AFGHANISTAN UA Rae Ny0)B VIE ANNUAL REPORT 26 Funded By: rae ae aedAWA ANNUAL REPORT - 2018AMA Progress Review 2005-2010 2011-2012 2012 2013 2014 2015 The Start: AMA was established in May 2005, as the national network of Mfisin Afghanistan. AMA was housed in an MFI with limited resources and few activities. + Registered in 2007 with Ministry of Justice. + Became member of South Asian jofinance Network. + Trained over 800 MFistatt. + Published newsletters and atlicies, Rejuvenation: AMA revived through support from USAID's FAIDA project and continued support from MISFA. Starled anew with new vision. New management, staft, govemance andoffice. Expanded membership. Expanded activities into provinces. Sector coordination: CEO Coordination Meetings, CSPI Forum, Development Finance Working Group Meetings. Knowledge Management: sector update reports, training needs assessment, newsletter, website. Lobbying and Advocacy Program and Legal Awareness Meetings and Regional Coordination Meetings. Capacity Building: peer learning workshops, Pakistan Microfinance Networkstudy tour. ‘Membership in SEP Network. 169 MFI staff capacities ‘enhanced. Establishment: AMA established itself as the true representative of the development finance sector and gained trust and credibility among its members, donors and stakeholders, + Diversified its membership base-8 newmemberships. + Initiated transition of responsibilities from MISFA to AMA - took over responsbilifies of Iwo coordination hubs. + Signed partnership agreement with MIX market. + Launched CSPI forum in Kabul and extended to Balkh province. + Conducted the first Salary Survey. + Developed Communication Strategy and Branding guidelines. + Partnership with UN Habitat - trained 670 community banks leaders and staf. + Scholarships- awarded 6 scholarships for international trainings and conferences. Strengthening: After full establishment in 2012, AMA focused ‘on strengthening its infrastructures and systems. + Launched MicroView online application: published 3 MicroView reports. + Drafted Code of Conduct for the Development Finance Sector of Afghanistan, + Signed MOU with MISFA on transition of responsibilities from MISFA to AMA + Developed AMA communication strategy 2013-2014 + Led coordination of stakeholders inthe Eastemregion. + Participated and represented Afghanistan's development finance sector in international events, including the SEEP conference in the United States, ‘and the India Microcredit Summit. + Expanded AMA membership to 15, with three new members this year. + Initiated SME loan verification mechanism + Awarded 5 scholarships to AMA member staff to altend an Intemational conference. + Organized 3 exposure visits at nationalandintemationallevels + Established Credit Registry and Reputation Risk Management Working Groups. + Assessed the impact of Program ‘and Legal Awareness Meetings, Implementation: with infrastructures and systems strengths, AMA implemented its planned activities and focused on new initiatives, + Completed the transition of responsibiilies of development finance sector advocacy/lobbying from MISFA. + Finalized the Code of Conduct iter six months plot implementation + Developed the Social Performance Management Framework for Afghanistan. + Conducted the second Salary Survey and published the report. + Published tI Magazine " languages + Conducted the first Members Feedback Survey in collaboration with the SEEP Network + Took over the responsibility of ‘organizing Women Access to Finance & Islamic Finance Workshops from FAIDA. + Initiated facilitation of six out of seven MFis participation in Da ‘Afghanistan Bank's (DAB) Public Credit Registry + Initiated organizing microfinance program awareness meetings at istrict levels + Initiated Client Success Stories ‘Competition in Afghanistan- the first event was organized. + Initiated promoting AMA and Microfinance sector visibility in 1s. first Microfinance icroMag"” in three Strategizing: AMA, developing its strategic plan, focuses its activities to achieve its strategic targets. Developed the five years Strategic & Sustainability Plan (SSP) for AMA, Signed an MOU with Afghanistan Institute of Banking & Finance (AIBF} to jointly conduct trainings inthe provinces. Conducted a Training Needs Assessment (TNA) to better understand the capacity building needsofthe sector. Initiated meetings with the Provincial Govemors to increase ‘awareness and attract their support forthe sector. ‘Conducted a study on the Status of CSPls in Afghanistan to determine the status and potential of CsPisin Afghanistan. Gained the honor to serve as the Vice Chairperson for South Asian Micro-entrepreneurs Network (SAMN) fora three years term, Facilitated participation of FINCA Afghanistan, OXUS Afghanistan, ‘Mutahid DFi, and ARFC in DAB's Public Credit Registry (PCR). The MoUs were signed between these fourMFls and DAB | PCR Published the sector Code of Conduct booklet in three languages; English, Dari and Pashto and shared with AMA membersforimplementation. Represented AMA and the development finance sector in different national and international forums.2016 2017 Diversifying Fund: With the strategic and sustainability plan in place, AMA focused on diversifying its sources of funding, and providing quality support to ils members and the sector. Last year, AMA: + Signed five grant agreements with MISFA; USAID's projects: FAIDA, WIE] Promote; and with GERES/EU; + Conducted a baseline assessment of two MFls on their adoption of the sectors Code of Conduct; + Facilitated the completion of the first phase of information sharing with the Public Crecit Registry (PCR), enabling three Mis to upload microfinance loans information into PCR: + Developed a mechanism for members’ data validation, which was utilzed for seven of ‘AMA's member organizations last year, + Upgraded the MicroView online application, adding new features and parameters; + Received 16 official Letters of Support from different local Government authorities; + Facilitated the signing of a Memorandum of Cooperation between Samangan Police ‘and MFls; + Established the Central Regional Office in Kabul - covering four provinces; + Organized a learning visit by ‘AMA senior management with a peer network, the Azerbaijan Microfinance Association; and + Conducted 14 Access to Finance workshops for women, the youth, and the renewable energy sector. New partnerships; with the establishment of partnerships with newdonorsin 2016. ‘AMA in addition to its routine activities, concentrated its efforts insuccessfulimplementation of the new projects, thus gained frust and confidence of its new donors. Last year, AMA: + Raised the awareness of 800 local govemment authorities in 11 provinces about microfinance program. + Increased knowledge and awareness of 500 farmers, community elders and locai government authorities on access to agricultural credit. 14,000 information booklets, 200 standing banners and 20 billboards were printed, and disseminated or placed. + Organized two trainings on Agriculture Credit Risk Management, and Financial Analysis & Portfolio Management. + Organized one in-country and one intemational exposure visits onagriculture financing. + Facilitated green loans fo Kabul residents. 190 Energy Saving Solutions (ESS) techniques Constructed through loans. * Completed the fist round of internships program and secured permanent jobs for 38 fresh women graduates who participatedin the program. + Helped businesses expand through a variety of loan products by organiang Access ‘0 Finance Matchmaking Roundtables, + Facilitated the 2nd phase of information sharing with Public Credit Registry (PCR); all seven Mis in Afghanistan are using the faciities of the PCR. + Initiated discussions on debt funding from commercial Banks to MFis. First roundtable was organized and a committee was established lo take forward the discussions. + Developed standards and benchmarks for development finance sector, + Developed Risk Management Fund Guidelines for development finance sector in Alghanistan. wi Diversifying Fund: With the strategic and sustainal plan in place, AMA focused ‘on diversifying its sources of funding, and providing quality support to its members and the sector. Last year, AMA: Received Seven official Letters ‘of Support from different local Government authorities; Raised the awareness of 550 local government authorities in 10 provinces about microfinance program. Organized a leaming visit by AMA senior management with a peer network, the Azerbaijan Microfinance Association; and Conducted 16 Access to Finance workshops for women, the youth, and the renewable energy sector. Helped businesses expand through a variety of loan products by organizing Access to Finance Matchmaking Roundtables Facilitated green loans to Kabul residents. 504 Energy Saving Solutions (ESS) techniques constructed through loans. Completed the second and third round of intemships program and secured Permanent jobs for 56 fresh women graduates who participated in the program. Participated and represented ‘Afghanistan's development finance sector in the an Intemational event, South Asia Microfinance Network. Published the fist Annual Benchmark Repor/ State of the Sector Report. 2019 + Diversifying Fund: With the strategic and sustainability pian in place, AMA focused on diver sources of funding, and providing quality support to its members and the sector. Last year, AMA: + Raised the awareness of 550 local government authorities in 10 provinces ‘about microfinance program. + Organized two microfinance stakeholder roundtable meetings in Balkh and Herat provinces. The key topics discussed were related to communication, loan disbursement, and collection methods. + Conducted a Member Satisfaction Survey indicating 90% satisfaction of AMA activities in 2019. + Coordinated the facilitation of green loans to Kabul residents that ultimately resulted in the construction of 990 Eneray Saving Solutions (ESS) enabled through loans from member institutions. + Provided report writing training to AMA member organization staff that resulted in the participants’ commitment to providing their organizations with improved knowledge. + Increased uptick of the Public Credit Registry by MFls with 100 percent of SME ‘and 77 percent of microfinance clients data reported to the system. MFIs conducted almost 190,000 inquiries during the year. + Organized 2 KR forums to discuss HR and capacity building related issues ‘and opportunities in the sector with a particular focus on reducing staff poaching and promoting joint capacily-building efforts. + Organized two CEO coordination meetings and 21 regional coordination meetings in 10 provinces in the Central, East, North, Northeast, and Western regions. + Participated in the Inclusive Finance India Summit in Delhi, India, in December 2019 with financial support from MISFA. + AMA Publications: © Second issue of the Annual Benchmark Report © Second issue of MicroMag + 0 Sixth issue of E-Newsletter ©. Fourth issue of MicroView Reports © 2019 Annual Report publicized to microfinance practitioners at a national and intemational level.The Board of Directors AMA operates as an independent legal entity, and is governed by its Board of Directors. The Board of Directors consists of five members. The Board members have diversified experiences of development finance, HISTORY, MISSION, VISION management, and, economics. Afghanistan Microfinance Association (AMA) is the national network of Development Finance Institutions (DFls) in Afghanistan. It was established in 2005 by the Microfinance based organization serving the advocacy and coordination gapsin the sector. With continued MISFA's financial and technical support AMA has positioned itself as, Salim Khan curently serves as Chief Executive Officer of OXUS Afghanistan Previously he worked with FINCA Afghanistan, FINCA Pakistan, The First Microfinance Bank (FMFB) Afghanistan, FMFB Pakistan, AKRSP Pakistan, and AKDN Afghanistan. Mr. Khan has a Master's Degree in Commerce and Accounting with Distinction. He is an Intemational Certified Expert in Risk Management, SME Lending, and Microfinance. Vice Chair - Mr. Bashir Mohammad Khan Bashir Khan is the CEO of the Islamic Investment and Finance Cooperatives (lIFC) Group, whichis the national association for Credit Unions in Afghanistan He is one of the pioneers in the microfinance sector of Afghanistan and has over 15 years’ experience in this industry. Mr. Khan has a Bachelor's Degree in Finance and Accounting andis a Certified Public Accountant (CPA) Member - Mr. Ali Rawnaq Sayed Muhammad Ali Rawnag began his microfinance career with the reputable organizations ARMP and FMFB-A, starting as a branch manager and advancing to head of the operation. Mr. Rawnag joined FINCA Afghanistan in April 2014 in the capacity of Depuly Chief Operating Officer and, after six months, was promoted to Chief Operating Officer. In March 2018, Mr. Rawnag was promoted to the position of Acting Chief Executive Officer of FINCA Afghanistan and was appointed as CEO of FINCA Afghanistan in 2019. Mr. Rawnag holds a Bachelor's in Science and Finance from UMEF University and, an MBA in Leadership & Sustainability from Cambria University. Member - Mr. Abdul Rahim Nasty Abdul Rahim Nasry’s the Country Director of Hand in Hand Afghanistan. He has over 20 years of work experience in government agencies and NGOs. He holds a Bachelor's degree from Peshawar University and an Executive MBA from the Preston Institute of Management Science and Technology in Pakistan. Member - Mr. Faburama Ceesay Faburama Ceesay joined FMFB-A as Chief Financial Officer (CFO) in October 2014. After five years wilh FMFB-A as CFO, he is now the Chief Executive Officer as of February 2020. He holds a Bachelor's Degree in Intemational Development Studies from St. Mary's University in Halifax, Canada. He is also a Chartered Certified Accountant and a member of the Association of Chartered Cerlified Accountants inthe UK since 2006. Mr, Ceesay has a rich experience of over eighteen years in financial and treasury management. Before joining FMFB-A as CFO, he worked at Standard Charlered Bank Gambia Ltd as Financial Controller and Standard Chartered Bank Kabul as Chief Financial Officer rom 2010 to 2012. AMA ANNUAL REPORT 2018 § Investment Support Facility for Afghanistan Gn association that promotes the broader (MISA), microfinance practitioners, andother evelopment finance sectorin Afghanistan, stakeholders. | ‘AMA js proud to be one of the founding AMA was registered with the Ministry of Justice members of the South Asian Micro of Afghanistan in 2007. Since 2010, AMA had nirepreneur Network (SAMN) and has been established itself as a vital resource and Gnacive memberanes 2009, coordination body for the financial development sector when it was provided sufficient financial resources by donors enabling it to build a stable membership- AMA also is a member of the Social Enterprise and Education Promotion (SEEP) Network since 2012. Vision: To build an inclusive, sustainable, and responsible development finance sector through policy advocacy, knowledge management, coordination and networking, and capacity building. Mission: To promote financial inclusion through the creation of an enabling environment for the development finance sectorin Afghanistan. “AMA is an efficient, reputable association with comprehensive goals and plans. My first interaction with AMA was truly inspirational. How can the entity uniting the entire microfinance sector of the country on its network also be so effective and, at the same time, supportive. During my professional experience, | encountered several organizations that were supposed to act as a unifying forum for the industry, and AMA is Med seeks eX Mina aXe ee ARN CK esol M MeL AAA om Acca Sica Menaeiiact ecomelte Relaels sailed same ia eR iretsccniU ls olicelte aa Vahid Najatzada eng ot V Relea Ue nen yal 1 AWA ANNUAL REPORT - 20181. Foundation for International Community Assistance (FINCA) Afghanistan 2. Islamic Investment & Finance Cooperatives (IIFC) Group AMA GOVERNANCE AND MANAGEMENT Governance As an independent legal entity, a board of members meet at least once a year, while the 8 3, Mutahid Development Finance Institution directors governs AMA. The general assembly board meets once every quarter to review the §¢ is constituted with a representative from each quarterly progress, advise management on €8 4, OXUS Afghanistan. member organization serving as the highest day-to-day operations, and take collective 8 2 | decision-making body. decisions accordingly. SE The board of directors is composed of five There are also several ad-hoc werking groups 1. Afghanistan Women Council (AWC) 2. Aga Khan Foundation (AKF) members drawn from a diverse field of experiences, such as development finance, banking, management, and economics, among others. The general assembly and standing sub-committees such as finance and audit, and advocacy. In 2019, AMA organized four Board of Directors meetings and two CEO Coordination Meetings. 2 3. Handin Hand Afghanistan = 5 o Management Q 4, Woman Economic Empowerment Rural Development Program (WEE-RDP) eos AMA has adopted a decentralized The Executive Director leads the organization EDE2 organizational structure with separate board with support from Managers: Research & 6882. and management team responsbbities. The Communication, Finance & Administration, nee senior management team headed by the and Project Managers at Head Office Executive Director (ED) carries out day-to-day supported by two Regional Coordinators. management of AMA. ‘Afghanistan Microfinance Association (AMA) > Organogram 2 2 1. Afghan Rural Finance Company (ARFC) General Body E085 2. The First Microfinance Bank (FMFB) Afghanistan © S252 (Ctoardof directors —) = £ (CBeeitive Drecter —) Associate (Rach etomneav) on 1. Afghanistan Institute of Banking & Finance Neots Manager (AIBF) Centarl Regional Coordinator ‘SA- Programs Manager (Admin/Finance Assistang AM ANNUAL REPORT - 7018 8 a AWA ANNUAL REPORT - 2018MESSAGE FROM THE CHAIRMAN ar si It is my privilege to present to you AMA's 2019 annual report. Facing increased security challenges over the year, microfinance institutions (MFis) grappled with balancing portfolio growth while maintaining portfolio quality. Despite the difficulties facing the sector, most MFis remained operationally self sustainable. The accomplishments of AMA in all its key roles, and innovative projects remained impressive during 2019. Continuation of coordination, collaboration, advocacy, and lobbying through the facilitation of MFls' participation in awareness programs at the district level and increasing the visibility of the microfinance sector at the national level are some of the key achievements in 2019. AMA membership and partnership with Intemational and regional stakeholders such as SEEP, SAMN, the MIX Market, Banking with the Poor (BWTP), and other Microfinance Networks enhanced AMA's visibility and recognition as an active microfinance association. Given the prevalent problems faced by MFls and the needs of the disadvantaged communities we are serving, | urge all MFIs to employ innovative approaches to improving the efficiency of their institutions and to remain attentive to improving the quality of their clients' lives As the Chairman of AMA's Board of Directors, | would like to take this opportunity to thank AMA's donors, MISFA, and the European Union (EU), as well as AMA's stakeholders, Board of Directors, and the management team for their notable contributions to AMA's achievements in 2019. would like to pay my special thanks to the MISFA leadership for their generous support to the microfinance industry. also extend my appreciation and thanks to all the employees for their professionalism and commitment for the AMA has continued growth and progress. Sincerely, Salim Khan SN AMA ANNUAL ORT - 2018 MESSAGE FROM THE EXECUTIVE DIRECTOR AMA spent another fruitful year - 2019, where AMA focused its efforts on three key areas: information management, coordination, and awareness-raising. The second issue of the Slate of the Sector Report (SoS) and Annual Benchmark Sector Statement was published, containing the operating and financial information of AMA members based on audited financial statements. These two publications, along with the quarterly MicroView Survey, provide AMA member organizations and pariners a transparent and comprehensive view of the development finance sector. AMA also participated in the Finance India 2019 Summit, with the theme focused on the client. The summit aimed to draw logether a wide variety of partners to exchange perspectives, recognize milestones, celebrate accomplishments, and offer proposals for strengthening strategy and practices towards making financial inclusion meaningful for clients. In line with best practice, AMA conducted a Members Feedback Survey in 2019 to gauge its member organizations’ level of satisfaction and how AMA can improve on existing services. The survey provided us valuable insights: information exchange, communication, sector coordination, networking, and workshops are among the services that 90% of the respondents ranked as good or excellent. The findings of the survey will be used for the development of AMA's five year strategic and sustainability plan. The Microfinance Program Awareness initiative is one of AMA's primary activities. In 2019, | was proud that nearly 550 representatives of local government authorities, community leaders, and additional stakeholders participated in various forms of awareness meetings, resulting in increased support for MFis in the local communities where they operate. We are grateful to AMA's donors, MISFA, and European Union for their continued support as well as to the Board of Directors for their guidance, to the members for their contributions and commitment, and AMA's core team for enabling AMA to achieve its objectives throughout the year. | genuinely thank you all for your valuable contributions. There are more obstacles ahead, and we need to prepare ourselves to respond to those challenges. By joining hands with AMA through your ongoing commitment, we will continue to promote a sustainable development finance sectorin Afghanistan. Sincerely, Mohammad Akbar Sarwar 1. AWA ANNUAL REPORT - 2018ry gt=== Highlights from 2019 ‘AMA is committed to strengthening the development finance sector in Afghanistan. The Association provides its members and stakeholders the following four main functions: Lobbying and Advocacy: As the association of Development Finance Institutions (DFis), AMA advocates on behalf of DFis to influence policy, regulations, and attitudes in support of financial inclusion across the country. A component of this advocacy is the awareness meetings that AMA consistently organizes in different provinces with the participation of government officials, MFls, CSPis, community, and religious leaders. This awareness campaign is designed to sensitize provincial stakeholders to the work of development finance institutions microfinance, and enhance their understanding of how their work is crucial to economic development at the community, district, and provinciallevels. Knowledge Management: There is a rich body of knowledge and experience in the sector that needs to be harnessed and shared across the sector for broad learning and application of best practices. AMA is continually working with its members and stakeholders in developing needs-based knowledge management tools andservices. Data is gathered from members and other relevant sources, collated, analyzed, and shared in the form of regular publications, namely, MicroView Reports, MicroMag, State of the Sector Report, Newsletters, and Sector- Level Standards and information tools, including the Code of Conduct, Success Stories, and Annual Reports. These tools are updated regularly and shared widely throughout the year. Coordination and Networking: As a national level association of development finance institutions, AMA facilitates better coordination and convergence among the service providers, practitioners, financial institutions, and other stakeholders, including regional and provincial government departments. AMA builds bridges between its various partners through many forums, including the CEOs’ Coordination Meeting and Regional Coordination Meetings. Capacity Building: To meet the capacity building needs of its members and stakeholders, and the oroader sector, AMA coordinates various initiatives such as trainings and exposures visils, and workshops. These capacity-building activities enhance the knowledge and skills of Afghan staff and thus improve the quality of development finance programs. AM ANNUAL REPORT - 7018 e Held microfinance advocacy and awareness-raising meetings with nearly 550 local government authorities and stakeholders consisting of provincial govemors’ offices, heads of departments in relevant provincial departments, and other stakeholders in six provinces. Organized two microfinance stakeholder roundtable meetings in Balkh and Herat provinces. The key topics discussed were related to communication, loan disbursement, and collection methods. Conducted a Member Satisfaction Survey indicating 90% satisfaction of AMAactivitiesin 2019. Coordinated the facilitation of green loans fo Kabul residents that ultimately resulted in the construction of 990 Energy Saving Solutions (ESS) enabled through loans from memberinstitutions. Provided report writing training to AMA member organization staff that resulted in the participants’ commitment to providing their organizations with improved knowledge. Increased uptick of the Public Credit 2019 IN REVIEW Registry by MFis with 100 percent of SME and 77 percent of microfinance clients data reported to the system. MFls conducted almost 190,000 inquiries during the year. Organized 2 HR forums to discuss HR and capacity building related issues and opportunitiesin the sector with a particular focus on reducing staff poaching and promoting joint capacity-building efforts. Organized two CEO coordination meetings and 21 regional coordination meetings in 10 provinces in the Central, East, North, Northeast, and Westem regions. Participated in the Inclusive Finance India Summit in Delhi, India, in December 2019 with financial support from MISFA. AMA Publications: @ Second issue of the Annual Benchmark Report Secondissue of MicroMag Sixthissue of E-Newsletter Fourth issue of MicroView Reports 2019 Annual Report publicized to microfinance practitioners at a national and intemationallevel. > 222 AWA ANNUAL REPORT - 2018Core Services Lobbying & Advocacy, Knowledge Management, Coordination & Networking, and Capacity Building. Advocacy and Lobbying Through its advocacy efforts, AMA has influenced government, | uilding an enabling environment for develop nal levels af all levels enhanced the understanding and knowledge of key government and other relevant stakeholders in actors at provincial, regional and nati stakeholder communi 'y leaders nent finance AMA's advocacy and outreach to officials and community leaders about the development finance sector and its challenges/issues, as wé supporting the sector. il as helped them to better understand their role and respor ilfies in AMA has influenced government, legislators, community leaders, and other relevant stakeholders in promoting an enabling environment for development finance actors at provincial, regional, and national leve's, throughits advocacy efforts. AMA's advocacy and outreach to stakeholders strengthened the awareness and expertise of key government representatives, including regional and district jovernors and community leaders, about the development finance sector andits concerns. In line with AMA's five years strategic and sustainability plan, AMA focused its efforts on advocacy and lobbying during the year 2019. To be more effective in this function, AMA, in collaboration with its members, identified the challenges and issues that the development finance sector faces in the provinces and the actions required to overcome such challenges Government support for the sector remains inadequate. This is primarily due to a lack of awareness about the sector and its work among government key officials at national and provincial levels. Outreach and is particularly crucial in regions/provinces with newly appointed officials in important positions. To influence local actors and relevant stakeholders and to attract theirsupport, AMA organized numerous awareness sessions and regular coordination meetings at aistrict and local levels that advocated on behalf of the sector. To this end, AMA organized six program awareness meetings, five meetings with provisional govemor representatives, and 20 meetings with heads of department in central, north, northeast, and western region of Afghanistan, 417 local stakeholders participated in these meetings leading to increase support to DFis and MFis. These efforts resulted in obtaining official letters of endorsement from local government authorities in the regic mentioned above. As a result, AMA member organizations reported increased levels of assistance from local government authorities as a result of advocacy efforts. AeA ANNUAL REPORT - 2018j Program & LegalAiarene: Advocacy and Lobbying AMA advocacy strengthens local support to MFIs During the year 2019, through quarterly regional coordination meetings in various regions, AMA identified the following main challenges: + Inadequate cooperation and support from community leaders on client verification. + Negative public perception o microfinance, + Lack of cooperation and support from local government authorities, parlicularly from the governor offices, attorney genera central and provincial offices, justice and police departments for assistance with collections of default loans. To address these challenges, AMA prepared its annual plan to advocate on behalf of the sector and meet with key stakeholders in each province to discuss issues and seek their support. AMA, along with representatives microfinance institutions (MFls), met with Provincial and District Governors/Deputy Governors, Mayors, police departments, attorney generals, and community leaders in Kabul, Kunduz, Baghlan, Samangan, Balkh, Jawzjan, Badakhshan, Herat, Parwan, and Takhar provinces. At these meetings, MFl members briefed government officials on sector successes and accomplishments and provided a brief overview of the sector’shistory. They then expressed the difficulties they encountered in their operations and urged the authorities to help by providing letters of support to specific provincial government departments. Local officials appreciated outreach efforts and pledged their support to the sector. They recognized microfinance to be a pivotal contributor to job creation and reducing poverty in the country. The top-down approach of AMA meeting high-level authorities of the provinces resulted in better coordination and cooperation among the sector players and local authorities. Summary of advocacy outcomes: + Local government authorities are sensitized to the positive role of microfinance and have pledged to support MFI operations in theirprovinces. + Official letters of support issued by the governors’ officesin targeted provinces. + MEls are now able to leverage the official letters of support from the Governors to engender more cooperation at the community level + Focal points were assigned for MFls to contact anytime should issues arise in the future + Community leaders are now supportive of certifying client loan applications “The MFis are providing an essential service for the poorest members of our society to run a business and find income for their livelihood. AM ANN ORT - 2018 Advocacy and Lobbying Medes Thisis also. a. good opportunity for those people who need money to build on and improve their current agricultural, handicraft, or other business products. The Badakhshan Governor's office will support MFI activities, whichis needed allover the province." Mr. Akhtar Mohammad Khairzada Deputy Governor of Badakhshan province Microfinance Stakeholders Roundtable in Balkh and Herat Provinces: AMA organized two separate roundtables in Balkh and Herat provinces with 130 people in attendance, including AMA's Executive Director. The roundtables were designed to facilitate open dialogue between local government and community leaders on the one hand and representatives from development finance institutions on the other. The gatherings provided an opportunity for law enforcement (police and local attorney- generals), as well as municipality and community elders (Waki-e-Guzars), to learn how Df ls stimulate the local economy. With a better understanding of the role of DFis in providing financial services to low-income members of their communities, these local stakeholders ore encouraged to strengthen their support to development finance actorsin theirprovinces DFls partners were also able to raise awareness of specific operational issues that they seek help from the local authorities. ‘Among the key topics aiscussed were related to communication, loan disbursement, and collection methods. The officials provided constructive feedback to MFls for and committed to supporting them when needed. AWA ANNUAL REPORT - 2018Knowledge Management Knowledge Management is one of the important functions of AMA and a number of new initiatives/activities are outlined in AMA's five-year Strategic and Sustainability Plan. AMA collects data from its members and other relevant sources, analyzes and disseminates them through a set of publications and reports, In 2019, these publications and reports enhanced the knowledge and awareness of practitioners and stakeholders at national and international levels about the development finance sector of Afghanistan. In addition to promoting healthy competition among members, the information also helped members in making informed decisions pertaining to geographical expansion and identification of risky and saturated market niches. Coordination and Networking As a national association of development finance institutions, AMA facilitated better coordination and convergence among the service providers, practitioners, financial institutions and other stakeholders, including government departments during the year 2019. AMA built bridges between its various partners through a number of events: CEOs Coordination Meetings, Regional Coordination Meetings, and Working Groups’ meetings. These coordination events provided a platform for the different actors and stakeholders to get fogether and discuss sector issues at national and provincial levels, as well as fo share information, lessons and best practices. HR Forum: Based on its member organizations’ request, AMA conducted two Human Resources (HR) Forum meetings for the microfinance sector during 2019. All nine AMA member organizations are part of the forum, and it is also open for stakeholders to become a memberof the forum. The HR Forum is established to discuss HR and capacity building related issues and opportunities in the sector, with a particular focus on reducing staff poaching and promotingjoint capacity-building efforts. The Forum also creates the opportunity to discuss new initiatives or systems that can facilitate HR Deparment’ access to modem technology. The meetings will continue on a biannual basis. Public Credit Registry - Status Update: As of December 2019, all five microfinance institutions in Afghanistan are using the facilities of the Public Credit Registry (PCR) developed by Da Afghanistan Bank (DAB), the Central Bank of Afghanistan. Before they could utilize the system, each MFI had te go through the necessary training to learn the system and its functionalities, including data uploading procedures Afterward, they started uploading their SME client information into the system as a pilot and later on registered details of their microfinance clients As of December 2019, 100 percent of SME clients (2,223) and 77 percent of microfinance clients’ (143,916) information have been registered in PCR. During the year, 188,966 inquiries were placed by MFIs, a good sign of MfFlsinterest in using the PCR An inquiry regarding the client's credit background before the loan disbursement helpsin the avoidance of numerous loans and overindebtedness that increases the quality of the MFIs’ portfolio. AMA is dedicated to continuing collaboration with MFis and DAB/PCR until MFls are reporling 100 percent of their client base to Public Credit Registry. AM ANN ORT - 2018 Sector Coordination overview: The CEOs Coordination Meetings: The CEOs Coordination Meeting is regarded ‘as one of the most important venues for senior- level representatives of member organizations, donors, and other stakeholders to have strategic discussions around operations, emerging issues, and common ways forward In 2019, AMA organized two CEOs Coordination Meetings in Kabul. The Regional Coordination Meetings The Regional Coordination Meeting is a forum for representatives of Mls, CSPls, and stakeholders in the regions to share and discuss regional/provincial level issues, challenges, and opportunities. In 2019, AMA organized 21 Regional Coordination Meetings in 10 provinces in the Central, East, North, Northeast, and West regions. Green Loans Facilitation: Facilitation of green loansis a project focused ‘on an agreement reached between AMA and Switch Asia Project to hold 40 green loan awareness workshops in 15 districts of Kabul province. Information on project activities and Mls financial service offerings focusing on green loans for construction of Energy Saving Solution (ESS) techniques were presented during the workshops. The workshops increased awareness of 1,000 families regarding green loans and formed linkages between MFis and beneficiaries to increase their understanding of creait terms andrequirements Energy Saving Solution techniques project consists of metal glass, wooden, and plastic verandas, double glass window installations, roof insulations, solar walls, Tandor caps, and building solar cookers. With the awareness built and linkages created, so far, 990 ESS projects have been constructed through financing facility, which is expected to increase in the future after the consumer awareness initiatives and extension of the financing facility, AWA ANNUAL REPORT - 2018Capacity Development AMA coordinates various initiatives such as trainings and workshops. These capacity-building activities enhance the knowledge and skills of Afghan staff and thus improve the quality of development finance programs. ance India g Event: Inclusive ‘Summit 2019: AMA, with financial assistance from the microfinance investment support facility for Afghanistan (MISFA), arranged the participation of the Afghanistan microfinance sector in the 1éth Inclusive Finance India Summit, in Delhi, on December 4, 2019. More than 1,000 representatives participated in summit, were seven representatives from the Afghan government and microfinance sector, the Indian government, professionals, scholars, service providers, and the broader microfinance groups around South Asia and the world. The summit gathered a diverse set of stakeholders to share experiences, celebrate accomplishments, and propose recommendations for improving both policy and practices toward making financial inclusion meaningful forclients. The two-day learning event delved into various policy and operational issues with views and experiences of over 70 speakers through seven plenary, and six technica sessions, technology in advancing financial inclusion continued to be the focus of the summit. The conference also provided the delegates an opportunity to participate in live polls, provide feedback, and post questions. ACTH Volta Cen mele kay Ferre eater tae Mate ones [eel cols oltre ur ae eure, rvices cerlified trainer was hir Pema ote aie Sonat] iets may arch & Communi I lseto aie ate dal mots) Dede eue eres een A Meal oo ao Armd eueta eeu oat} iia Pia pon goals within t OMe else leas eure SM ele Maceo elo a eMC iete u ae m uel aE ene ercuels f Dalal intendedto Nana creme Arla Tanger aaa cane AMA ANNUAL ORT - 2018 0 Other Achievements Donor's Financial Supportto AMA: Grant Agreement with MISFA: Microfinance Investment Support Facility for Afghanistan (MISFA) extended its financial suppor! to Afghanistan Microfinance Association (AMA) forthe year 2019. Mr, Bahram Barzin, the Managing Director of MISFA and the Executive Director of AMA, signed the agreement on February 11, 2019. Under this agreement, MISFA financed AMA's planned activities under its four main functions; Lobby & Advocacy, Knowledge Management, Coordination and Networking, and Capacity Building during the year 2019. The grant helped AMA in providing better services to its members and stakeholders at national and regionallevels. MISFA, being one of the founding members of AMA, has been providing technical and financial support to AMA since its inception in 2005 AMA acknowledges MISFA's generous support to AMA for the past few years and is looking forward for future supports of MISFA too. a AWA ANNUAL REPORT - 2018In the Year Ahead, AMA will +--+ > Develop and stories booklet. tinue with organizing co tional and provinciallevels. roducing relevant AMAmanagement. nduct Access-to-Finance wor Ulira Poor (TUP) projects Develop & Design: Zohra Saba Review & Edit: Mohammad Akbar Sarwari Edit & Proof Read: Katrin Fakir AM ANNUAL REPORT - 7018 SECTOR AT A GLANCE As of Dec 31, 2019 AEN in Million G76 193,958 Active Borrowers Gross Loan Active Savers Savings Portfolio 88% PAR > 30 Days Women Borrowers Branches Employees OSS > 100% Market Share - GLP. B AWA ANNUAL REPORT - 2018FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 UH Shafiq Hamid Jamal & Co wt! Chartered Accountants nt auditors’ report to the B« Dir of AMA Opinion We have audited the financial statements of Afghanistan Microfinance Association (the Organization), which comprise the statement of financial position as at December 3 1, 2019, and the statement of comprehensive income, statement of changes in accumulated funds ind statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Organization as at December 31, 2019, and of its fnancial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with Intemational Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Organization in accordance with the international Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion Kabul Date: August 31, 2020 Shafiq Hamid Jamal & Co Chartered Accountants Ajab AM ANNUAL REPORT - 7018 4 STATEMENT OF FINANCIAL POSITION AAS AT DECEMBER 31, 2019 Noter 2019 2018 AEN AEN NON CURRENT ASSETS Property and equipment 4 869,081 1,213,625 Tangible aesete 5 153,904 307015 14,023,075 CURRENT ASSETS. Advances and prepayment 69,465 13,88 Chas and bane 7 16,347,608, 4.253.203 16,987,074 15,685,841 TOTAL ASSETS 16,010,089 Troe NON CURRENT LIABILITIES en am conve sian ini ni ea Hc ia oe vase wi ‘anette pastime os: FINANCE MANAGER EXECUTIVE DIRECTOR B AWA ANNUAL REPORT - 2018‘STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CASH FLOW FOR THE YEAR ENDED DECEMBER 31, 2019 FOR THE YEAR ENDED DECEMBER 31, 2019 Nite, fasta Notes 2019 2018 a7 AEN Tacome Cash flow from operating activities Operuing income 10 1459,399 2517371 Surplus forthe year 908,877 2379330 Exchange gin 177,995 454,080 ‘Total Income 1,737,335, 2,971,651 i Digeenaa 4 516,48 333227 Expenditure Amortization 5 211,021 214.817 Personnel cost 092,802 15,559,827 ‘Aiea nin Ba sees Sst 4net4 Sornledge scapes cot 605,759 16,923 i ee ear ee ‘Member services cost 483,441 131,445 = “ee “Trlning and capacity building cost 938,625 14.ti0 ‘Working capital changes “Lobbying & Advocacy cost 264,830 500,020 cogs Depreciation 4 516,148 533.2 Decrease in advances and other prepayments 6 793,173 895,762 “Amortization 5 211,021 214,817 Decrease in Grant receivable ¥ 8 2471531 Awareness Generation, Recognition snd Visibility : 964,496 Decrease / (Incretse) in accrued and other Uabiites 1» 20970 @78101) Arspeneas slsiog woskahope: = teAe) Net cash inflow from operating activities 553,650 3,661 380 Round table = 46.462 Project operational cost - 893,915 Cash flow from investing activities: Sciam eater ag 2897 600 SSB Purchase of propery, plant and equpment aes (233,105) (218600) Se ANO287: Bheh6 O78 Net cash inflow in investing activities (233,105) (218,600) Deficit before grant income (aa, Basa Cash flow from financing activites: Grantincome 1B 1320779 273.959 Defected grant 9 (06,179) 74571) tuple tceee Sa [Net cash outlow from Financing activites Cay, Tas ‘Net change in cash and cash equivalents 2,094,406 4,678,409 Cash & cash equivalents at beginning of the period 14,253,203 9,574,794 ‘The annexed notes fiom 1 to 15 form an integral part of these Financial Statements Gash &: coal equiealenn ac end of te period FINANE! (AGER :CUTIVE DIRECTOR 7 FINANCE MANAGER EXECUTIVE DIRECTOR AM ANNA ORT - 2018 B a AMA ANNUAL REPORT - 2018Afghanistan Microfinance Association (AMA) house # 42, street 3, taimani project, district 4 Kabul-Afghanistan,