The European Union has committed 15 million euros ($16.3 million) to support access to finance for micro, small and medium-sized enterprises (MSMEs) in Afghanistan, the EU delegation said on Thursday.
The funding will be channelled through the Afghan Credit Guarantee Foundation under the second phase of the “MSME Access to Finance for Livelihoods in Afghanistan” programme, known as MALA II, which aims to strengthen economic resilience and promote sustainable livelihoods.
The new phase builds on an earlier programme that concluded in 2025 and will focus on expanding sustainable finance, with particular attention to green and climate financing, returnees, agricultural businesses and women-led enterprises, especially in underserved areas, the EU said.
Under the program, partner financial institutions will be supported to expand lending through risk-sharing mechanisms and credit guarantees, while MSMEs will receive targeted grants and technical assistance to build capacity. The initiative also includes efforts to develop Islamic finance products, automate banking processes and expand digital and branch-based financial services.
“The European Union remains committed to investing in Afghanistan’s economic growth and job creation,” said Eric Beaume, head of cooperation at the EU Delegation to Afghanistan. He said the first phase of the program helped support more than 55,000 jobs and mobilised 68 million euros in financing.
Executives from Afghan financial institutions said the program had played a key role in improving access to credit. Fernand Pillonel, chairman of the supervisory board of OXUS, said the grant scheme had enabled small businesses to secure financing.
Ziauddin Haidari, chief executive of First MicroFinance Bank, said technical assistance funded by the programme had improved operational efficiency and could help banks reach underserved areas by lowering transaction costs through digitisation.
Khisrow Fazli, chief executive of Ghazanfar Bank, said credit guarantees provided through the Afghan Credit Guarantee Foundation were essential for expanding MSME financing.
Afghanistan’s private sector has struggled with limited access to finance, weak infrastructure and economic isolation since the Taliban returned to power in 2021. International donors have increasingly relied on targeted programmes aimed at supporting livelihoods and financial inclusion while avoiding direct engagement with the Taliban authorities.
