Financial Crime World

Afghanistan’s Banking Sector Vulnerable to Financial Crime Amid Widespread Exclusion

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Kabul - In a country where nearly 85 percent of adults lack access to banking services, financial exclusion is a major concern in Afghanistan. The limited number of access points, high costs, and inadequate financial services that fail to meet the needs of low-income households are just some of the factors contributing to this issue.

Factors Contributing to Financial Exclusion

  • Limited number of access points
  • High costs
  • Inadequate financial services failing to meet the needs of low-income households

Disproportionate Impact on Women

  • Only 7% of women own bank accounts, compared to 23% of men
  • Lack of trust in the financial sector, cultural and religious beliefs, and security concerns hinder financial inclusion

National Financial Inclusion Strategy (NFIS)

The Central Bank of Afghanistan (DAB) launched the NFIS for 2020-2024 to address these challenges. The strategy aims to:

Objectives of NFIS

  • Promote greater financial inclusion
  • Contribute to economic growth and overall welfare
  • Expand access points
  • Enhance access to formal financial services
  • Improve agriculture sector financing
  • Establish a robust consumer empowerment framework
  • Promote digital financial services

Expected Outcomes

  • Double the percentage of Afghan adults owning bank accounts within five years
  • 27% of Afghan adults will own an account at a financial institution, including mobile money institutions
  • Special efforts to increase account ownership among Afghan women

Challenges and Opportunities for Success

  • Effective coordination between public and private stakeholders is crucial
  • Commitment from all stakeholders, particularly public and private sector entities, is essential
  • The DAB is fully committed to implementing the strategy

Conclusion

Afghanistan’s banking sector faces significant vulnerabilities to financial crime due to widespread exclusion. The National Financial Inclusion Strategy aims to address these challenges by promoting greater financial inclusion and contributing to economic growth and overall welfare. Effective coordination between stakeholders and commitment to implementing the strategy are crucial for its success.