EUROPEAN UNION INVESTS EUR 15 MILLION TO SUPPORT ACCESS TO FINANCE FOR MICRO, SMALL, AND MEDIUM ENTERPRISES

Kabul, Afghanistan - 28 January 2026 - The European Union (EU), in partnership with the Afghan Credit Guarantee Foundation (ACGF), has announced a €15 million investment in the second phase of the "Micro, Small, and Medium Enterprises (MSME) Access to Finance for Livelihoods in Afghanistan" (MALA II) initiative.

The MALA II will enhance economic resilience and promote sustainable livelihoods by strengthening the capacity of MSMEs across the country. Building on the achievements of Phase I -which successfully concluded in 2025- the new phase is designed to improve the uptake of sustainable finance. It places a particular focus on green and climate financing, returnees, agricultural actors, and female-headed enterprises, in particular in underserved geographical areas.

Core Objectives of MALA II:

• Scaling MSME Financing: Enabling Partner Financial Institutions (PFIs) to expand lending through enhanced risk-sharing mechanisms and guarantee incentives.

• Direct Capacity Building: Strengthening MSMEs-with a focus on returnees and women-led firms-through targeted grants and Technical Assistance (TA).

• Institutional Strengthening: Developing Islamic finance products, automating processes, and building the capacity of PFIs to better serve the MSME sector.

• Expanding Digital Reach: Increasing financial access in underserved areas by supporting PFIs in expanding branch networks and digital banking channels.

Through these interventions, MALA II will help create and sustain jobs, raise household incomes, and broaden financial inclusion across Afghanistan.

Eric Beaume, Head of Cooperation, EU Delegation to Afghanistan: "The European Union remains committed to investing in Afghanistan's economic growth and job creation. Phase I of MALA supported over 55,000 jobs and mobilised €68 million in financing. The second phase will further expand access to affordable finance nationwide, with a dedicated focus on innovation, resilience, and the inclusion of women and agricultural actors."

Fernand Pillonel, Chairman of the Supervisory Board of OXUS, stressed that MALA's grant scheme has been enabling MSMEs to obtain financing.

Ziauddin Haidari, CEO of First MicroFinance Bank (FMFB), stated that TA activities funded by MALA have improved process efficiency and he envisioned that MALA II will allow the bank to reach out to underserved areas by lowering transaction costs through digitization.

Khisrow Fazli, CEO of Ghazanfar Bank, highlighted that ACGF's guarantees supported by MALA are essential for its MSME financing business.