Afghanistan- New Study Indicates a Drastic Decrease in Availability of Credit in Herat

(MENAFN- Wadsam) The Afghanistan Research and Evaluation
Unit (AREU) launched a research paper titled 'On Borrowed Time: The limits of
informal credit for livelihood security in Herat, Afghanistan' at an event in
Kabul on 1 July 2019.

The event was attended by a number of
high-ranking government officials, national and international organizations and
civil society organizations representatives who discussed in detail the
findings of the paper. It should be mentioned that this paper was produced as a
result of a joint effort between AREU and the Secure Livelihoods Research Consortium
(SLRC) and the Overseas Development Institute (ODI).

Within Afghanistan's deeply
socially embedded economy, informal credit is a key mechanism through which
markets operate and through which the distributional economy provides access to
land, labor and income for rural households. This study undertakes an in-depth
examination of informal credit practices in two villages in Herat that differ
in size and economy, exploring how credit operates. In particular, it looks at
the ways in which credit is used and negotiated, its interaction with
livelihood churning, how credit mechanisms are gendered and the extent to which
social relations are underpinned by informal credit.

The study has found that the availability
of credit has drastically decreased in recent years. It has linked this to a
number of factors such as declining job opportunities in Iran, drought, access
to water, longer-term land subdivision and demographic trends that has reduced
the viability of agriculture as the mainstay of livelihoods.

The study notes, 'Nonetheless, credit
access remains widespread with few exceptions (namely opium addicted
individuals) and religious norms ensuring loans are cost free and often with
indefinite repayment periods enable most households to manage remarkably large
debts averaging USD 2500.' The study found that a credit system had stretched
to the limit, with poorer households in particular mortgaging their land,
exhausting saleable assets and reducing consumption not just in the short-term
but for years on end.

According to the study, informal credit
systems are also highly gendered with women frequently participating in small
in-kind exchange, but access to cash remains limited. The study found 'The
absence of men through work in Iran has to an extent increased women's access
to credit, as permission to borrow is granted by husbands before departure.' Although
women are increasingly accessing credit, the study also noted that 'ownership
of the loan and responsibility to repay remain with the men and women's agency
is constrained by this as much as a lack of independent earnings and in rare
cases, household factors combined with women's agency and ability to work
enables them to circumvent these norms to a degree.'

paper is one of eight pieces of research conducted in Afghanistan, Nepal,
Pakistan, Sri Lanka and Uganda. The study was conducted by the Afghanistan
Research and Evaluation Unit (AREU), Centre for Poverty Analysis (CEPA - Sri
Lanka), Feinstein International Center (FIC, Tufts University - Uganda), Nepal
Institute for Social and Environmental Research (NISER), Overseas Development
Institute (ODI) and the Sustainable Development Policy Institute (SDPI -

AREU is an independent research
institute based in Kabul that was established in 2002 by the assistance of the
international community in Afghanistan. AREU's mission is to conduct
high-quality evidence-based research to inform and influence policy and
practice and to actively disseminate the results and promote a culture of research
and learning.



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