Financial Crime World

Financial Exclusion and Crime Threaten to Undermine Afghanistan’s Economic Growth

The Challenge of Financial Exclusion in Afghanistan

A staggering 85% of adults in Afghanistan lack access to a formal bank account, making it one of the most financially excluded countries worldwide. The central bank, Da Afghanistan Bank (DAB), has launched a National Financial Inclusion Strategy (NFIS) to tackle this issue and promote greater financial inclusion.

Causes of Financial Exclusion

The root causes of financial exclusion in Afghanistan are numerous:

  • Limited access points
  • High costs
  • Inadequate services
  • Security concerns
  • Religious and cultural beliefs
  • Lack of trust in the financial sector
  • Low financial literacy

The National Financial Inclusion Strategy (NFIS)

To address this issue, DAB established a Financial Inclusion Department (FID) in June 2016 and formed a Financial Inclusion Taskforce comprising government agencies, financial services providers, non-governmental organizations, and international organizations. A National Committee for Financial Inclusion was also set up to hold consultations on the strategy and obtain stakeholders’ policy commitments.

Objectives of the NFIS

The core objectives of the NFIS include:

  • Expanding and diversifying access points
  • Enhancing men’s and women’s access to formal financial services
  • Improving agriculture sector’s access to finance
  • Establishing a robust financial consumer empowerment and protection framework
  • Promoting digital financial services

Expected Outcomes

With the effective implementation of the NFIS, it is expected that:

  • The percentage of Afghan adults owning bank accounts will double within five years
  • 27% of Afghans are expected to own an account at a financial institution, including mobile money institutions, by 2024
  • Special efforts will be made to increase account ownership among women

Challenges and Opportunities

However, achieving this target requires proper coordination between public and private stakeholders as well as their commitment towards implementing the NFIS. DAB is fully committed to a successful implementation and is already taking steps in this direction through various initiatives.

Combating Financial Crime

Despite these efforts, financial crime remains a significant threat to Afghanistan’s financial stability. The country has struggled with money laundering, terrorist financing, and other forms of financial fraud, which can undermine economic growth and erode trust in the financial system.

To combat these threats:

  • DAB must work closely with international partners and domestic stakeholders to develop and implement effective anti-money laundering and combating the financing of terrorism (AML/CFT) measures
  • Strengthen regulations
  • Enhance supervision
  • Increase public awareness about the risks and consequences of financial crime

Conclusion

Ultimately, achieving financial inclusion and combating financial crime are critical for Afghanistan’s economic growth and stability. With the successful implementation of the NFIS and effective regulation, the country can unlock the potential of its financial sector and promote greater prosperity for all citizens.