Khawani Khairkhwah was only 14 years old when his father was shot dead during the Taliban invasion of Afghanistan in 1999. Khawani’s family lived in a village in Mir Bacha Kot in the outskirts of northern Kabul known as Shamali, an historic citadel built to defend against invaders. Khawani was attending fourth grade in the village public school, and his father was earning a living for the family as a shopkeeper. The Taliban occupation changed everything for Khawani—Shamali was burned down, thousands of Afghans were brutally killed, and thousands more were forced to flee. Khawani and his family became refugees in Pakistan.
Following the fall of the Taliban in 2003, Khawani and his family returned to Afghanistan. He started driving a lorry carrying consignments to earn a living. For a few years, income for those in the logistics and transportation industries had been lucrative. Khawani had benefited from the large presence of NATO and ISAF forces and their logistical requirements.
But two years ago, the industry started scaling down with the gradual withdrawal of foreign troops from the country. Khawani returned to the livelihood he learned from his father; he opened a grocery shop near his house in Sar-e-Kotal in Khair Khana, a densely populated residential area of Kabul.
Although, he was earning enough to support the family, he knew that if only he had enough capital, he had what it takes to expand it. It was at this time that a Mutahid DFI staff approached him and introduced Khawani to the microfinance products and services offered by Mutahid. Being religiously conservative, Khawani decided to go for the Sharia-compliant product murabaha; his first loan was worth AFN 200,000 (about USD 4,000).
Murabaha is the most popular mode of Islamic financing. It is also known as “mark-up” or “cost-plus financing". This Islamic product is approved by the Ulema Council (religious scholars) of Afghanistan. Mutahid piloted the product in Herat province in January 2013 and last March, it launched murabaha in Kabul. Recent reports indicate a dramatic client uptake of the product.
For Khawani, the effect of the loan on his family’s quality of life has also been significant.
“By receiving the loan, my capital increased from USD 6,000 to USD 10,000 and so did my profit in the same ratio”, said Khawani. “I sell more than AFN 10,000 (about USD 200) everyday out of which 20 percent is the net profit”. According to Khawani, his monthly net profit exceeds AFN 60,000 (about USD 1,200).
Now 28 years old, Khawani is father to four children: three sons and one daughter. He can afford to send two of his school-aged children to a private school, in the hopes that they would get good education and complete their studies, unlike himself, who could only reach up to grade four.
Khawani, who lives with his extended family of 15 including four brothers, has been the main income earner since the death of his father in his early teens. As the eldest son, he became the breadwinner, looking after his younger brothers and sickly mother, who eventually passed away when Khawani was 22 years old.
He has many hardship stories to tell, having to bear grown-up responsibilities during his childhood years, but Khawani focused on his goals in life and when he got the opportunity to borrow capital to grow his small business, he was ready, yet again to bear the responsibilities that come with being an entrepreneur.
And now, even when two other members of his family are running two different shops, one is still driving a lorry and life is more comfortable; Khawani remains motivated to set new and bigger goals for his family. With his perseverance, his cherished memories of apprenticeship in his father’s shop, his desire to provide a better education and life for his own children, there is no doubt Khawani will get to the next level.
Khawani’s story exemplifies the multiplier effect of development finance. A small loan to one micro-entrepreneur with the skills and know-how to expand his/her business could help increase an entire household’s purchasing power, children’s ability to go to school, enable the household to contribute to economic activities in the community, and contribute to job generation.