In This Issue:

1. Introduction and Achievements up to date ....................................................................... Page: 2

2. 256 Saving Groups in Karokh District of Herat ………………………………………………………………… Page: 3

3. Farhad: My economic situation has improved……………………………………………………………….. Page: 4

4. A Snap shot of AREDP’s Research activities ……………………………………………………………………. Page: 4

5. The Marble training that linked Afghan SMEs to European Markets…………………………….. Page: 5

6. A short Training but Long term Impacts …………………………………………………………………………. Page: 7

7. Safeguards Implementation Unit……………………………………………………………………………………. Page: 8

Creditable Achievements to Date

Total districts covered: 25

Total villages covered: 636

Total Saving Groups: 5,007 (2,355 female – 47%)

Total members of Savings Groups: 57,406

(27,323 female – 47.5%)

Total savings: Afs65.7 Million.

(of which Afs30.3 Million 46% was saved by women)

No. of Members accessed loans: 6,855 (3,485 female – 51%)

No. of loans accessed by members : 7,671 (3,973 loans by

female, 52 % )

Aggregated loan amount disbursed by SGs: Afs47.3 Million

(of which 19.3 million AFN 41 % was disbursed by FSGs)

Total Enterprise Groups: 655 (285 female – 43.5%)

Total members of Enterprise Groups: 3,709

(1,932 female – 52%)

Total Village Savings and Loan Associations: 71

Total SGs federated into VSLAs : 481

No. of SMEs whose technical feasibility and economical

viability studies completed : 396

Total SMEs whose Business Plans Developed 262

Letter of Understanding Signed with SMEs: 160

No. of SMEs exposed and trained for business needs : 81

AREDP is a national government-led multi-donor funded, program that jump-starts and facilitates private sector growth in

rural Afghanistan. The program strengthens the private sector through integrated, value chain, top to bottom knowledge

based interventions, bottom to top community enterprise development and by addressing credit and capital needs on all

levels and in all locations.

The objective of Afghanistan Rural Enterprise Development Program is to increase employment, income of rural men and

women, and the sustainability of targeted local enterprises.

The program operates under the Ministry of Rural Rehabilitation and Development and managed by the Program

Management Office (PMO) in Kabul.

The key principles of the AREDP Development Objectives includesfacilitating linkages with market putting community

and entrepreneurs in decisive position, community led and sustainable enterprises , , building partnerships, facilitating

client decisions, sharing best practices and vertical integration.

AREDP has two Program components and program management as one functional and support component.The two

Program components are Community-led Enterprise Development (CED) which provides a platform for rural community

and entrepreneurs to organize themselves, share knowledge, experience, expose to improves practices, enhance

technical, entrepreneurial skills, provides knowledge-base and access to micro savings and loans (financial services) to

community and rural enterprises. CED establishes and nurture Savings Groups, Enterprise Groups and Village Savings and

Loan Associations. SME Development component facilitates SMEs, provides business advisory, technical exposures and

trainings, market linkages and financial services to rural SMEs.

The support component consists of Program management functions, it handle policy issues for rural enterprises, plus

research and technical support services. M&E and Gender work across all program components

Page: 2

Karokh district becomes hub and pioneer of Saving Groups in Herat

Majghandak is a village in the Karokh District of Herat Province and was in the past divided into two separate sections.

The division cut off the relations between the villagers living in differentsections and thus, they hadlimited social

interactions together.

The Afghanistan Rural Enterprise Development Program (AREDP) started its mobilization process at the village levelto be

able to start implementing its programme at the whole village. During the mobilization process, thesocial problems and

conflicts betweenthe two sections of the village were settled. The formation of savings groupsreached across the

villageboundaries and led to a renewed solidarity, unity and togetherness among the residents of the village.

Moreover, as a result of community mobilization, facilitation and consistent handholding and capacity building support;

theAfghanistan Rural Enterprise Development Program formed about 265 savings groupsthroughout Karokh district, with

six femaleand 5 male SGs only in Majghandak village. The formation of savings groups helped the residents of the two

parts of thevillages to meet each other, discuss about their common business plans and work together.

In fact, the eleven savings groups in Majghandak village have a total of 160 members of which 62 percent arefemales. The

savings groups extended loans to 16 savings group members of Majghandak village, 14 of whom are women. The total

amount of loans issued was 40,000 Afghanis out of which 70 percent of the loan was disbursedto women.Undoubtedly,

the mentioned figures clearly indicate a very strong participation of women in the programme activities.

Page: 3

Farhad: My economic situation has improved

Mr. Farhad, a resident of Fateh Abad village, in the

Surkhrud district of Nangarhar, was a farmer who

was suffering severe economic problems. After

AREDP began activities in his village, Mr. Farhad

joined a Savings Group called Afghan. Having saved

30 Afghanis each week, Farhad, the treasurer of

Afghan, got a loan of 26,000 Afghanis to buy cotton

processing machinery.

He installed the cotton processing machinery in his

village and now he processes 30 metric tons of

cotton each month.

He is currently able to earn 15,000 Afghanis per month. Farhad said, “I am very satisfied with my business, because

through it I can cover all of my own expenses and my home expenses.”

Before establishing the cotton machinery business, Farhad was only involved in farming and was not making enough

money to cover his home expenses. His economic situation has significantly improved as a result of starting up the

business.

Farhad said, “We have benefitted a lot from the AREDP Program. We meet every week and get to know about each

other’s problems. If AREDP were not functioning in our village, I would never have become the owner of a

sustainable and strong business, as I have today,”

A Snap shot of AREDP’s Research activities!

AREDP research unit aims to address a knowledge gap and to inform and influence program decisions and approach in

order to bring about effective change. AREDP researches include provincial situational analysis; baseline surveys,

program impact assessment, case study of best enterprise development practices inside and outside Afghanistan in

countries similar to Afghanistan context, value chain studies and focused researches based on need of AREDP program

units. The findings and analysis of these researches are presented as recommendations in report types to the program

leadership and are uploaded to AREDP Website as its official research publications.

AREDP researches hugely depends on the primary data therefore, in order to assure the quality of the research

projects, AREDP uses both internal and external peer review mechanisms such as extensive consultations with technical

experts, field monitoring, survey verification and data validation mechanisms.

In 2012, The AREDP research unit in partnership with two international firms conducted Provincial Situational Analysis

(PSAs) research in provinces of Balkh, Bamyan, Parwan, Hirat, Nangarhar and Badakhshan. The Provincial Situational

Analysis (PSAs) were conducted to provide an update analysis of socio-economic and demographic situation of the

provinces and further to identify key value chains that constitute best choice for public investment and rural private

sector development. The result of these studies provided recommendations to help AREDP management to make

informed decisions regarding its interventions and focus on enterprise development areas that creates employment and

income generations for the rural men and women of Afghanistan in sustainable way.

Page: 4

The Marble training that linked Afghan SMEs to European Markets!

In November 2012, the Afghanistan Rural Enterprise Development Program

(AREDP) facilitated 12-days of marble know-how training for 6 Afghan SMEs in

Turkey. The training was conducted between November 23 – December 4 in

Istanbul, Sakarya and Afyon. In addition to the 6 SME members, one Business

Development Officer from Herat and one from Kabul headquarteralso

participated in the training. The training was conducted by representatives of Bir

Dis Tic Ltd. and MKS Machinery.

MKS Machinery is one of the leading machinery manufacturers of Turkey which

supplies marble processing machines to more than 50 countries throughout the

world. Bir Dis Tic Ltd. is a trading company involved in international trade of

mineral products.

The training was conducted to train the participants on improved methods of

extraction and standardization of marble stones; increase knowledge of SMEs

about modern machineries and equipments used for extraction and

processing;enhance the technical skills of SMEs on marble production process

such as grading, costing, pricing, and input-output supports, and to improve the

marketing information system for marble SMEs’ competitiveness and train

marble SMEs on Europe demand quality and also about learning how to

substitute marble imports to Afghanistan.

Page: 5

The training started with a visit to MKS machinery facility

in Adapazari, Sakarya. During the visit, the participants

requested the company to open its agency in Herat so

that they could easily access to machines’ spare parts and

technical services. MKS CEO welcomed the idea and

mentioned that they are about to open an agency in

Afghanistan. Afterwards, the CEO accompanied the

visitors to its processingfacility (General Mermer

Company), arranged a tour and explained the functions of

the different machines used in their company.

During the visit to MKS, the Afghan marble SME members

learned how to open a quarry and identify the direction of

extraction considering the natural and geological

structure of the quarry. They were also given explanations

on how to maximize extraction quantity with a minimum

of manpower and equipment, methods of matching drill

points while keeping in consideration the drill divergence,

using laser pointing device for accurate marking of drill

points both horizontally and vertically, and measuring for

avoiding closure of drill openings and getting rid of small

pieces falling into the drill opening.

The trainees also received practical training on using and

installing laser devices for cross-cutting machines and

block cutters, farming and coating cracked blocks with

epoxy in order to avoid stone wastage, and edge

chamfering and polishing machines.

The participants also participated in a meeting chaired by

Engineer Yalcin, chief of the Department of Mines and

Minerals (IMIB), and member of board of Istanbul Mineral

and Metals Exporter’s Association (IMMIB).

The Afghan businessmen discussed about the possible

establishment of Herat Marble Association and requested

IMIB and IMMIB to support them with the establishment

of such an association.

Engineer Yalcin promised that IMIB will be happy to

provide support and technical assistances to the Herat

Marble Association and Afghan Marble Industry. He also

explained that it would be important for the Herat Mable

Association to become a member of an international

organization of its type. Engineer Yalcin also stated that

they are ready to link Afghan marble companies with

Turkish machinery suppliers and marble customer

companies through enabling Afghan SMEs to attend

international exhibitions held in Turkey.

Furthermore, in a meeting with DEMMER management

team, Afghan members of marble processing companies

showed samples of their products to its managing

director. The managing director of DEMMER got

extremely interested in purchasing Afghan marbles and

told Afghan businessmen that DEMMER is ready to

purchase their marble blocks when required.

Simultaneously, the team visited TEMMER Marble

Processing Company, the largest marble production and

Export Company of Turkey. The TEMMER CEO provided

business ideas and advices to the Afghan marble

businessmen for the growth and development of their

companies and expansion of their businesses.

Having purchased Afghan marbles, the TEMMER CEO

showed interest in purchasing Afghan marbles from

Afghan marble companies and toldAfghan businessmen

that he is going to order blocks from Afghan marble

processing companies for their international customers.

He also promised that when needed, he will send some

machineries including standard processing and polishing

machines to Afghan marble processing companies.

At the end of the training, all participants felt very pleased

and acknowledged that the training was a big

achievement for them.

Page: 6

Miss GhizaalHaress the Executive Director of the AREDP

inaugurated the training and delivered short a speech

on the purpose of the training. The topics discussed

during training were suggested by the Training Unit

which carried out the ideas of other relevant units. The

trainer had developed his plan according to the AREDP

requisitions and presented general information about

banks, and in-depth and specific information about

Islamic Banking. The trainees participated actively and

were happy because some of their questions which

were long time pending un-answered, were

satisfactorily replied and cleared the doubts. The

trainer was rated impressive by the participants and

therefore, it was requested to have the training again

for one more day for HQ and for 3 days at each

provincial office.

At the end of the training, everyone felt very happy.

They expressed their satisfaction and thanked the TU

for hiring such a consultant. They suggested that the

training materials on Islamic finance should be

reviewed and certified by Shariah Board of Da

Afghanistan Bank, and Mr. Niazi also promised to

facilitate the process. In addition, both the trainer and

the trainees agreed and emphasized on keeping long

term communication so that they could refer to Dr.

Niazi as a source person when needed. Mr. Niazi also

welcomed the suggestion and said that he would be

ready anytime.

AShort Training but Long term Impacts!

The AREDP Training Unit has been constantly involved in

creating, designing and developing training materials and

conducting trainings at the headquarter and provincial level

in order to improve and build up the capacities and skills of

the AREDP employees, and facilitate for the effective

implementation of the Programme throughout the target

provinces. Even though the TU with the inputs and supports

of the Access to Finance Unit has already developed

constructive instructional materials on Islamic banking but

yet there were many technical frequently asked questions

that needed more specific and clearer answers.

Therefore, the Training Unit invited a well known Afghan

Islamic Banking Specialist, Mr. Mustafa Niazi who holds a

PH.D in Shariah and Law and is currently working as the

chief of the Islamic Board of the Bank-e-Milli-e Afghan. The

training was conducted on December 31st, 2012 at the

AREDP Head quarter’s Meeting Hall. The participants of the

training included the employees and managers of different

units such as Training Unit, CED, SME, A2F, FBU, M&E,

Research, and Administration, Communications and also the

International advisors and specialists of the Program.

Topics covered during the training:

a.Introduction to Banks and Islamic Banking

b.History of Islamic Banking

C.Comparison of Islamic and Conventional Banking counts

d.Reba

e.Islamic Modes of Finance:Wadia, Mudaraba, Murabaha

f.Questions and Answers and open discussion.

Page: 7

0

10

20

30

40

Bamyan Nangarhar Balkh

Participants of SIU Training Workshops Per Province

No. of SMEs No. of EGs No. Provincial Staff

Safeguards Implementation Unit

The Safeguards Implementation Unit (SIU) has been established within

AREDP in order to enhance/build up the capacities of the AREDP staff and its stakeholders

on environment and social aspects. To do this, the SIU is committed to using and implementing the Environmental Social

Management Framework (ESMF). The ESMF will allow AREDP to “avoid, mitigate or minimize adverse environmental and

social impacts of AREDP supported activities and sub-projects.”

The objectives of the Safeguard Implementation Unit can be outlined as follows:

To assess the potential social and environmental impacts of the sub-projects.

To adopt and implement appropriate mitigating measures which can effectively address the identified negative impacts.

To create appropriate mechanisms and activities for managing, reporting and monitoring environmental and social concerns.

To provide necessary technical trainings and capacity building workshops.

SIU in December

As usual, during December 2012, The SIU Specialist, Mr. Wahid Ibrahim Zada traveled to different provinces to visit the

SMEs closely, provide them with technical advices and help them consider environmental and social safeguards in their

usual activities.

In addition, the SIU unit conducted some Environmental & Social Safeguards trainings for the owners of the SMEs and

EGs in Bamyan, Nangarhar and Balkh. The trainings were designed and presented using a participatory and inclusive

approach and each lasted for three consecutive days. All the participants assessed the trainings very useful and

requested for more trainings and workshops in the future.

Contact us for sharing your feedback:

E-mail:yasin.samim@mrrd.gov.af

Phone: 0093 (0) 781523992

Website:aredp-mrrd.gov.af

Address: Darrul- Aman Main road,

Nila Bagh Street, Kabul Afghanistan.

Page: 8