Pacific B usiness R eview I nternational

A Refereed Monthly International Journal of Management Indexed With Web of Science(ESCI)
ISSN: 0974-438X
Impact factor (SJIF):8.396
RNI No.:RAJENG/2016/70346
Postal Reg. No.: RJ/UD/29-136/2017-2019
Editorial Board

Prof. Mahima Birla
(Editor in Chief)

Dr. Khushbu Agarwal
(Editor)

Dr. Asha Galundia
(Circulation Manager)

Editorial Team

A Refereed Monthly International Journal of Management

Impact of Microfinance on Employment Opportunities and Income Generation in the Bamyan Province of Afghanistan

 

Azizuddin Sultani

Ph.D. Scholar,

Department of Business Administration,

Mangalore University

E-mail: azizuddin.rs@gmail.com

 

Dr. Chandrashekhar R.

Assistant Professor,

Department of Business Administration,

Mangalore University

E-mail: thambi_2k@yahoo.com

 

Satar Ansari

Bachelor of Economics Faculty,

Bamyan University, Afghanistan

E-mail: sataransari786l@gmail.com

 

 

 

 

 

 

 

 

 

Abstract

Microfinance is widely recognized as a tool of financial development to decrease poverty and assist vulnerable people in accessing financial services. Moreover,Microfinance Institutions (MFIs) have an impactful role in improving the livelihood of the Afghan people, and it has been rapidly growing since 2003. Therefore, the authors examined the impact of microfinance on employment opportunities and income generationin the Bamyan province of Afghanistan. The sample size is made up of 220 borrowers from First Microfinance Bank Afghanistan (FMFB-A), partners of the Microfinance Investment Support Facility for Afghanistan (MISFA), and the Afghanistan Microfinance Association (AMA), which supports beneficiaries by offering a wide range of services while actively engaging in research, product development and innovation that assists borrowers. The quantitative analysis of data was executed bySPSSsoftware 25. The Wilcoxon Signed Rank Test was used to compare employment opportunities and income before and after using FMFB-A loans at a 5 percent level of significance, also used median and percentage. The result found that Microfinance has a significant impact on the job change after availing loans from FMFB-A and proved the positive effect of microfinance on employment opportunities. Furthermore, the authors found that FMFB-A has helped customers raise their family income by generating opportunities for lucrative jobs.

Keywords: Afghanistan, Employment Opportunities,FMFB-A, Income Generation,Microfinance.

 

 

 

 

 

 

 

 

Introduction

The Microfininitiative has improved perceptions of poor people in many countries. Some countries have created large credit flows, mostly to communities and households with little income that traditional financial institutions typically excluded them (Kurmanalieva,Montgomery & Weiss, 2003).

Since the end of the 1990s, Microfinance Institutions (MFIs) have developed as an economic development tool for low-income people.As Yunus (2007) defined, microfinance programs can help the poor generate more income and address issues caused by poverty. According to Bikbaeva and Gaibnazarova (2009),microfinance might be an efficient solution for facilitating the poor with viable employment opportunities for poor people. It raises the number of private businesses and generates extra job facilities.The provision of microloans to the poor allows them to raise their incomes because it can be used for self-employment and other income-generating activities (Ahlin & Jiang, 2008). Because microfinance in developing nations primarily focuses on the poor, these activities enable individuals to build a stable asset base and livelihood security, reducing poverty.

Due to the gradual rise in demand for microfinance in the Afghanistan context, the Islamic Republic of Afghanistan established the Microfinance Investment Support Facility for Afghanistan (MISFA) in 2003. Afghanistan was under an interim government, and a strong contingent of international forces kept militants at bay. The economy had been in a state of disrepair, millions of Afghans didn't have regular jobs, and millions more poured back into the country, ready to take off their refugee status and retake their homes. To help their families, Afghans required income-generating livelihoods. Therefore, the development of employment and private industry prioritized reconstruction, a critical component of a national economy.Moreover, it would not be possible to achieve peace and security, which have long eluded Afghanistan, with a population displeased by joblessness.MISFA partnered initially with 16 MFIs/MFBs working in Afghanistan, mainly operated by overseas-based foreign parent organizations.

Afghanistan Microfinance Association (AMA),which is an Afghannational network development finance institution (DFIs), was founded by the (MISFA), microfinance professionals, and other stakeholders in 2005. AMA is to raise awareness among microfinance borrowers about development finance and address misperceptions and misunderstandings about the sector via lobbying and advocacy, business collaboration and networking, capacity building, and information management. Moreover, AMA aims to increase sustainable development finance sector.

Currently, nine Microfinance Institutions are working in the country with a total Loan Portfolio of 9,607,678,446 AFN (Afghani). There are about 423,357 clients, 150,509 active borrowers, around 37% of them are women active borrowers, and 2,670 staff of these financial intuitions (as of December 2019), who are spread across the country.

The First Microfinance Bank- Afghanistan (FMB-A), founded in 2004, is a member of the Aga Khan Microfinance Agency (AKAM) with financial institutions activities in more than 15 countries across the developing countries. It is related tothe Aga Khan Development Network (AKDN),one of Afghanistan's largest Microfinance Institutions. Besides,it is an essential partner of MISA and AMA, covering 14 provinces, 38 branches, 204,136 clients, 59,383 active borrowers. With a loan portfolio of 5,387,902,857 AFN and  23 % of the borrowers are women ( as of December 2019).Most MFIs borrowers obtain loans for employment, decreased poverty, income generation, and other vital purposes in Afghanistan.

This paper explores whether Microfinance positively impacts employment opportunities and income generation of (FMBF-A) borrowers in the Bamyan Province of Afghanistan.

Literature Review

Microfinance Institutions have emerged as a platform for poverty reduction and economic empowerment; further, the author has noted that MFIs provide services to the vulnerable, pursue income-generating services, and lead to higher recovery levels (Rajasekar, 2004).

Barr (2004) stated that access to finance would improve the income status of the poor by enabling them to get better access to healthcare and education, which effectively helps improve the labor force's efficiency. Thus, the provision of microfinance should support the formal financial system since it can provide the poor with credit. Moreover, since microfinance can help raise poor people's income and asset base, it can allow the poor to apply for conventional financial sector loans.Garikipati (2008) stated that microfinance enables vulnerable people to enhance their standard of life by allowing the impoverished to produce income and accumulate assets in India.

Nader (2008) revealed that microfinance did play an essential part in the wellbeing of the family members in Cairo. It assists them in obtaining assets and creating income, enhances education for children, and advances their health and harmony.Mokhtar (2011) emphasized the significant role of microfinance in improving the jobs, properties, and standard of living of customers in Malaysia.

Alhassan and Akudugu (2012), in a study in northern Ghana's Tamale, discovered that microfinance has a significant effect on women's ability to generate income to sustain livelihoods in the home.Subsequently, they noticed that women are more empowered to engage in income-generating activities that preserved men until now.Mamun et al. (2012) explored that the role of microfinance positively impacted borrowers' income generation and job employment opportunities. Burjorjee and Jennings (2008) have shown that microfinance benefits Yemen's women entrepreneurs by enhancing new businesses and poverty alleviation.Augsburg et al. (2015) found that microfinance organizations contributed to a rise in self-employment, business ownership, inventories,and a move away from wage labor in Bosnia and Herzegovina. Besides, the authors considered the effect of being optimistic and essential and recorded a decline in consumption, a rise in savings, and improved durables for the households.

Tripathy (2006), in a study in Kurukshetra, Haryana, found that microfinance, including micro-savings, is slowly evolving as one of the useful, practical approaches to decrease poverty. Therefore, the author stated that offering job opportunities would efficiently create jobs and support household incomes.

            Folmer (2012) concluded that microfinance enables women in Ethiopia to improve their decision-making ability, gain money, andboost household spending.  Okurut et al. (2014) observed that loans helped empower the customers through decision-making on family expenses. Furthermore, the authors found that the clients' gained respect from family and community members.

In a research study in the Kasur district of Pakistan, Shah and Butt (2011) concluded that most women who used the microfinance facility gained full socio-economic empowerment. Additionally, the study found that it is directly related to raising socio-economic equality of working women in the Kasur district. However, Asencios-Gonzalez et al. (2018) conducted a study to evaluate the incidence of economic violence towards women, especially in the formal sector of women-managed micro-companies in Peru. The authors found that some of the women entrepreneurs were influenced by economic violence. Simultaneously, some of the participants were pressured by their spouses to receive credit towards their will.

Areeley and Chaturvedi (2007)observed early indications that MISFA had a significant effect on employment development in Afghanistan. The authors stated that expansions and start-ups had equipped their clients with work openings. The authorsconcluded that each participant generated one and a half job prospects. After entering the system, 80 percent of female participants indicated an 'improved attitude' towards their husbands and other relatives.PARWAZ is an organization that played a significant role in offering microfinance loans to consumers in Afghanistan. The study found that peoplecan carry out business activities such as farming, home-based tailoring facilities, poultry, carpet weaving, jewelry making, and shopkeeping with microfinance. Further,  the report described that customers record higher incomes, a rise in household income (such as home electronic devices, mobile phones, kitchen products). The general pattern is that people already have more trust than before taking out the loan (PARWAZ, 2006).

Another research by Greeley (2007) considered the evidence available to support the real potential of microfinance to encourage women in Afghanistan, especially in programs aimed at women entrepreneurs, to agree on the usage of loans and engage in income-earning activities. The study result showed that microfinance could affect women's and men's empowerment, reducing poverty.BRAC (2008) also indicated that involvement in microfinance assisted customer families in accumulating assets and diversifying sources of income in Afghanistan.

Echavez et al. (2012) findings indicate that people enrolled in the MIFs initiative are more active thanother communities in Afghanistanand can move quickly beyond their households. In this sense, the wearing of Chadaris by women (garments that cover the whole body with a mesh curtain for the eyes). However, the notion of women working to gain an income was widely embraced in the culture. Society respected and promoted the commitment of women to participate with their households in successful work. Throughout this study, it was a significant influencing factor in motivating all-female borrowers to use the loan to develop or grow a small company.According to Hussein (2009), a loan benefits a larger family or community of men.Furthermore, it is often typical for families to depend on numerous sources of income and companies to rely on labor and support from various family members in Afghanistan.

Therefore, there are many challenges, as well asin Afghanistan.Hargreaves et al. (2009) discuss the challenges of accessing the resources required for rural women to startup or develop a small business. They claimed that women lack control over and access to assets such as property, facilities, and resources in Afghanistan in reality. The authors also argued that women's legal right to inheritance is traditionally circumvented, refusing them protection required for commercial bank loans. Moreover, the authors mentioned that most commercial banks in Afghanistan are based in urban areas and offer conventional loans to qualified customers with collateral.

Hussein (2009 ) described that providing loans to women in Afghanistan implies that women make all financial transactions and repay loans, but they have no authority regarding their loans. The researcher also mentioned that it is usual to depend on multiple sources of income for homes and firms to draw on labor and input from various family members. Tracking the use of loans is hard and expensive and almost complicated to identify who is in control. Ritchie (2013) found that poor females fail to go beyond the current system, mainly because of restricted qualifications, skills, and independence. In the demanding context of Afghanistan, the author emphasized the structural barriers to developing poor women's enterprises in the context of Afghanistan.

The objective of the study

The study examines the impact of microfinance on employment opportunities and income generation through First Microfinance Bank borrowers in Afghanistan.

Hypothesis

H1: Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their employment opportunities.

H2:Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their income generation.

Methodology

Data Collection and Sample Size

 

This studyused primary data collected through a questionnaire,and the questionnaire was prepared in the Persian language (Afghanistan formal Language) for easy understanding of the bank's customers.A systematic random sampling method has been adopted for the survey and considered 220 respondents ofthe First Microfinance Bank Afghanistan (FMFB-A) in Bamyan province and its districts. Bamyan is the biggest province in the Hazarajat region of Afghanistan.

The data analysis was carried out using the SPSS, version 25. The authors analyzed the primary data using a nonparametric test(Wilcoxon Sing Rank Test) since the collected data was not normally distributed. Wilcoxon Sign Rank Testis an alternative test (Paired T-Test) used when the data violate the parametric assumptions.

The authors have selected the First Microfinance Bank because it is one of the largest microloan providers in Afghanistan. In addition, the bank has various financial programs considering the rural empowerment of women and men in the region.

Effect of Microfinance on Employment Opportunities

Table 1. Descriptive Statistics of Demographic

                                     N/Valid Cases           Median                       Std. Deviation

Gender                                   220                              139 Male                     0.483        

Marital Status                        220                              117 Married                            0.500  

Age                                         220                              20-30 Years old                      0.761

Education                               220                              79 Secondary School             1.465

Types of House                      220                              196 Private House                   0.32    

Source: field survey data

Out of the 220 sample sizes, 139 (63.2 %) of them were male, 117 (53.2%) respondents were married, betweenthe ages of 20 – 30 years old. Besides, 79 (35.9%)  respondents of the survey had secondary school qualifications, and finally, 196 (89.1%) of the borrower lived in a private house (own house). (Table-1)

Table 2. Effect of Microfinance on Job

 

Frequency

Percent

Very High

31

14.1

Medium

96

43.6

Less

67

30.5

Nothing

26

11.8

Total

220

100.0

                                Source: field survey data

The respondents also opined that microfinance had a positive effect on theiremployment opportunities. Most respondents (57.7 %) were agreed that the impact of microfinance on employment opportunitiesis very high to medium. However, (30.5 %) stated that microfinance has a lower impact on employment opportunities. The remaining (11.8 %) believed that microfinance hadn't had any positive impact on their employment. (Table-2)

 

 

 

 

Table 3. Types of occupations before and afterobtaining a loan from FMFB-A

 

Occupation before availing of loan

Occupation after availing of loan

 

Frequeny

Percent

Frequency

Percent

Ordinary Labour

138

62.7

7

3.2

Agriculture

45

20.5

72

32.7

Ranch

9

4.1

54

24.5

Driving

22

10.0

63

28.6

Others

6

2.7

24

10.9

Total

220

100.0

220

100.0

Source: field survey data

Table 3 displays the analysis of the effects of microfinance on employment opportunitychanges after availing of a loan from FMFB-A. (62.7 %) of the participants were ordinary laborbefore obtaining a loan from FMFB-A. However, after availing of the service, this amount declined to (3.2 %). In addition, before availing of the service (20.5 %), participants worked in agriculture sectors, but after obtaining the services, this amount improved to (32.7 %). Considering the Ranch respondents increased to this field from (4.1%– 24.5%). The remaining driving and other occupations also increased from (10% – 28.6%) and ( 2.7 % – 10.9%) respectively. Overall, according to the table, the survey respondents obtained better occupations compared to their previous jobs before availing of the loan from FMFB-A.

Table. 4Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Number of Respondents Before Availing Loan from FMFB-A – Number of Respondents After Availing Loan from FMFB-A

Negative Ranks

12a

55.50

666.00

Positive Ranks

163b

90.39

14734.00

Ties

45c

 

 

Total

220

 

 

a. Number of Respondents After Availing Loan from FMFB-A < Number of Respondents Before Availing Loan from FMFB-A

b. Number of Respondents After Availing Loan from FMFB-A > Number of Respondents Before Availing Loan from FMFB-A

c. Number of Respondents After Availing Loan from FMFB-A = Number of Respondents Before Availing Loan from FMFB-A

 

 

Tables 5. Test Statistica

 

Number of Respondents Before and After Availing Loan from

FMFB-A

Z

-10.877b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

 

b. Based on negative ranks

 

 

     

As the p-value calculated is 0.000 and Z value= -10.877, in a sense,P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impactedthe respondents' types of jobs andhaveobtained better occupationsafter using loans from FMFB-A.

Effect of Microfinance on Income Generation

Table 6. Sources of Family Income

 

Frequency

Percent

Driving

75

34.1

Ranch

57

25.9

Agriculture

Shopkeeping

54

34

24.5

15.5

Total

220

100.0

Source: field survey data

The majority of the survey participant's income was from the drivingfield (34.1%). Followed by Ranch (25.9 %) and agriculture (24.5%).Moreover, shopkeeping (Petty Shops) was another source of income (15.5%). Table 6 shows the respondents' high level of satisfaction with the impact of microfinance on their income.

Table 7. Descriptive Statistics

 

 

Monthly Income Before Availing loan from FMFB-A

Monthly Income After Availing loan from FMFB-A

N

220

220

Median

5,000.00

10,000.00

Std. Deviation

2996.868

4405.702

Source: field survey data

The average monthly income of the FMFB-A customers before using the loanwas 5,000 AFNand increased to 10,000 AFN after availing of a loan from FMFB-A (Table 7).

 

 

 

 

 

 

 

 

 

 

Table 8. Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Monthly Income Before Availing loan from FMFB-A – Monthly Income After Availing loan from FMFB-A

Negative Ranks

0a

.00

.00

Positive Ranks

214b

107.50

23005.00

Ties

6c

 

 

Total

220

 

 

a. Monthly Income After Availing loan from FMFB-A < Monthly Income Before Availing loan from FMFB-A

b. Monthly Income After Availing loan from FMFB-A > Monthly Income Before Availing loan from FMFB-A

c. Monthly Income After Availing loan from FMFB-A = Monthly Income Before Availing loan from FMFB-A

 

 

Table 9. Test Statisticsa

 

Monthly income Before and After Availing loan from FMFB-A

Z

-12.727b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

b. Based on negative ranks

 

As the p-value calculated is 0.000 and Z value = -12.727, in a sense P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impacted income generation after using loans from FMFB-A (Table 8, 9).

Conclusion

The microfinance program is considered an essential development strategy to reduce poverty, improve the borrowers' income, and significantly impact employment opportunities around nine MFIs/MFBsoperating in Afghanistan, covering seventeen provinces to eradicate poverty and meet financially excluded people's needs.The finding of this study describes that First Microfinance Bank,like many other banks in developing countries, empowers urban and rural people in Afghanistan.

The study reveals that microfinance positively impacts male and female empowerment in Afghanistan, although the extent of impact varies on different measures. The authors founda significant effect on the customer's income generation and employment opportunities.Furthermore, it is alsofound that the change in types of jobs after availing a loan from MFIs/MFBs is favorable. MFIs/MFBs helped customers increase their family income by generating gainful employment opportunities.Microfinance may not always empower all borrowers, but most customers experience some degree of empowerment by this opportunity. Therefore, it can have a powerful impact on borrowers' empowerment bystrengtheningtheir financial base and enhancing their economic contribution to their families and communities.

References

Ahlin, C. and Jiang, N. (2008) Can micro-credit bring development? Journal of Development Economics, 86, 1–12.doi.org/10.1016/j.jdeveco.2007.08.002

Alhassan A.R. and Akudugu M.A. (2012). Impact of Microcredit on Income Generation Capacity of Women in the Tamale Metropolitan Area of Ghana. Journal of Economics and Sustainable Development, 3(5).

Augsburg, B., De Haas, R., Harmgart, H., &Meghir, C. (2015). The impacts of microcredit: Evidence from Bosnia and Herzegovina. American Economic Journal: Applied Economics, 7(1), 183-203. DOI: 10.1257/app.20130272

Almalki, S. (2016). Integrating Quantitative and Qualitative Data in Mixed Methods Research--Challenges and Benefits. Journal of education and learning, 5(3), 288-296.

Asencios-Gonzalez, Z., Vara-Horna, A., McBride, J. B., Santi-Huaranca, I., Chafloque-Céspedes, R., & Rosillo, A. D. (2018). Factors associated with intimate partner economic violence against female micro-entrepreneurs in Peru. International Journal of Emerging Markets.doi.org/10.1108/IJoEM-08-2017-0294

Afghanistan Microfinance Association (AMA) (2019, December). Microview 27 a Quarterly update on Development Finance Outreach in Afghanistan.  Retrieved from http://ama.org.af/wp-content/uploads/2020/02/MicroView-Report-27.pdf date: 03/08/2020

Ahmad, S. Z. (2012). Microfinance for women micro and small–scale entrepreneurs in Yemen:Achievements and challenges. International Journal of Entrepreneurship and Small Business, 16(1), 102-120. http://dx.doi.org/10.1504/IJESB.2012.046920

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Bikbaeva, G. and Gaibnazarova, M. (2009) Impact of microfinance on alleviating rural poverty in Uzbekistan, Problems of Economic Transition, 52, 67–85.

Echavez, C., Zand, S., &Bagaporo, J. L. L. (2012). The Impact of Microfinance Programmes on Women's Lives: A Case Study in Balkh Province. Universitäts-und Landesbibliothek Sachsen-Anhalt.

Greeley, M., &Chaturvedi, M. (2007). Microfinance in Afghanistan: A Baseline and Initial Impact Study of MISFA. Microfinance Investment Support Facility for Afghanistan.

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Hargreaves, J., Makhubele, B. M., Mashaba, K., Morison, L., Motsei, M., Peters, C., Interventions, S. (2009). The World Bank in South Asia Afghanistan Gender Mainstreaming Implementation Note Series, No. 3 Helping Microfinance Work Better for Women In a Rapidly Expanding Microfinance Sector, More Room for Women, (2), 1–4.

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Tripathy, K. K. (2006). Microcredit intervention and poverty alleviation. Kurukshethra: A Journal on Rural Development, 54(11).

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Impact of Microfinance on Employment Opportunities and Income Generation in the Bamyan Province of Afghanistan

 

Azizuddin Sultani

Ph.D. Scholar,

Department of Business Administration,

Mangalore University

E-mail: azizuddin.rs@gmail.com

 

Dr. Chandrashekhar R.

Assistant Professor,

Department of Business Administration,

Mangalore University

E-mail: thambi_2k@yahoo.com

 

Satar Ansari

Bachelor of Economics Faculty,

Bamyan University, Afghanistan

E-mail: sataransari786l@gmail.com

 

 

 

 

 

 

 

 

 

Abstract

Microfinance is widely recognized as a tool of financial development to decrease poverty and assist vulnerable people in accessing financial services. Moreover,Microfinance Institutions (MFIs) have an impactful role in improving the livelihood of the Afghan people, and it has been rapidly growing since 2003. Therefore, the authors examined the impact of microfinance on employment opportunities and income generationin the Bamyan province of Afghanistan. The sample size is made up of 220 borrowers from First Microfinance Bank Afghanistan (FMFB-A), partners of the Microfinance Investment Support Facility for Afghanistan (MISFA), and the Afghanistan Microfinance Association (AMA), which supports beneficiaries by offering a wide range of services while actively engaging in research, product development and innovation that assists borrowers. The quantitative analysis of data was executed bySPSSsoftware 25. The Wilcoxon Signed Rank Test was used to compare employment opportunities and income before and after using FMFB-A loans at a 5 percent level of significance, also used median and percentage. The result found that Microfinance has a significant impact on the job change after availing loans from FMFB-A and proved the positive effect of microfinance on employment opportunities. Furthermore, the authors found that FMFB-A has helped customers raise their family income by generating opportunities for lucrative jobs.

Keywords: Afghanistan, Employment Opportunities,FMFB-A, Income Generation,Microfinance.

 

 

 

 

 

 

 

 

Introduction

The Microfininitiative has improved perceptions of poor people in many countries. Some countries have created large credit flows, mostly to communities and households with little income that traditional financial institutions typically excluded them (Kurmanalieva,Montgomery & Weiss, 2003).

Since the end of the 1990s, Microfinance Institutions (MFIs) have developed as an economic development tool for low-income people.As Yunus (2007) defined, microfinance programs can help the poor generate more income and address issues caused by poverty. According to Bikbaeva and Gaibnazarova (2009),microfinance might be an efficient solution for facilitating the poor with viable employment opportunities for poor people. It raises the number of private businesses and generates extra job facilities.The provision of microloans to the poor allows them to raise their incomes because it can be used for self-employment and other income-generating activities (Ahlin & Jiang, 2008). Because microfinance in developing nations primarily focuses on the poor, these activities enable individuals to build a stable asset base and livelihood security, reducing poverty.

Due to the gradual rise in demand for microfinance in the Afghanistan context, the Islamic Republic of Afghanistan established the Microfinance Investment Support Facility for Afghanistan (MISFA) in 2003. Afghanistan was under an interim government, and a strong contingent of international forces kept militants at bay. The economy had been in a state of disrepair, millions of Afghans didn't have regular jobs, and millions more poured back into the country, ready to take off their refugee status and retake their homes. To help their families, Afghans required income-generating livelihoods. Therefore, the development of employment and private industry prioritized reconstruction, a critical component of a national economy.Moreover, it would not be possible to achieve peace and security, which have long eluded Afghanistan, with a population displeased by joblessness.MISFA partnered initially with 16 MFIs/MFBs working in Afghanistan, mainly operated by overseas-based foreign parent organizations.

Afghanistan Microfinance Association (AMA),which is an Afghannational network development finance institution (DFIs), was founded by the (MISFA), microfinance professionals, and other stakeholders in 2005. AMA is to raise awareness among microfinance borrowers about development finance and address misperceptions and misunderstandings about the sector via lobbying and advocacy, business collaboration and networking, capacity building, and information management. Moreover, AMA aims to increase sustainable development finance sector.

Currently, nine Microfinance Institutions are working in the country with a total Loan Portfolio of 9,607,678,446 AFN (Afghani). There are about 423,357 clients, 150,509 active borrowers, around 37% of them are women active borrowers, and 2,670 staff of these financial intuitions (as of December 2019), who are spread across the country.

The First Microfinance Bank- Afghanistan (FMB-A), founded in 2004, is a member of the Aga Khan Microfinance Agency (AKAM) with financial institutions activities in more than 15 countries across the developing countries. It is related tothe Aga Khan Development Network (AKDN),one of Afghanistan's largest Microfinance Institutions. Besides,it is an essential partner of MISA and AMA, covering 14 provinces, 38 branches, 204,136 clients, 59,383 active borrowers. With a loan portfolio of 5,387,902,857 AFN and  23 % of the borrowers are women ( as of December 2019).Most MFIs borrowers obtain loans for employment, decreased poverty, income generation, and other vital purposes in Afghanistan.

This paper explores whether Microfinance positively impacts employment opportunities and income generation of (FMBF-A) borrowers in the Bamyan Province of Afghanistan.

Literature Review

Microfinance Institutions have emerged as a platform for poverty reduction and economic empowerment; further, the author has noted that MFIs provide services to the vulnerable, pursue income-generating services, and lead to higher recovery levels (Rajasekar, 2004).

Barr (2004) stated that access to finance would improve the income status of the poor by enabling them to get better access to healthcare and education, which effectively helps improve the labor force's efficiency. Thus, the provision of microfinance should support the formal financial system since it can provide the poor with credit. Moreover, since microfinance can help raise poor people's income and asset base, it can allow the poor to apply for conventional financial sector loans.Garikipati (2008) stated that microfinance enables vulnerable people to enhance their standard of life by allowing the impoverished to produce income and accumulate assets in India.

Nader (2008) revealed that microfinance did play an essential part in the wellbeing of the family members in Cairo. It assists them in obtaining assets and creating income, enhances education for children, and advances their health and harmony.Mokhtar (2011) emphasized the significant role of microfinance in improving the jobs, properties, and standard of living of customers in Malaysia.

Alhassan and Akudugu (2012), in a study in northern Ghana's Tamale, discovered that microfinance has a significant effect on women's ability to generate income to sustain livelihoods in the home.Subsequently, they noticed that women are more empowered to engage in income-generating activities that preserved men until now.Mamun et al. (2012) explored that the role of microfinance positively impacted borrowers' income generation and job employment opportunities. Burjorjee and Jennings (2008) have shown that microfinance benefits Yemen's women entrepreneurs by enhancing new businesses and poverty alleviation.Augsburg et al. (2015) found that microfinance organizations contributed to a rise in self-employment, business ownership, inventories,and a move away from wage labor in Bosnia and Herzegovina. Besides, the authors considered the effect of being optimistic and essential and recorded a decline in consumption, a rise in savings, and improved durables for the households.

Tripathy (2006), in a study in Kurukshetra, Haryana, found that microfinance, including micro-savings, is slowly evolving as one of the useful, practical approaches to decrease poverty. Therefore, the author stated that offering job opportunities would efficiently create jobs and support household incomes.

            Folmer (2012) concluded that microfinance enables women in Ethiopia to improve their decision-making ability, gain money, andboost household spending.  Okurut et al. (2014) observed that loans helped empower the customers through decision-making on family expenses. Furthermore, the authors found that the clients' gained respect from family and community members.

In a research study in the Kasur district of Pakistan, Shah and Butt (2011) concluded that most women who used the microfinance facility gained full socio-economic empowerment. Additionally, the study found that it is directly related to raising socio-economic equality of working women in the Kasur district. However, Asencios-Gonzalez et al. (2018) conducted a study to evaluate the incidence of economic violence towards women, especially in the formal sector of women-managed micro-companies in Peru. The authors found that some of the women entrepreneurs were influenced by economic violence. Simultaneously, some of the participants were pressured by their spouses to receive credit towards their will.

Areeley and Chaturvedi (2007)observed early indications that MISFA had a significant effect on employment development in Afghanistan. The authors stated that expansions and start-ups had equipped their clients with work openings. The authorsconcluded that each participant generated one and a half job prospects. After entering the system, 80 percent of female participants indicated an 'improved attitude' towards their husbands and other relatives.PARWAZ is an organization that played a significant role in offering microfinance loans to consumers in Afghanistan. The study found that peoplecan carry out business activities such as farming, home-based tailoring facilities, poultry, carpet weaving, jewelry making, and shopkeeping with microfinance. Further,  the report described that customers record higher incomes, a rise in household income (such as home electronic devices, mobile phones, kitchen products). The general pattern is that people already have more trust than before taking out the loan (PARWAZ, 2006).

Another research by Greeley (2007) considered the evidence available to support the real potential of microfinance to encourage women in Afghanistan, especially in programs aimed at women entrepreneurs, to agree on the usage of loans and engage in income-earning activities. The study result showed that microfinance could affect women's and men's empowerment, reducing poverty.BRAC (2008) also indicated that involvement in microfinance assisted customer families in accumulating assets and diversifying sources of income in Afghanistan.

Echavez et al. (2012) findings indicate that people enrolled in the MIFs initiative are more active thanother communities in Afghanistanand can move quickly beyond their households. In this sense, the wearing of Chadaris by women (garments that cover the whole body with a mesh curtain for the eyes). However, the notion of women working to gain an income was widely embraced in the culture. Society respected and promoted the commitment of women to participate with their households in successful work. Throughout this study, it was a significant influencing factor in motivating all-female borrowers to use the loan to develop or grow a small company.According to Hussein (2009), a loan benefits a larger family or community of men.Furthermore, it is often typical for families to depend on numerous sources of income and companies to rely on labor and support from various family members in Afghanistan.

Therefore, there are many challenges, as well asin Afghanistan.Hargreaves et al. (2009) discuss the challenges of accessing the resources required for rural women to startup or develop a small business. They claimed that women lack control over and access to assets such as property, facilities, and resources in Afghanistan in reality. The authors also argued that women's legal right to inheritance is traditionally circumvented, refusing them protection required for commercial bank loans. Moreover, the authors mentioned that most commercial banks in Afghanistan are based in urban areas and offer conventional loans to qualified customers with collateral.

Hussein (2009 ) described that providing loans to women in Afghanistan implies that women make all financial transactions and repay loans, but they have no authority regarding their loans. The researcher also mentioned that it is usual to depend on multiple sources of income for homes and firms to draw on labor and input from various family members. Tracking the use of loans is hard and expensive and almost complicated to identify who is in control. Ritchie (2013) found that poor females fail to go beyond the current system, mainly because of restricted qualifications, skills, and independence. In the demanding context of Afghanistan, the author emphasized the structural barriers to developing poor women's enterprises in the context of Afghanistan.

The objective of the study

The study examines the impact of microfinance on employment opportunities and income generation through First Microfinance Bank borrowers in Afghanistan.

Hypothesis

H1: Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their employment opportunities.

H2:Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their income generation.

Methodology

Data Collection and Sample Size

 

This studyused primary data collected through a questionnaire,and the questionnaire was prepared in the Persian language (Afghanistan formal Language) for easy understanding of the bank's customers.A systematic random sampling method has been adopted for the survey and considered 220 respondents ofthe First Microfinance Bank Afghanistan (FMFB-A) in Bamyan province and its districts. Bamyan is the biggest province in the Hazarajat region of Afghanistan.

The data analysis was carried out using the SPSS, version 25. The authors analyzed the primary data using a nonparametric test(Wilcoxon Sing Rank Test) since the collected data was not normally distributed. Wilcoxon Sign Rank Testis an alternative test (Paired T-Test) used when the data violate the parametric assumptions.

The authors have selected the First Microfinance Bank because it is one of the largest microloan providers in Afghanistan. In addition, the bank has various financial programs considering the rural empowerment of women and men in the region.

Effect of Microfinance on Employment Opportunities

Table 1. Descriptive Statistics of Demographic

                                     N/Valid Cases           Median                       Std. Deviation

Gender                                   220                              139 Male                     0.483        

Marital Status                        220                              117 Married                            0.500  

Age                                         220                              20-30 Years old                      0.761

Education                               220                              79 Secondary School             1.465

Types of House                      220                              196 Private House                   0.32    

Source: field survey data

Out of the 220 sample sizes, 139 (63.2 %) of them were male, 117 (53.2%) respondents were married, betweenthe ages of 20 – 30 years old. Besides, 79 (35.9%)  respondents of the survey had secondary school qualifications, and finally, 196 (89.1%) of the borrower lived in a private house (own house). (Table-1)

Table 2. Effect of Microfinance on Job

 

Frequency

Percent

Very High

31

14.1

Medium

96

43.6

Less

67

30.5

Nothing

26

11.8

Total

220

100.0

                                Source: field survey data

The respondents also opined that microfinance had a positive effect on theiremployment opportunities. Most respondents (57.7 %) were agreed that the impact of microfinance on employment opportunitiesis very high to medium. However, (30.5 %) stated that microfinance has a lower impact on employment opportunities. The remaining (11.8 %) believed that microfinance hadn't had any positive impact on their employment. (Table-2)

 

 

 

 

Table 3. Types of occupations before and afterobtaining a loan from FMFB-A

 

Occupation before availing of loan

Occupation after availing of loan

 

Frequeny

Percent

Frequency

Percent

Ordinary Labour

138

62.7

7

3.2

Agriculture

45

20.5

72

32.7

Ranch

9

4.1

54

24.5

Driving

22

10.0

63

28.6

Others

6

2.7

24

10.9

Total

220

100.0

220

100.0

Source: field survey data

Table 3 displays the analysis of the effects of microfinance on employment opportunitychanges after availing of a loan from FMFB-A. (62.7 %) of the participants were ordinary laborbefore obtaining a loan from FMFB-A. However, after availing of the service, this amount declined to (3.2 %). In addition, before availing of the service (20.5 %), participants worked in agriculture sectors, but after obtaining the services, this amount improved to (32.7 %). Considering the Ranch respondents increased to this field from (4.1%– 24.5%). The remaining driving and other occupations also increased from (10% – 28.6%) and ( 2.7 % – 10.9%) respectively. Overall, according to the table, the survey respondents obtained better occupations compared to their previous jobs before availing of the loan from FMFB-A.

Table. 4Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Number of Respondents Before Availing Loan from FMFB-A – Number of Respondents After Availing Loan from FMFB-A

Negative Ranks

12a

55.50

666.00

Positive Ranks

163b

90.39

14734.00

Ties

45c

 

 

Total

220

 

 

a. Number of Respondents After Availing Loan from FMFB-A < Number of Respondents Before Availing Loan from FMFB-A

b. Number of Respondents After Availing Loan from FMFB-A > Number of Respondents Before Availing Loan from FMFB-A

c. Number of Respondents After Availing Loan from FMFB-A = Number of Respondents Before Availing Loan from FMFB-A

 

 

Tables 5. Test Statistica

 

Number of Respondents Before and After Availing Loan from

FMFB-A

Z

-10.877b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

 

b. Based on negative ranks

 

 

     

As the p-value calculated is 0.000 and Z value= -10.877, in a sense,P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impactedthe respondents' types of jobs andhaveobtained better occupationsafter using loans from FMFB-A.

Effect of Microfinance on Income Generation

Table 6. Sources of Family Income

 

Frequency

Percent

Driving

75

34.1

Ranch

57

25.9

Agriculture

Shopkeeping

54

34

24.5

15.5

Total

220

100.0

Source: field survey data

The majority of the survey participant's income was from the drivingfield (34.1%). Followed by Ranch (25.9 %) and agriculture (24.5%).Moreover, shopkeeping (Petty Shops) was another source of income (15.5%). Table 6 shows the respondents' high level of satisfaction with the impact of microfinance on their income.

Table 7. Descriptive Statistics

 

 

Monthly Income Before Availing loan from FMFB-A

Monthly Income After Availing loan from FMFB-A

N

220

220

Median

5,000.00

10,000.00

Std. Deviation

2996.868

4405.702

Source: field survey data

The average monthly income of the FMFB-A customers before using the loanwas 5,000 AFNand increased to 10,000 AFN after availing of a loan from FMFB-A (Table 7).

 

 

 

 

 

 

 

 

 

 

Table 8. Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Monthly Income Before Availing loan from FMFB-A – Monthly Income After Availing loan from FMFB-A

Negative Ranks

0a

.00

.00

Positive Ranks

214b

107.50

23005.00

Ties

6c

 

 

Total

220

 

 

a. Monthly Income After Availing loan from FMFB-A < Monthly Income Before Availing loan from FMFB-A

b. Monthly Income After Availing loan from FMFB-A > Monthly Income Before Availing loan from FMFB-A

c. Monthly Income After Availing loan from FMFB-A = Monthly Income Before Availing loan from FMFB-A

 

 

Table 9. Test Statisticsa

 

Monthly income Before and After Availing loan from FMFB-A

Z

-12.727b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

b. Based on negative ranks

 

As the p-value calculated is 0.000 and Z value = -12.727, in a sense P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impacted income generation after using loans from FMFB-A (Table 8, 9).

Conclusion

The microfinance program is considered an essential development strategy to reduce poverty, improve the borrowers' income, and significantly impact employment opportunities around nine MFIs/MFBsoperating in Afghanistan, covering seventeen provinces to eradicate poverty and meet financially excluded people's needs.The finding of this study describes that First Microfinance Bank,like many other banks in developing countries, empowers urban and rural people in Afghanistan.

The study reveals that microfinance positively impacts male and female empowerment in Afghanistan, although the extent of impact varies on different measures. The authors founda significant effect on the customer's income generation and employment opportunities.Furthermore, it is alsofound that the change in types of jobs after availing a loan from MFIs/MFBs is favorable. MFIs/MFBs helped customers increase their family income by generating gainful employment opportunities.Microfinance may not always empower all borrowers, but most customers experience some degree of empowerment by this opportunity. Therefore, it can have a powerful impact on borrowers' empowerment bystrengtheningtheir financial base and enhancing their economic contribution to their families and communities.

References

Ahlin, C. and Jiang, N. (2008) Can micro-credit bring development? Journal of Development Economics, 86, 1–12.doi.org/10.1016/j.jdeveco.2007.08.002

Alhassan A.R. and Akudugu M.A. (2012). Impact of Microcredit on Income Generation Capacity of Women in the Tamale Metropolitan Area of Ghana. Journal of Economics and Sustainable Development, 3(5).

Augsburg, B., De Haas, R., Harmgart, H., &Meghir, C. (2015). The impacts of microcredit: Evidence from Bosnia and Herzegovina. American Economic Journal: Applied Economics, 7(1), 183-203. DOI: 10.1257/app.20130272

Almalki, S. (2016). Integrating Quantitative and Qualitative Data in Mixed Methods Research--Challenges and Benefits. Journal of education and learning, 5(3), 288-296.

Asencios-Gonzalez, Z., Vara-Horna, A., McBride, J. B., Santi-Huaranca, I., Chafloque-Céspedes, R., & Rosillo, A. D. (2018). Factors associated with intimate partner economic violence against female micro-entrepreneurs in Peru. International Journal of Emerging Markets.doi.org/10.1108/IJoEM-08-2017-0294

Afghanistan Microfinance Association (AMA) (2019, December). Microview 27 a Quarterly update on Development Finance Outreach in Afghanistan.  Retrieved from http://ama.org.af/wp-content/uploads/2020/02/MicroView-Report-27.pdf date: 03/08/2020

Ahmad, S. Z. (2012). Microfinance for women micro and small–scale entrepreneurs in Yemen:Achievements and challenges. International Journal of Entrepreneurship and Small Business, 16(1), 102-120. http://dx.doi.org/10.1504/IJESB.2012.046920

Afghanistan Microfinance Association (AMA). Retrieved from https://ama.org.af/archives/599date: 03/08/2020

Annual Report, 2006. PARWAZ.

Barr, M. S. (2004). Microfinance and financial development. Mich. J. Int'l L., 26, 271.

Bikbaeva, G. and Gaibnazarova, M. (2009) Impact of microfinance on alleviating rural poverty in Uzbekistan, Problems of Economic Transition, 52, 67–85.

Echavez, C., Zand, S., &Bagaporo, J. L. L. (2012). The Impact of Microfinance Programmes on Women's Lives: A Case Study in Balkh Province. Universitäts-und Landesbibliothek Sachsen-Anhalt.

Greeley, M., &Chaturvedi, M. (2007). Microfinance in Afghanistan: A Baseline and Initial Impact Study of MISFA. Microfinance Investment Support Facility for Afghanistan.

Garikipati, S. (2008). The Impact of Lending to Women on Household Vulnerability and Women's Empowerment: Evidence from India. World Development, 36(12), 2620-2642. http://dx.doi.org/10.1016/j.worlddev.2007.11.008

Hargreaves, J., Makhubele, B. M., Mashaba, K., Morison, L., Motsei, M., Peters, C., Interventions, S. (2009). The World Bank in South Asia Afghanistan Gender Mainstreaming Implementation Note Series, No. 3 Helping Microfinance Work Better for Women In a Rapidly Expanding Microfinance Sector, More Room for Women, (2), 1–4.

Hussein, M. H. (2009). State of Microfinance in Afghanistan. Institute of Microfinance (InM).

Shah,TH., Butt, H. (2011). Income Generating Activities Through Microcredit And Women's Socio-Economic Empowerment: A Study Of District Kasur, Pakistan. Academic Research International, 1(3).

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Mahmood, T., Arby, M., Hussain, T., & Sattar, A. (2016). IMPACT OF MICROFINANCE ON INCOME GENERATION AND LIVING STANDARDS: A Case Study of Dera Ghazi Khan Division. Pakistan Economic and Social Review, 54(1), 73-80. Doi: 10.2307/26616699

Mokhtar, S. H. (2011). Microfinance Performance in Malaysia. Doctor of Philosophy, Lincoln University, New Zealand. Retrieved from http://hdl.handle.net/10182/4186

Mamun, A. A., Adaikalam, J., &Wahab, S. A. (2012). Investigating the Effect of AmanahIkhtiar Malaysia's Microcredit Program on Their Clients Quality of Life in Rural Malaysia. International Journal of Economics and Finance, 4(1), 192-203. doi.org/10.5539/ass.v10n1p230

Microfinance Investment Support Facility for Afghanistan (MISFA) (2013, March). Annual Report. Retrieved from http://www.misfa.org.af/wp-content/uploads/2015/04/Annual-Report-Mar-2013.pdf.

Nader, Y. F. (2008). Microcredit and the socio-economic wellbeing of women and their families in Cairo. The Journal of Socio-Economics, 37, 644-656. http://dx.doi.org/10.1016/j.socec.2007.10.008

Okurut, F. N., Kagiso, M., Ama, N. O., &Okurut, M. L. (2014). The impact of microfinance on household welfare in Botswana. Botswana Journal of Economics, 12(1), 45-58.

Rajasekhar, D. (2004). Poverty alleviation strategies of NGOs. Concept Publishing Company.

Ritchie, H.A. (2013, September 26). Negotiating Tradition, Power and Fragility in Afghanistan: Institutional Innovation and Change in Value Chain Development. ISS Ph.D. Theses. Erasmus University Rotterdam. Retrieved from http://hdl.handle.net/1765/41427

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Tripathy, K. K. (2006). Microcredit intervention and poverty alleviation. Kurukshethra: A Journal on Rural Development, 54(11).

Yunus, M., 2007. Creating a world without poverty: Social business and the future of capitalism. New York: Public Affairs.

 

Impact of Microfinance on Employment Opportunities and Income Generation in the Bamyan Province of Afghanistan

 

Azizuddin Sultani

Ph.D. Scholar,

Department of Business Administration,

Mangalore University

E-mail: azizuddin.rs@gmail.com

 

Dr. Chandrashekhar R.

Assistant Professor,

Department of Business Administration,

Mangalore University

E-mail: thambi_2k@yahoo.com

 

Satar Ansari

Bachelor of Economics Faculty,

Bamyan University, Afghanistan

E-mail: sataransari786l@gmail.com

 

 

 

 

 

 

 

 

 

Abstract

Microfinance is widely recognized as a tool of financial development to decrease poverty and assist vulnerable people in accessing financial services. Moreover,Microfinance Institutions (MFIs) have an impactful role in improving the livelihood of the Afghan people, and it has been rapidly growing since 2003. Therefore, the authors examined the impact of microfinance on employment opportunities and income generationin the Bamyan province of Afghanistan. The sample size is made up of 220 borrowers from First Microfinance Bank Afghanistan (FMFB-A), partners of the Microfinance Investment Support Facility for Afghanistan (MISFA), and the Afghanistan Microfinance Association (AMA), which supports beneficiaries by offering a wide range of services while actively engaging in research, product development and innovation that assists borrowers. The quantitative analysis of data was executed bySPSSsoftware 25. The Wilcoxon Signed Rank Test was used to compare employment opportunities and income before and after using FMFB-A loans at a 5 percent level of significance, also used median and percentage. The result found that Microfinance has a significant impact on the job change after availing loans from FMFB-A and proved the positive effect of microfinance on employment opportunities. Furthermore, the authors found that FMFB-A has helped customers raise their family income by generating opportunities for lucrative jobs.

Keywords: Afghanistan, Employment Opportunities,FMFB-A, Income Generation,Microfinance.

 

 

 

 

 

 

 

 

Introduction

The Microfininitiative has improved perceptions of poor people in many countries. Some countries have created large credit flows, mostly to communities and households with little income that traditional financial institutions typically excluded them (Kurmanalieva,Montgomery & Weiss, 2003).

Since the end of the 1990s, Microfinance Institutions (MFIs) have developed as an economic development tool for low-income people.As Yunus (2007) defined, microfinance programs can help the poor generate more income and address issues caused by poverty. According to Bikbaeva and Gaibnazarova (2009),microfinance might be an efficient solution for facilitating the poor with viable employment opportunities for poor people. It raises the number of private businesses and generates extra job facilities.The provision of microloans to the poor allows them to raise their incomes because it can be used for self-employment and other income-generating activities (Ahlin & Jiang, 2008). Because microfinance in developing nations primarily focuses on the poor, these activities enable individuals to build a stable asset base and livelihood security, reducing poverty.

Due to the gradual rise in demand for microfinance in the Afghanistan context, the Islamic Republic of Afghanistan established the Microfinance Investment Support Facility for Afghanistan (MISFA) in 2003. Afghanistan was under an interim government, and a strong contingent of international forces kept militants at bay. The economy had been in a state of disrepair, millions of Afghans didn't have regular jobs, and millions more poured back into the country, ready to take off their refugee status and retake their homes. To help their families, Afghans required income-generating livelihoods. Therefore, the development of employment and private industry prioritized reconstruction, a critical component of a national economy.Moreover, it would not be possible to achieve peace and security, which have long eluded Afghanistan, with a population displeased by joblessness.MISFA partnered initially with 16 MFIs/MFBs working in Afghanistan, mainly operated by overseas-based foreign parent organizations.

Afghanistan Microfinance Association (AMA),which is an Afghannational network development finance institution (DFIs), was founded by the (MISFA), microfinance professionals, and other stakeholders in 2005. AMA is to raise awareness among microfinance borrowers about development finance and address misperceptions and misunderstandings about the sector via lobbying and advocacy, business collaboration and networking, capacity building, and information management. Moreover, AMA aims to increase sustainable development finance sector.

Currently, nine Microfinance Institutions are working in the country with a total Loan Portfolio of 9,607,678,446 AFN (Afghani). There are about 423,357 clients, 150,509 active borrowers, around 37% of them are women active borrowers, and 2,670 staff of these financial intuitions (as of December 2019), who are spread across the country.

The First Microfinance Bank- Afghanistan (FMB-A), founded in 2004, is a member of the Aga Khan Microfinance Agency (AKAM) with financial institutions activities in more than 15 countries across the developing countries. It is related tothe Aga Khan Development Network (AKDN),one of Afghanistan's largest Microfinance Institutions. Besides,it is an essential partner of MISA and AMA, covering 14 provinces, 38 branches, 204,136 clients, 59,383 active borrowers. With a loan portfolio of 5,387,902,857 AFN and  23 % of the borrowers are women ( as of December 2019).Most MFIs borrowers obtain loans for employment, decreased poverty, income generation, and other vital purposes in Afghanistan.

This paper explores whether Microfinance positively impacts employment opportunities and income generation of (FMBF-A) borrowers in the Bamyan Province of Afghanistan.

Literature Review

Microfinance Institutions have emerged as a platform for poverty reduction and economic empowerment; further, the author has noted that MFIs provide services to the vulnerable, pursue income-generating services, and lead to higher recovery levels (Rajasekar, 2004).

Barr (2004) stated that access to finance would improve the income status of the poor by enabling them to get better access to healthcare and education, which effectively helps improve the labor force's efficiency. Thus, the provision of microfinance should support the formal financial system since it can provide the poor with credit. Moreover, since microfinance can help raise poor people's income and asset base, it can allow the poor to apply for conventional financial sector loans.Garikipati (2008) stated that microfinance enables vulnerable people to enhance their standard of life by allowing the impoverished to produce income and accumulate assets in India.

Nader (2008) revealed that microfinance did play an essential part in the wellbeing of the family members in Cairo. It assists them in obtaining assets and creating income, enhances education for children, and advances their health and harmony.Mokhtar (2011) emphasized the significant role of microfinance in improving the jobs, properties, and standard of living of customers in Malaysia.

Alhassan and Akudugu (2012), in a study in northern Ghana's Tamale, discovered that microfinance has a significant effect on women's ability to generate income to sustain livelihoods in the home.Subsequently, they noticed that women are more empowered to engage in income-generating activities that preserved men until now.Mamun et al. (2012) explored that the role of microfinance positively impacted borrowers' income generation and job employment opportunities. Burjorjee and Jennings (2008) have shown that microfinance benefits Yemen's women entrepreneurs by enhancing new businesses and poverty alleviation.Augsburg et al. (2015) found that microfinance organizations contributed to a rise in self-employment, business ownership, inventories,and a move away from wage labor in Bosnia and Herzegovina. Besides, the authors considered the effect of being optimistic and essential and recorded a decline in consumption, a rise in savings, and improved durables for the households.

Tripathy (2006), in a study in Kurukshetra, Haryana, found that microfinance, including micro-savings, is slowly evolving as one of the useful, practical approaches to decrease poverty. Therefore, the author stated that offering job opportunities would efficiently create jobs and support household incomes.

            Folmer (2012) concluded that microfinance enables women in Ethiopia to improve their decision-making ability, gain money, andboost household spending.  Okurut et al. (2014) observed that loans helped empower the customers through decision-making on family expenses. Furthermore, the authors found that the clients' gained respect from family and community members.

In a research study in the Kasur district of Pakistan, Shah and Butt (2011) concluded that most women who used the microfinance facility gained full socio-economic empowerment. Additionally, the study found that it is directly related to raising socio-economic equality of working women in the Kasur district. However, Asencios-Gonzalez et al. (2018) conducted a study to evaluate the incidence of economic violence towards women, especially in the formal sector of women-managed micro-companies in Peru. The authors found that some of the women entrepreneurs were influenced by economic violence. Simultaneously, some of the participants were pressured by their spouses to receive credit towards their will.

Areeley and Chaturvedi (2007)observed early indications that MISFA had a significant effect on employment development in Afghanistan. The authors stated that expansions and start-ups had equipped their clients with work openings. The authorsconcluded that each participant generated one and a half job prospects. After entering the system, 80 percent of female participants indicated an 'improved attitude' towards their husbands and other relatives.PARWAZ is an organization that played a significant role in offering microfinance loans to consumers in Afghanistan. The study found that peoplecan carry out business activities such as farming, home-based tailoring facilities, poultry, carpet weaving, jewelry making, and shopkeeping with microfinance. Further,  the report described that customers record higher incomes, a rise in household income (such as home electronic devices, mobile phones, kitchen products). The general pattern is that people already have more trust than before taking out the loan (PARWAZ, 2006).

Another research by Greeley (2007) considered the evidence available to support the real potential of microfinance to encourage women in Afghanistan, especially in programs aimed at women entrepreneurs, to agree on the usage of loans and engage in income-earning activities. The study result showed that microfinance could affect women's and men's empowerment, reducing poverty.BRAC (2008) also indicated that involvement in microfinance assisted customer families in accumulating assets and diversifying sources of income in Afghanistan.

Echavez et al. (2012) findings indicate that people enrolled in the MIFs initiative are more active thanother communities in Afghanistanand can move quickly beyond their households. In this sense, the wearing of Chadaris by women (garments that cover the whole body with a mesh curtain for the eyes). However, the notion of women working to gain an income was widely embraced in the culture. Society respected and promoted the commitment of women to participate with their households in successful work. Throughout this study, it was a significant influencing factor in motivating all-female borrowers to use the loan to develop or grow a small company.According to Hussein (2009), a loan benefits a larger family or community of men.Furthermore, it is often typical for families to depend on numerous sources of income and companies to rely on labor and support from various family members in Afghanistan.

Therefore, there are many challenges, as well asin Afghanistan.Hargreaves et al. (2009) discuss the challenges of accessing the resources required for rural women to startup or develop a small business. They claimed that women lack control over and access to assets such as property, facilities, and resources in Afghanistan in reality. The authors also argued that women's legal right to inheritance is traditionally circumvented, refusing them protection required for commercial bank loans. Moreover, the authors mentioned that most commercial banks in Afghanistan are based in urban areas and offer conventional loans to qualified customers with collateral.

Hussein (2009 ) described that providing loans to women in Afghanistan implies that women make all financial transactions and repay loans, but they have no authority regarding their loans. The researcher also mentioned that it is usual to depend on multiple sources of income for homes and firms to draw on labor and input from various family members. Tracking the use of loans is hard and expensive and almost complicated to identify who is in control. Ritchie (2013) found that poor females fail to go beyond the current system, mainly because of restricted qualifications, skills, and independence. In the demanding context of Afghanistan, the author emphasized the structural barriers to developing poor women's enterprises in the context of Afghanistan.

The objective of the study

The study examines the impact of microfinance on employment opportunities and income generation through First Microfinance Bank borrowers in Afghanistan.

Hypothesis

H1: Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their employment opportunities.

H2:Microfinance loan offered by First Microfinance Banks to its beneficiaries positively impacts their income generation.

Methodology

Data Collection and Sample Size

 

This studyused primary data collected through a questionnaire,and the questionnaire was prepared in the Persian language (Afghanistan formal Language) for easy understanding of the bank's customers.A systematic random sampling method has been adopted for the survey and considered 220 respondents ofthe First Microfinance Bank Afghanistan (FMFB-A) in Bamyan province and its districts. Bamyan is the biggest province in the Hazarajat region of Afghanistan.

The data analysis was carried out using the SPSS, version 25. The authors analyzed the primary data using a nonparametric test(Wilcoxon Sing Rank Test) since the collected data was not normally distributed. Wilcoxon Sign Rank Testis an alternative test (Paired T-Test) used when the data violate the parametric assumptions.

The authors have selected the First Microfinance Bank because it is one of the largest microloan providers in Afghanistan. In addition, the bank has various financial programs considering the rural empowerment of women and men in the region.

Effect of Microfinance on Employment Opportunities

Table 1. Descriptive Statistics of Demographic

                                     N/Valid Cases           Median                       Std. Deviation

Gender                                   220                              139 Male                     0.483        

Marital Status                        220                              117 Married                            0.500  

Age                                         220                              20-30 Years old                      0.761

Education                               220                              79 Secondary School             1.465

Types of House                      220                              196 Private House                   0.32    

Source: field survey data

Out of the 220 sample sizes, 139 (63.2 %) of them were male, 117 (53.2%) respondents were married, betweenthe ages of 20 – 30 years old. Besides, 79 (35.9%)  respondents of the survey had secondary school qualifications, and finally, 196 (89.1%) of the borrower lived in a private house (own house). (Table-1)

Table 2. Effect of Microfinance on Job

 

Frequency

Percent

Very High

31

14.1

Medium

96

43.6

Less

67

30.5

Nothing

26

11.8

Total

220

100.0

                                Source: field survey data

The respondents also opined that microfinance had a positive effect on theiremployment opportunities. Most respondents (57.7 %) were agreed that the impact of microfinance on employment opportunitiesis very high to medium. However, (30.5 %) stated that microfinance has a lower impact on employment opportunities. The remaining (11.8 %) believed that microfinance hadn't had any positive impact on their employment. (Table-2)

 

 

 

 

Table 3. Types of occupations before and afterobtaining a loan from FMFB-A

 

Occupation before availing of loan

Occupation after availing of loan

 

Frequeny

Percent

Frequency

Percent

Ordinary Labour

138

62.7

7

3.2

Agriculture

45

20.5

72

32.7

Ranch

9

4.1

54

24.5

Driving

22

10.0

63

28.6

Others

6

2.7

24

10.9

Total

220

100.0

220

100.0

Source: field survey data

Table 3 displays the analysis of the effects of microfinance on employment opportunitychanges after availing of a loan from FMFB-A. (62.7 %) of the participants were ordinary laborbefore obtaining a loan from FMFB-A. However, after availing of the service, this amount declined to (3.2 %). In addition, before availing of the service (20.5 %), participants worked in agriculture sectors, but after obtaining the services, this amount improved to (32.7 %). Considering the Ranch respondents increased to this field from (4.1%– 24.5%). The remaining driving and other occupations also increased from (10% – 28.6%) and ( 2.7 % – 10.9%) respectively. Overall, according to the table, the survey respondents obtained better occupations compared to their previous jobs before availing of the loan from FMFB-A.

Table. 4Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Number of Respondents Before Availing Loan from FMFB-A – Number of Respondents After Availing Loan from FMFB-A

Negative Ranks

12a

55.50

666.00

Positive Ranks

163b

90.39

14734.00

Ties

45c

 

 

Total

220

 

 

a. Number of Respondents After Availing Loan from FMFB-A < Number of Respondents Before Availing Loan from FMFB-A

b. Number of Respondents After Availing Loan from FMFB-A > Number of Respondents Before Availing Loan from FMFB-A

c. Number of Respondents After Availing Loan from FMFB-A = Number of Respondents Before Availing Loan from FMFB-A

 

 

Tables 5. Test Statistica

 

Number of Respondents Before and After Availing Loan from

FMFB-A

Z

-10.877b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

 

b. Based on negative ranks

 

 

     

As the p-value calculated is 0.000 and Z value= -10.877, in a sense,P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impactedthe respondents' types of jobs andhaveobtained better occupationsafter using loans from FMFB-A.

Effect of Microfinance on Income Generation

Table 6. Sources of Family Income

 

Frequency

Percent

Driving

75

34.1

Ranch

57

25.9

Agriculture

Shopkeeping

54

34

24.5

15.5

Total

220

100.0

Source: field survey data

The majority of the survey participant's income was from the drivingfield (34.1%). Followed by Ranch (25.9 %) and agriculture (24.5%).Moreover, shopkeeping (Petty Shops) was another source of income (15.5%). Table 6 shows the respondents' high level of satisfaction with the impact of microfinance on their income.

Table 7. Descriptive Statistics

 

 

Monthly Income Before Availing loan from FMFB-A

Monthly Income After Availing loan from FMFB-A

N

220

220

Median

5,000.00

10,000.00

Std. Deviation

2996.868

4405.702

Source: field survey data

The average monthly income of the FMFB-A customers before using the loanwas 5,000 AFNand increased to 10,000 AFN after availing of a loan from FMFB-A (Table 7).

 

 

 

 

 

 

 

 

 

 

Table 8. Wilcoxon Signed Ranks Test (Ranks)

 

N

Mean Rank

Sum of Ranks

Monthly Income Before Availing loan from FMFB-A – Monthly Income After Availing loan from FMFB-A

Negative Ranks

0a

.00

.00

Positive Ranks

214b

107.50

23005.00

Ties

6c

 

 

Total

220

 

 

a. Monthly Income After Availing loan from FMFB-A < Monthly Income Before Availing loan from FMFB-A

b. Monthly Income After Availing loan from FMFB-A > Monthly Income Before Availing loan from FMFB-A

c. Monthly Income After Availing loan from FMFB-A = Monthly Income Before Availing loan from FMFB-A

 

 

Table 9. Test Statisticsa

 

Monthly income Before and After Availing loan from FMFB-A

Z

-12.727b

Asymp. Sig. (2-tailed)

.000

a. Wilcoxon Signed Ranks TestSource: field survey data

b. Based on negative ranks

 

As the p-value calculated is 0.000 and Z value = -12.727, in a sense P-value cal=0.000<0.05 (table value) from the Wilcoxon test, we conclude that microfinance positively impacted income generation after using loans from FMFB-A (Table 8, 9).

Conclusion

The microfinance program is considered an essential development strategy to reduce poverty, improve the borrowers' income, and significantly impact employment opportunities around nine MFIs/MFBsoperating in Afghanistan, covering seventeen provinces to eradicate poverty and meet financially excluded people's needs.The finding of this study describes that First Microfinance Bank,like many other banks in developing countries, empowers urban and rural people in Afghanistan.

The study reveals that microfinance positively impacts male and female empowerment in Afghanistan, although the extent of impact varies on different measures. The authors founda significant effect on the customer's income generation and employment opportunities.Furthermore, it is alsofound that the change in types of jobs after availing a loan from MFIs/MFBs is favorable. MFIs/MFBs helped customers increase their family income by generating gainful employment opportunities.Microfinance may not always empower all borrowers, but most customers experience some degree of empowerment by this opportunity. Therefore, it can have a powerful impact on borrowers' empowerment bystrengtheningtheir financial base and enhancing their economic contribution to their families and communities.

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