AFGHANISTAN: Afghan financier offers countrywomen a door into the business world

February 13, 2010 – (Seattle Times) Storai Sadat is a financier whose clients are often found far from the commercial centers of this capital city. She loans money to female entrepreneurs, whose workplace may be a hillside backyard where pigeons are raised for pet markets or a living room where blue cloth is sewed into burqas.

Sadat heads Ariana Financial Services, which helps Afghan women join a business community they were largely shut out of during the Taliban era. Some of these women work alone in their homes. Some form cooperatives that fashion handicrafts. Others open kiosks and larger markets that sell groceries, beauty supplies and other merchandise.

Most of these women never got a chance to attend school to learn how to read, write or keep a ledger, so Ariana loan officers also act as mentors.

"Even though they have a business, they don't know the value of the work they do," said the 33-year-old Sadat, who serves as Ariana's executive director. "We go to their house and set up a very simple income statement and very basic accounting."

Even in the aftermath of Taliban rule, Afghanistan remains a bastion of conservative Islam. So Sadat's work to empower women puts her on the cusp of social and economic change.

Since 2003, Ariana has loaned more than $16 million to some 54,000 people, most of whom are women. These microloans average about $350 but can have a big impact.
Some women, as their businesses prospered, have been able to buy pens and notebooks to send their daughters to school. Others boosted incomes so they only had to work part time, and then they decided to head off to classes.

All of this change can cause discord. So women who want Ariana to bankroll their business ventures must have their husbands sign the loan documents. And men, who also can take loans from Ariana, must have their wives buy into the project.

"We really want to steer clear of conflict."

Lifelong resident
Sadat is a lifelong resident of Kabul whose Pashtun family hung on through decades of strife during the Soviet occupation of Afghanistan and subsequent civil war.

Then came Taliban rule. Sadat had to leave medical school and for the first time don a burqa.

But even under the Taliban, she was able to gain government approval to work as a translator for a German aid group that offered health services to Afghan women.
After the militant Islamic regime collapsed in 2001, Sadat went to work for Mercy Corps, an international aid organization based in Portland. She helped set up a women's vocational-training center, then focused on finance when Mercy Corps received an initial $85,000 grant from the Gates Foundation to develop a microloan program in Afghanistan.

Today, Ariana is independently registered in Afghanistan. The stock is owned by Mercy Corps, which reinvests earnings to boost the business.

Sadat leads a company with 170 employees that has expanded from a base in Kabul to also include the eastern city of Jalalabad and the northern city of Mazar-i-Sharif. In 2005, Sadat headed to Kandahar province in southern Afghanistan, where she found dozens of potential clients. But Ariana had to back off loaning money in that province as Taliban gained more control of the area and security risks increased.

Sadat tries to balance her job with the demands of being a Muslim wife and mother of two young sons. She receives strong support from her husband, who works in an Afghan government ministry. But there have been some tense times. In 2008, she received anonymous threatening messages on her cellphone.

"I know that people know me," Sadat said. "It was very serious."

Sadat got a new cellphone, changed her office hours but didn't retreat from her work.
Sadat also had another problem that year — a corrupt employee, who was found to have embezzled funds. Though the theft was a setback, Sadat says the company remains on firm financial ground with a loan-repayment rate of more than 95 percent.
Getting word out

To find new clients, Ariana runs advertisements on Afghan television. Ariana staff members also fan out into neighborhoods where they stop at bakeries, mosques and people's homes to talk up the services.

Laila, a 40-year-old seamstress, received a $200 loan to bankroll her home business making blue burqas. Though the garb is a symbol, to some, of the isolation of women in this society, Laila finds a certain liberation in her work. "I can make 10 burqas a month," Laila said. "I sell them to shopkeepers and make good money."

The bank also makes group loans, and though the borrowers are often involved in separate businesses they collectively are responsible for repayment.

Maliah, for example, shares an $800 loan with three other women. Her colleagues are involved in embroidery and other handicrafts, while Maliah raises brightly colored pigeons that's she hatched from eggs in backyard coops.

The pigeons are a popular pet in Kabul homes, with the highest prices paid for unusual colorings, such as red on one wing and yellow on the other.

"That is very rare,"Maliah said. "In 20 years, I have only had four such pigeons."

The interest rates can range from 10 percent for a six-month repayment plan to as much as 30 percent for an 18-month loan. The profits for most of these small entrepreneurs are strong enough to allow a more than 95 percent payback rate without defaults.

But for some, interest rates can be a deal breaker. Some interpret Islamic Shariah law as forbidding such payments.

In 2009, Ariana began to offer alternative financing. Under this Shariah service, for example, Ariana may buy something that a client orders, such as a piece of equipment or supplies. Ariana sells that item to the client at a higher price, and then gets repaid over time.

Ariana earns a profit on the transaction. But there is no interest paid on the deal.

"There is a lot of talk about Islamic banking, and we really want to serve the whole of society," Sadat said.