Contributing to agricultural finance in Afghanistan with USB’s MPhil in Development Finance – USB Alumnus Stellenbosch Business School Skip to main content
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This article is written by USB alumnus Grant Norris

This article is written by USB alumnus Grant Norris

Studying for an MPhil in Development Finance (MDevF) at the University of Stellenbosch Business School (USB) was the best career investment I could have made. At the time of enrolling for my Master’s at USB, I was privileged to be part of an outstanding team at First National Bank (FNB) Commercial – yet felt the need to challenge myself outside of the corporate world.

Since graduating in 2007 I can look back and proudly claim to have walked the talk in my quest to become a development professional, working in the MENA region and South Asia for some of the world’s leading development companies on economic development and finance programmes.

At the end of September, I will finish my work supporting agricultural finance in Afghanistan to take up a Vice President position with Blue Orchard, a Swiss-based impact-investment fund manager, based in Phnom Penh, Cambodia. I cannot envisage any of this would have happened without that life changing decision to study for my Master’s degree at USB.

 Over the past five years, I’ve been working on a ground-breaking finance project in Afghanistan. Supported by the U.S. Agency for International Development (USAID), in 2010 the project established an agricultural development fund to expand access to credit for the agriculture sector in Afghanistan.

The fund makes credit available to commercial farmers and agribusiness entrepreneurs through direct lending and also provides apex funds to microfinance institutions and other intermediaries that wish to enter into agriculture finance and integrating them as intermediaries of ADF funds – in particular to service the financing needs of farmers and micro/small agriculture enterprises.

In Afghanistan’s agriculture sector, there are significant gaps that exist between demand and the availability of agricultural financial services provided by formal institutions. A recent national survey found only 5% of farmers were likely to apply for credit from formal institutions. Also of significance is that SME agricultural borrowers receive a disproportionately small amount of the credit: only 10.6%, a number that underscores the difficulties for SME is to access credit.

Because of the enormous gap between demand for and supply of agricultural credit there are untapped financing opportunities across multiple value chains for those institutions willing to respond to the unique needs of agriculture.

The providers of formal agriculture credit include a variety of types of financial institutions, including commercial banks, microfinance institutions and non-bank financial intermediaries (NBFI). However, providing appropriate financial services and lending to farmers and agribusinesses presents challenges that multiply as financial institutions move from larger enterprises and high value chains to smallholder farmers and lower value crops.

“I cannot envisage any of this would have happened without that life changing decision to study for my Master’s degree at USB.”
– Grant Norris

As a technical lead advisor, a key focus area for me was to ensure the agricultural development fund successfully transitioned into a standalone, sustainable agricultural finance institution. This meant putting in place an effective strategy to accelerate lending to the agriculture while also addressing institutional capacity needs, such as:

  • Ensuring the fund was sufficiently capitalized and able to generate enough income to cover operating costs, thereby becoming financially sustainable;
  • Strengthening the funds’ governance structure, policies, procedures and safeguards with the purpose of streamlining day-to-day operations, while reducing the risk of political influence.

Today, functioning as a finance company, the fund performs its operations through a head office in Kabul, five regional offices and two satellite offices, employing 64 local staff. After nearly eight years of lending activities, the fund has lent a cumulative amount of USD 105 million with USD 20.2 million presently outstanding.

With a minimum loan size of $100,000, the fund originally exclusively targeted the larger end of the agricultural credit market with direct lending. It recently introduced smaller loan sizes, ($25,000 – $100, 00) to address the “missing middle”; those agricultural SMEs that are too small for most banks but too large for MFIs.  It has also introduced a special smaller loan for women, offering lower interest rates and maturities.


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