ 6] Capital to start/expand business

[ 7] Household expenses

[ 8] Emergency/health purposes

[9 ] For performing last rites/marriage


E.04 To what extent are you satisfied with the savings arrangements you currently have?

1 [ ] Very unsatisfied 2 [ ] Not satisfied 3 [ ] FAIRY SATISFIED


E.05 IF NOT satisfied, what aspects of the savings arrangements don’t you like?

1 [ ] Safety of savings not assured 2 [ ] Long distance to facility 3 [ ] Accessibility/liquidity of savings 4 [ ] Forced nature of savings 5 [ ] Inability to leverage loan/other services 6 [ ] No Confidentiality 7 [ ] Other (specify ______________________)

E.06 Have you ever tried, to borrow money from Commercial Banks/SACCOs/MFIs to finance your business/activities in the last one year?

1. Yes 2. NO

E.07 If No, why have you never tried to borrow finances?

1. There was no need

2. Did not have capacity to borrow

3. Not aware of financial providers

4. High interest rates by financiers

5. Lack of sufficient Collateral

6. Loans from financial institutions in the country are not easily accessible

7. Others (Specify) ____

E.08 If yes, how did you use the loan? 1=Buying farm inputs (Fertilizer, Seeds, Agrochemicals) 2=Bought additional herd 3=Bought farm assets(Vehicles) 4=Invested in another business(diversification) 5= Paid Salaries 6= Bought/leased farm 7=Other(specify)

E.09 What were the conditions for the loan?

1. Interest rates (%) 2. Grace period (Months) 3. Repayment period (Years) 4. Collateral requirement 5. Minimum and maximum loan values 6.Membership with financial Institution 7. Others (specify)

E.10 Are you comfortable with the above loan terms and conditions?

1. Yes 2. No

E.11 If No, What terms would you prefer? Interest rate: Minimum____ Maximum ______ Grace period: Minimum___ Maximum ____ Repayment period: Min ____Max ________ Other terms: _______________

E.12 Apart from loans and savings, what other financial products/service would you need?

1. 2. 3. 4. 5.

SECTION E: MONEY TRANSFER SERVICES

E.01 Have you sent or received any money from friends or relatives using any medium for the last 12 months? YES [ ] NO [ ] (if NO go to section F)

E.02 Which of these services have you used to receive/ send money to someone living within Afghanistan in the past 12 months? [1 ] Remittance companies /Hawala




E.03 Which of these services have you used to receive/ send money to someone living outside of Afghanistan in the past 12 months?






SECTION F: Informal Financial Services

F.01 Do you belong to any ROSCA/ASCA?

1 [ ] YES 2 [ ] NO (if NO go to Section G)

F.02 If yes, how many ROSCA/ASCA are

you participating in? 1 [ ] 2 [ ] 3[ ] [ ] More than 3

F.03 What is the frequency of your contribution?

[ 1] Daily

[ 2] Weekly

[ 3] Monthly

[ 4] Annually

F.04 For what reasons do you participate in a ROSCA/ASCAs?




[4] Buy household goods


[6] Provides an opportunity for socializing

[7] Raise money needed for weddings


9 Others (specify)

SECTION G: INSURANCE

G.01 What kind of misfortunes have you faced in your daily life in the last 12 months? (tick as appropriate)




[4] Drought/famine



[7] Loss of savings





G.02 How did you get yourself out of these misfortunes? [1] Use up your savings

[2]Sell your assets e.g. car, business, household goods, livestock

[3] Borrow money



[6] Paid by insurance (Insurance name_____________________)


G.03 If you had an opportunity to pay a little money to a company that could protect you against these misfortunes, would you be willing to take advantage of the service? [1] YES [2] NO

G.04

If No in question G.03 above what are the reasons for not willing to take it?






H1 Have you ever received any form of Non-financial services as listed here below?

H1.01 Training in: -



[2Business management (planning, pricing, costing, record keeping)


[4]




[9] Other (Specify)_________________

H1.02 Assistance to access markets e.g.





[4] Other (Specify)_________________

H1.02 Production improvement/competitiveness e.g.







[6] Other (Specify)_________________

H2 Tell us more about your interest in non-financial services


I have

never

heard

about it

Am aware of

an

organization

that provides

it

Given a chance I

would be

interested to

participate

Yes No



keeping)





[7] Other (Specify)_________________

H.02 Assistance to access markets e.g.

I have

never

heard

about it

Am aware of

an

organization

that provides it

Given a chance I would

be interested to

participate

Yes No




[4] Other (Specify)_________________


I have never

heard about

it

Am aware of

an

organization

that provides it

Given a chance I

would be interested to

participate

Yes NO






[6] Other (Specify)_________________

SECTION I: NON-FINANCIAL SERVICES

I.01 Have you ever received any form of Non-financial services as listed here below? (1) Yes (2) No

I.02 Training in: -

Name the provider


[2Business management (planning, pricing, costing, record keeping)





[7] Other (Specify)_________________

I.03 Assistance to access markets e.g.

Name the provider




[4] Other (Specify)_________________

I.04 Production improvement/competitiveness e.g.

Name the provider






[6] Other (Specify)_________________

I.05: - Self Assessement

1. In your own assessment (interviewee’s), what is your level of knowledge of: - Non Basic Medium High Expert

i. Financial Issues

ii. Islamic Financial system

2. Do you keep record of your income and expenses? Yes No

If yes, explain how? 3. Do you know what a budget is? Yes N0 If yes, explain if you have ever done a budget of your household or your business or your group IGA?

4. Do you know what an interest rate is? Yes No

If yes, please explain what it is. 5. What financial goals have set :

short term (within 1

year):

medium term (3-5

years):

Long term (above 5 years):

i. For your family in the

periods specified

ii. How much Money in

AFS do you think you

need to reach these

goals?

Thank you for giving us your time. Is there a question you would like to ask us? Enumerator Sign off……………………………………………………Tel…… Time Interview ended……………… Supervisor Name ………………………………………………… Signature ………………………………. Date………………..

6.1.4: QUESTIONNAIRE FOR URBAN HOUSEHOLDS

MAPPING OF FINANCIAL SERVICES SURVEY IN BALKH AND SAMANGAN PROVINCES

URBAN HOUSEHOLD QUESTIONNAIRE

Enumerator Name……………………………………………………Tel……………………. Start

Time……….

SECTION A: GENERAL INFORMATION


A.01 Date of interview ……./11/2015



Location of the Household [1] Rural

[2] Urban






A.09 Number of members within HH? Number [ ] Female [ ] Male [ ]

A.10 Number of HH members per age [ ] Below 5 [ ] 6-17 [ ]18 - 30 [ ] 31 – 40 [ ] > 40

A.11 Are you the Head of the

household

[1] Yes [2] No

A.12 Location of employment/business

premises of Household Head

[1] Rural [2] Urban

A.13 Province Household Head

originated from?


SECTION B: HOUSEHOLD INCOME AND EXPENSES

B.01 Sources of income Amount AFS Frequency of receipt

Formal Employment [1] Daily [2] Weekly [3] Monthly [4] Annually

Casual work – Full-time [1] Daily [2] Weekly [3] Monthly [4] Annually

Casual work – Part-time [1] Daily [2] Weekly [3] Monthly [4] Annually

Business activities [1] Daily [2] Weekly [3] Monthly [4] Annually

Farm produce – Crop farming [1] Daily [2] Weekly [3] Monthly [4] Annually

Farm produce – Cash Crop 1] Daily [2] Weekly [3] Monthly [4] Annually

Remittances from relatives [1] Daily [2] Weekly [3] Monthly [4] Annually

Livestock/dairy produce [1] Daily [2] Weekly [3] Monthly [4] Annually

Aid from NGO/government [1] Daily [2] Weekly [3] Monthly [4] Annually

Pension [1] Daily [2] Weekly [3] Monthly [4] Annually

Others(specify) [1] Daily [2] Weekly [3] Monthly [4] Annually

TOTAL

B.02 Household Expenses Amount AFS Frequency of spending

Rent [1] Daily [2] Weekly [3] Monthly [4] Annually

Food stuff/groceries [1] Daily [2] Weekly [3] Monthly [4] Annually

School fees [1] Daily [2] Weekly [3] Monthly [4] Annually

Utilities (electricity and water) [1] Daily [2] Weekly [3] Monthly [4] Annually

Energy (charcoal, kerosene) [1] Daily [2] Weekly [3] Monthly [4] Annually

Health care [1] Daily [2] Weekly [3] Monthly [4] Annually

Mobile phone communication [1] Daily [2] Weekly [3] Monthly [4] Annually

Transport [1] Daily [2] Weekly [3] Monthly [4] Annually

Wages for domestic workers [1] Daily [2] Weekly [3] Monthly [4] Annually

Outstanding Loan repayment [1] Daily [2] Weekly [3] Monthly [4] Annually

Others (specify) [1] Daily [2] Weekly [3] Monthly [4] Annually

TOTAL

B.02 Business Expenses Amount AFS Frequency of spending

Rent for business premises [1] Daily [2] Weekly [3] Monthly [4] Annually

Purchase of good and

services

[1] Daily [2] Weekly [3] Monthly [4] Annually

Salary for employees [1] Daily [2] Weekly [3] Monthly [4] Annually

Utilities (electricity and water) [1] Daily [2] Weekly [3] Monthly [4] Annually

Market/Government licenses [1] Daily [2] Weekly [3] Monthly [4] Annually

Others(specify) [1] Daily [2] Weekly [3] Monthly [4] Annually

TOTAL

SECTION C: FINANCIAL SERVICES PROVISION

C.01 Do you have an account with a formal/semi-formal financial institution? [ ] YES [ ] NO (if not

go to C03)

C.02 If Yes in (C.01) above, what type of accounts do you maintain in which financial institutions?

Savings Loan Both Savings and

Loan

Other (Specify)

_______________

Commercial Bank 1

2 3 4

Microfinance

Bank

1

2

3

4

Microfinance

Institution

1

2

3

4

SACCO 1

2

3

4

FSA (Village

Banks)

1

2

3

4

Other (Specify) 1

2

3

4

C.03 Which of these non-bank

institutions have provided

you with financial

services/transactions in the

last twelve months?

(TICK ALL MENTIONED)



[ 2] NGOs/Microfinance Institution


[ 4]Hawalla

[ 3] Non


C.04 Besides savings and loans,

for what other purpose did

you use the financial

services provider

mentioned (C.02 & C.03)

above? (tick as appropriate)

Purpose






[ 6] Savings




[ 10] Others (Specify)

C.05 If NOT having an account

with a financial services

provider, why don't you

have with any of the

financial institutions above

(C.02)?

Reason








[ 8] I am not interested / I do not need it

[ 8] Other(specify)

SECTION D: SAVINGS AND BORROWING SERVICES

D.01 Do you set aside some part of your income? YES [ 1 ] [ 2 ] NO (if NO go to D.07)

D.02 What is the main source of

your savings?

1 [ ] Business activities

2 [ ] farm produce

3 [ ] livestock/dairy produce

4 [ ] Wage employment

5 [ ] Remittances from family/friends

6 [ ] aid from NGO/Government

7 [ ] pension

8 [ ] Other (specify)____________________

D.03 If you set aside some money

as savings, for what purpose

are you saving for?





[5 ] Agricultural activities (farming/buy livestock/farm inputs/farm

implements)






D.04 Where do you keep the

money for the said purpose?

Facility Specify Name if

applicable

[ 1] Bank

[ 2] Microfinance Institution

[3 ] Kept with family or friend

[4 ] Using mobile money service (MPesa)

[5 ] Save with group(savings group)

[6 ] Kept with a shopkeeper

[ 7] Kept it at home

[ 8] Saving in property (e.g livestock, jewellery)

[ 9] Kept with Saraaf (money changer)


D.05 To what extent are you

satisfied with the savings

arrangements you currently

have?

1 [ ] Very unsatisfied

2 [ ] Not satisfied

3 [ ] FAIRY SATISFIED

4 [ ] Satisfied

5 [ ] Very satisfied

D.6 IF NOT satisfied, what

aspects of the savings

arrangements don’t you like?

1 [ ] Safety of savings not assured

2 [ ] Long distance to facility

3 [ ] Accessibility/liquidity of savings

4 [ ] Forced nature of savings

5 [ ] Inability to leverage loan/other services

6 [ ] No Confidentiality

7 [ ] Other (specify ______________________)

D.07 If you do not currently set aside some part of your income, have you ever done it in the past five years

YES [ 1 ] [ 2 ] NO (if NO go to D.11)

D.08 What was the main source of

your savings then?

1 [ ] Business activities

2 [ ] farm produce

3 [ ] livestock/dairy produce4 [ ] Wage employment

5 [ ] Remittances from family/friends

6 [ ] aid from NGO/Government

7 [ ] pension

8 [ ] Other (specify)____________________

D.09 For what purpose did you

save?





[5 ] Agricultural activities (farming/buy livestock/farm inputs/farm

implements)






D.10 Where did you keep the

money for the said purpose?

Facility Specify Name

[ 1] Bank

[ 2] Microfinance Institution

[3 ] Kept with family or friend

[4 ] Using mobile money service (MTO)

[5 ] Save with group(ROSCA/ASCA)

[6 ] Kept with a shopkeeper

[ 7] Kept it at home

[ 8] Saving in property (e.g livestock, jewellery)


D.11 Have you borrowed any money in the last 12 months? YES [ ] [ ] NO (if NO go to section E)

D.12 If YES, where did you

borrow from?

Source Specify Name

[ 1] Bank/MTO

[ 2] microfinance institution

[ 3] Installment credit or buying on credit (supplier)

[ 4] Family or friend

[ 5] Moneylender

[ 6] Employer

[7 ] Saraaf /private money lender

[ 8] Mpesa


D.13 For what purpose was the

money borrowed?

[ 1] Buying a house or a plot

[ 2] Buying goods/services

[ 3] For building, extension or renovation of house


[5 ] Agricultural activities (farming, buying cows, farm machines/tools)

[6 ] Business activities (Business capital etc)

[7 ] Household expenses

[8 ] Emergency/health purposes

[ 9] For performing last rites/marriage

[10] Others specify

D.14 How did you repay the loan

you received?

[ 1]Repaid back the same amount

[ 2] Repaid with a cost above the loan(service charge)

D.15 To what extent are you

satisfied with the borrowing

arrangements you currently

have?

1 [ ] Very unsatisfied

2 [ ] Not satisfied

3 [ ] FAIRY SATISFIED

4 [ ] Satisfied

5 [ ] Very satisfied

D.16 IF NOT satisfied, what

aspects of the borrowing

arrangements don’t you like?

PICK A MAXIMUM OF TWO

1 [ ] I am charged interest/Riba

2 [ ] The group arrangement

3 [ ] Loan security requirement

4 [ ] Forced nature of group savings

5 [ ] Long distance to facility

6 [ ] No Confidentiality

7 [ ] Other (specify ______________________)

SECTION E: MONEY TRANSFER SERVICES

E.01 Have you sent or received any money from friends or relatives using any medium for the last 12 months?

YES [ ] NO [ ] (if NO go to section F)

E.02 Which of these services have you used to

receive/ send money to someone living

within Afghanistan in the past 12 months? [1 ] Remittance companies /Hawala




E.03 Which of these services have you used to

receive/ send money to someone living

outside of Afghanistan in the past 12

months?






SECTION F: Informal Financial Services

F.01 Do you belong to any ROSCA/ASCA? YES [1] [2 ] NO (if NO go to Section G)

F.02 If yes, how many ROSCA/ASCA are

you participating in?

1 [ ] 2 [ ] 3[ ] 4 [ ] More than 3

F.03 What is the frequency of your

contribution?

[ 1] Daily

[ 2] Weekly

[ 3] Monthly

[ 4] Annually

F.06 For what reasons do you participate in

a ROSCA/ASCAs?




[4] Buy household goods


[6] Provides an opportunity for socializing

[7] Raise money needed for weddings


9 Others (specify)

SECTION G: INSURANCE


G.0

1

What kind of misfortunes have you

faced in your daily life in the last 12

months? (tick as appropriate)



[4] Drought/famine



[7] Loss of savings





G.0

2

How did you get yourself out of these

misfortunes?

[1] Use up your savings

[2]Sell your assets e.g. car, business, household goods,

livestock

[3] Borrow money



[6] Paid by insurance (Insurance

name_____________________)


G.03 If you had an opportunity to pay a little money to a company that could protect you against these

misfortunes, would you be willing to take advantage of the service? [1] YES [2] NO

G.04

If No in question G.03 above what are

the reasons for not willing to take it?






SECTION H: NON-FINANCIAL SERVICES

H1 Have you ever received any form of Non-financial services as listed here below?





keeping)





[7] Other (Specify)_________________

H1.02 Assistance to access markets e.g.





[4] Other (Specify)_________________

H1.02 Production improvement/competitiveness e.g.







[6] Other (Specify)_________________

H2 Tell us more about your interest in non-financial services


I have

never

heard

about it

Am aware of

an

organization

that provides

it

Given a chance I

would be

interested to

participate

Yes No



keeping)





[9] Other (Specify)_________________

H.02 Assistance to access markets e.g.

I have

never

heard

about

it

Am aware

of an

organization

that

provides it

Given a chance I

would be interested

to participate

Yes No




[4] Other (Specify)_________________


I have

never

heard

about it

Am aware of

an

organization

that

provides it

Given a chance I

would be

interested to

participate

Yes No






[6] Other (Specify)_________________

I.05: - Self Assessement

6. In your own assessment, what is your level of knowledge of: - Non Basic Medium High Expert

iii. Financial Issues

iv. Islamic Financial system

7. Do you keep record of your income and expenses? Yes No If yes, explain how? _________________________________________________________________________________ _________________________________________________________________________________________

8. Do you know what a budget is? Yes N0 If yes, explain if you have ever done a budget of your household or your business or your group IGA?

___________________________________________________________________________________

9. Do you know what an interest rate is? Yes No If yes, please explain briefly.

_______________________________________________________________________

10. What financial goals have set : short term (within 1

year):

medium term (3-5

years):

long term (Over 5 years):

iii. For your family in the

periods specified

iv. How much Money in

AFS do you think you

need to reach these

goals?

Thank you for giving us your time. Is there a question you would like to ask us?

Enumerator Signature …………………………………………………… Time Interview ended…………………..

Supervisor Name ………………………………………………… Signature ……………………………….

Date………………..

report on - fragile states · 2019. 12. 18. · including loans and savings, money transfer, and...

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