The Financing Gap

Notes from Hedvig & the Artisan Toolkit team's trip to Kabul. For more information about the toolkit, click here

Afghan crafts producers, like small business owners around the world, have many challenges. Most of these are similar to the ones the rest of us entrepreneurs face, but there is one in particular that's hard to overcome in a place like Afghanistan - financing!

When I first came to Kabul 12 years ago the gap in financing available to small businesses was a topic of discussion within Afghanistan. Now, so many years later, the international community is having the same conversation. There is a relatively large amount of micro-financing available in Afghanistan, but micro-finance loans are typically a few hundred dollars and not enough to build a business on. There are the banks, which provide large loans- over $100,000- but to secure this size of loan, business owners must offer serious collateral. This is hard in a country with mostly unresolved property rights and where no one has a mortgage.

All of the businesses we meet need financing in the lower end of the spectrum - between $5,000 and $100,000. But no loans are available. This is a very serious impediment for business and private sector growth. Our friend, the talented silk weaver Saleh Mohammad, tells me, “A customer wants to commission 16 new silk fabric designs, but I only have money to start six, what do you think I should do?” I have yet to give him an answer...

Saleh Mohammad at his loom

 

See Saleh Mohammad's work here


Hedvig Christine Alexander
Hedvig Christine Alexander

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