Microlending in a War Zone

Bamiyan Diaries – Day Five

In a small storage shed at the edge of town, we watched as 14-year-old Sayed Qarim signed a simple contract agreeing to borrow and repay a no-interest, 25,000 afghani loan (roughly $555). Daniel from the Zenda Company, the loan originator, counted out the crisp bills and handed them to Qarim, who smiled broadly and shook hands. Qarim, whose family farms potatoes and wheat, plans to use the funds to purchase a cow and her calf. “There are great benefits of owning a cow,” Qarim explains. “Our family gets to use the milk and we can sell the calf for a good profit.”

No one walking by outside on the narrow dirt road would have known an important business transaction had just occurred, one that could in fact help a young man and his family gain economic traction and greater security. The transaction didn’t take place in a bank. No village leaders were present. Only a 14-year-old boy, the representative of a private business company and a witness. And while the signed agreement constitutes a business relationship, the Zenda Company sees it as primarily personal.

Qarim was recommended for a loan by Faiz and Mohammad Jan, two other young men who live in his village and who have themselves recently received and repaid loans. Following this recommendation, Zenda spent much time getting to know Qarim, meeting with him, assessing his knowledge, his resources (such as access to grazing land) and his character, answering his questions and describing to him his responsibilities as a borrower.

Now that the transaction is complete, Qarim is required to send a picture of the cow and her calf as “proof” that the money was used as agreed. In addition, Hakim, another Zenda Company representative living in Bamiyan, who is fluent in Dari, the local language, will visit Qarim periodically. Along with Faiz and Mohammad Jan, he will try to provide whatever support Qarim needs to succeed.

Eighteen months ago, Mohammad Jan borrowed funds to purchase a cow and her calf. Three times in the intervening months, he has fattened the cow, raised the calf, sold them and used the money from their sale to purchase another cow and calf. He has repaid the loan in full and netted a profit thus far of nearly 7,000 afghanis. Faiz has been equally successful, using borrowed funds to purchase lambs; he repaid his loan, took out another and now owns ten sheep and two goats, prized locally both for their meat and for their fleece.

Zenda Company’s small business loan program has evolved gradually through trial and error in Bamiyan and Hakim, a Singaporean medical doctor and ex-pat living now in an outlying village, is central to its success. Hakim (a name given to him by local people which means “learned one”) originally came from Singapore to Quetta, Pakistan, on the Afghanistan border, where he worked for two years with Afghan refugees. “I essentially lived within a refugee settlement and I was treated as a local.”

While there, however, Hakim wanted to do more than treat the symptoms of war. Six years ago, he came to Bamiyan as a development worker with an international Non-Governmental Organization (NGO). Today in Afghanistan, NGOs involved in development work are as thick as wheat stalks in a field and their presence and operation has a significant impact in the country. But Hakim found that “the NGOs, too, have problems. They hold all the aid power, because they have all the money.” Because of this, says Hakim, despite their intentions, despite their mission, despite even their best efforts, international NGOs in Afghanistan often have a colonial relationship with Afghan communities, encouraging dependence rather than local initiative and sovereignty.

And then there is the intractable question of results. As one Afghan person told us, “The world says it is helping us. Where is this help? None of it reaches the people who need it. Here in Afghanistan it has been going on so long that we have to joke and laugh in order to manage our anger and disappointment.”

Seven months ago, Hakim left his position with the NGO. When he first arrived in Bamiyan, he was invited to visit and later to move into a small village. “The villages are very conservative. The only way to enter the community, even for a visit, is to be invited.”

Hakim has been in the community now for six years, living as people in the village do, eating only what people in the village have to eat. Like a member of the family, he participates in work. “I help in the fields, too,” he says with a self-effacing laugh, “but I’m not very good at it. I cannot work nearly as long or as fast as others.

“With time,” he says, “I’m realizing what it takes to practice what a young Afghan boy once told me, that without peace, life is impossible.” As he sees it, “morality, democracy and intellectual honesty are dying. Here we have forty-three countries [in the ISAF] trying to solve the problem of violence in Afghanistan. How can we allow these countries to say that more violence will solve the problems of violence, without asking them for evidence, for results? Where is intellectual inquiry? Moral skepticism? Why is war always the next solution? Why not reconciliatory talks; who dictates that talks are impossible for human beings? Why are we so willing to accept that violence and terror are the norm? If ordinary people don’t question this, academics at least should, but they don’t. A local shepherd boy knows this is not normal.”

In a country where villagers typically do not farm enough land to actually subsist, where malnutrition and stunted growth are in fact the norm and where the situation is worsening as land is divided and passed on to children, Hakim began to realize that peace cannot be pursued separately from economic security and food security. With this in mind, Hakim took his current position with the Zenda Company.

Through Zenda’s revolving loan fund, dozens of Afghan individuals have borrowed money for business start-up. These businesses include not only loans to villagers for livestock purchase, but also loans to shop owners and a number of loans to existing street vendors, who might, for example, benefit from having the funds to purchase a cart as well as additional inventory. The repayment terms on these loans are simple: one half due at the end of one year and the full amount due at two years. People interested in applying for a loan do so by supplying a simple handwritten proposal. At present, Zenda has received requests for loans totaling far more than it has funds to lend.

According to the United Nations, during the period 2005-2010 in Afghanistan, life expectancy at birth was less than 44 years. Child mortality (before the age of five) is the highest in the world and mortality for women in childbirth is among the highest. Eight hundred and fifty children die daily in Afghanistan. According to UNICEF, in the 2003-2008 period, an astounding 59 percent of Afghan children under the age of five are considered “stunted,” and for 9 percent of Afghan children under five, malnutrition is so severe it is considered wasting. “Is this normal?” Hakim asks.