Istanbul is part of Afghanistan

Whether the iCafé, the fashion label Poshak Istanbul or the Tarbeyat High School: In the Afghan capital Kabul, the entrepreneurial spirit is growing even in uncertain times.

In Shahr-e-Now, the coffee machine is running at full speed. The sewing machines rattle in Kart-e-Seh. And in Dasht-e-Barchi, the girls' voices drown out the neighborhood in the playground. Anyone who visits the iCafé in Kabul, strolls through the sewing workshop in Poshak Istanbul or observes the students at Tarbeyat High School will notice lively events everywhere, even a spirit of optimism.

"None of this would have been possible without a loan," says Mohammad Naser, 34 years old. He stands in his factory in southwest Kabul and checks the cuts made by his employees. In 2006 he and his brothers founded Poshak Istanbul, a fashion label for men's suits. The family comes from the textile industry, the brothers are trained as tailors and have worked in the industry in Iran. Like many Afghans, they lived in exile during the civil war and the Taliban years. After the fall of the Taliban in 2001, they saw their chance to build something in their home country. The industry was down and they saw the niche in the market.

“Istanbul sounds like the world to people,” says Naser, explaining the name of his brand. For him and his brothers, suits are the supreme discipline of tailoring. “They look fantastic on every man, they represent modernity, and whoever can tailor them can also tailor everything else.” A suit at Poshak Istanbul costs between 70 and 80 US dollars. They have the fabrics delivered from India, the United Arab Emirates and China. “We would like to work with local textiles, but hardly any are produced,” says Naser.

Your company is still an Afghan model of success. Naser founded his company on just 100 square meters in 2006 with a loan of US $ 1,000. It was clear from the start: Naser wanted to expand. And so he took out more loans. In total, Naser and his brothers have received US $ 1.5 million in loans to date. The 100 square meters of production area have now grown to 1,500 square meters. The number of 30 employees has grown to over 300 employees. "We produce almost 100,000 suits a year," says Naser, "nobody else in Afghanistan can do that." The company has made a name for itself over the past few years. And Naser has contracts with a dozen organizations and companies like WHO, UNDP and Ariana Airlines. “Poshak Istanbul even makes the uniforms for the employees of the presidential palace,” says Naser.

Foundation helps companies like Poshak Istanbul

The fact that people like Mohammad Naser were able to build successful companies is thanks to a foundation called ACGF (Afghan Credit Guarantee Foundation). In 2004, its predecessor was founded under the name CGF-A and co-initiated by DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, a wholly-owned subsidiary of KfW. The idea behind the Cologne-based foundation: A stable economy, work and income are essential for a peaceful society. In a country like Afghanistan, which has struggled with war and the associated economic problems for decades, the entrepreneurial spirit must first be awakened in the people. And banks must be encouraged to provide founders with the necessary capital. The ACGF helps banks as well as borrowers by insuring loans for small and medium-sized businesses. The foundation is financed by the Federal Ministry for Economic Cooperation and Development (BMZ), DEG and the World Bank. The foundation assets of the ACGF amount to 7.5 million euros.

"We create incentives for banks to grant people loans that would otherwise be considered unworthy of credit, and thus strengthen entrepreneurship," says Bernd Leidner, CEO of the ACGF. The loan volume is between $ 1,000 and $ 1 million. To date, the ACGF has insured $ 228 million in loans, over 5,250 total loans at an average default rate of 1.4 percent per year. The importance of the ACGF is also shown by the fact that 50 percent of all loans in the Afghan SME sector are secured by the ACGF. In other words, many loans would probably not have been approved had the ACGF not existed.

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Private school for 1,800 children

Tarbeyat High School probably wouldn't exist in its size either if the ACGF hadn't vouched for Director Muhammad Arif Fetry's credit. You can hear Fetry's private school in the Dasht-e-Barchi neighborhood before you see it. A loud babble of voices from young girls can be heard across the schoolyard. 1,800 children between the ages of 6 and 17 attend the school. The girls in the morning, the boys in the afternoon.

School principal Muhammad Arif Fetry has taught at UN schools in Pakistan and Iran for 25 years. In 2007, the 55-year-old came back to Afghanistan from exile with the aim of promoting youth in his own country. “I firmly believe that a country can only develop if future generations are well educated,” says Fetry. He speaks calmly and with a firm voice, wears a black suit and glasses. He could also be the director of a private school in Europe - if it weren't for the 16 surveillance cameras that monitor every corner of the building and the black assault rifle leaning next to his desk. Girls' schools are still the target of attacks in Afghanistan. This is another reason why an armed security guard is standing in front of the entrance. But Fetry sees the progress. When he founded the school in 2009, he only had a capacity for 450 students. With the help of the loan totaling 155,000 US dollars, Fetry was able to expand the school step by step from 2013 onwards. First a physics and chemistry laboratory was added, then a playground for the children, and finally more classrooms and an auditorium. Fetry plans to receive its next loan in 2022. “We think long term,” he says.

Girls in gray school uniforms and white headscarves run across the playground. They follow their teacher in amazement while he demonstrates experiments with the Bunsen burner. In another room they sing traditional songs into microphones. The students pay around twelve euros per month for the private school. That's a lot for most Afghan families, but a sensible investment in the future of the children. In public schools, classes are often overcrowded and teachers poorly trained. The atmosphere at Tarbeyat School is cheerful and the teachers seem committed. Fetry is proud of this. “I loved going to school as a child, so I really wanted to become a teacher. I hope that this passion will spread to our students, ”says Fetry.

A place for young people

Nargis Azizshahi picks up where Fetry leaves off. In 2017, the now 30-year-old founded the iCafé in Shahr-e-Now to create a place where people can exchange ideas after school and university. "After my master's degree, I realized that for us young people there is no place where we can come together," she says over a cappuccino in her café. “Even many universities don't have a proper library or a functioning Internet. I wanted to create a place where you can meet friends, learn and discuss. ”This is the only way, says Azizshahi, that new ideas can arise. “I believe in teamwork,” she says, adding with a smile, “and good coffee.” To make her dream come true, Azizshahi took out a loan of the equivalent of 25,000 US dollars. She says the credit she received thanks to the ACGF coverage gave her security and confidence in her business plan. "It's not only that the loan is partially insured, but there is also confidence when a financial institution supports your business concept."

Much of their café is currently under construction. Azizshahi wants to remodel the third floor. There is also scaffolding on the outer facade. In May, a terrorist attack in the neighborhood destroyed all the windows and mirrors in the café. “We live with the danger here,” says Azizshahi, “but at least it gave me a reason to remodel the café and adapt it to the needs of the customers.” These include: a library, a larger non-smoking area, more quiet corners.

A role model for Afghan women

Azizshahi embodies the young, committed Afghanistan. Not only does she work in her coffee shop, she also has a full-time job at the Department of Mines and Petroleum. When she is not in the iCafé, she follows the action on her iPad: How many orders have been received? How much revenue was generated that day? Which products have to be reordered?

Despite her other job, she tries to show herself in the café as often as possible. Especially so that women can see them. Azizshahi knows that most entrepreneurs in Afghanistan are still men. At ACGF, too, less than one percent of insured loans are taken out by women. Both ACGF and Azizshahi want to encourage women to take the step into entrepreneurship. The ACGF lowered the credit threshold from $ 10,000 to $ 1,000 this year because the high sum may have put off women in the past. This is where KfW intends to start in the future: The KfW Development Bank division is currently working on a project to improve access to financial services for start-ups and young companies. The BMZ has already committed funds; the project is to be implemented with the ACGF as a partner in Afghanistan. “We are also considering offering higher coverage rates for women - by insuring around more than 90 percent of the loan. We normally guarantee around 70 percent, ”says Bernd Leidner.

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“Women keep asking me about how to start a business,” says Azizshahi. Just recently she taught a student how to run a café for six months. "She's going to start her own restaurant now," says Azizshahi. "To see my ideals realized in other people, that is my real goal."

Azizshahi, Fetry and Naser show that entrepreneurs can achieve something even in crisis-ridden Afghanistan. Well-educated, well-dressed and with a cappuccino in hand, they set a sign of hope for future generations.

The presented project makes a contribution to these sustainability goals of the United Nations

Denying people access to education means denying them a basic human right - and important development opportunities for individuals and society. Education enables people to improve their political, social, cultural, societal and economic situation. Worldwide, 58 million children and 63 million young people do not yet have access to primary and secondary schools. 90 percent of all children with a disability never go to school. 781 million people are illiterate. Source:

All member states of the United Nations adopted the 2030 Agenda in 2015. Its core is a catalog with 17 goals for sustainable development, the Sustainable Development Goals (SDGs). Our world should be transformed into a place where people can live in peace with one another in an ecologically compatible, socially just and economically efficient manner.

Published on KfW Stories on March 6, 2020.