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Project Innovation Fund (PIF) – Boosting Enterprise Development in Western Afghanistan

Food and Agriculture Organization of the United Nations (Afghanistan) (

    The Project Innovation Fund (PIF) was designed as part of a project to promoting value chains-in western Afghanistan (PVC-W project), funded by the United States Agency for International Development (USAID), and implemented by Food and Agriculture Organization of the United Nations (FAO). When the project was rolled out in 2017, several small and medium enterprises (SME) had already expressed their interest to collaborate with the project. The PIF was envisioned to stimulate investments in partnership with SME to develop and grow high value crops (HVC), and dairy products markets. The PIF was developed with clear guidelines to facilitate partnerships with precisely defined roles.

    Implementation of the Project/Activity

    Clearly defined guidelines were developed to implement the PIF. To participate in the project, SME were required to submit a proposal in a standard template to the PVC-W project. SME would design the activities to be implemented through the PIF, whereas the PVC-W project would only provide support to fine-tune the proposal received. The PIF required equal financial contributions from both the beneficiary and the PVC-W project to fund the PIF proposal. However, some simplified versions of the PIF were also designed to specifically target those women-led SMEs. For these cases, the total fund for the PIF would not exceed USD 10 000 and the contribution from the SME could be less than 50 percent. In every PIF partnership, the project contribution was limited to equipment, machineries and technologies; however, SME contribution could also include buildings and constructions. The specifications of the goods and services required for the PIF would be jointly decided by the SME and PVC-W project. The contribution from the PVC-W project would be in kind and free of charge to the SME. The project would evaluate the submitted PIF proposals based on criteria such as cost-effectiveness, feasibility, sustainability, gender involvement and potential employment generation. Upon the approval of the proposal, a Memorandum of Agreement (MoA) towards the implementation of the PIF would be signed between the SME and FAO. Both sides would start procuring the items as per their agreed contributions to the PIF. The FAO PVC-W project provided the beneficiaries with various trainings required to achieve the intended outcomes.


    From 2017 to 2020, the project approved 133 PIF proposals mobilizing more than USD 5.5 million. Due to COVID-19 pandemic, only 72 SME (28 women-led SMEs) have completed implementation of the activities. Three modern and continuous processing/packaging units for raisin, pistachio, and cumin, respectively, have been established for the first time in western Afghanistan, which have added total three metric tonnes per hour processing capacity for each of these crops. Production/packaging technology for perfume from saffron, small-scale vacuum packaging for all crops, small-scale mechanized chakka (strained yogurt) processing system, solar powered milk cooling centers, or saffron dryers have also been introduced for the first time. More than 400 individuals have been trained and 250 new jobs have been created. All supported SMEs have been linked with the producers; therefore, all of them are operating with increased processing and sales capacities and sales, thereby creating more markets.

    Enabling factors and constraints

    Enterprise development is vital to create markets for the agricultural crops. The pre-existing availability of registered SME with some knowledge on processing and marketing enabled the success of the PIF. The role of private sector institutions such as the chambers of commerce and agribusiness associations were vital to encourage the SME to participate in the PIF. Competition among the SME to benefit from the PIF, ongoing insecurity and COVID-19 posed significant challenges at various stage of the PIF implementation process.

    Sustainability and replicability

    The beneficiaries were supported mainly based on their needs. All the partners were privately owned SME, which were interested to participate in the PIF. Mutual investment enhanced the sense of ownership of SME to the PIF. From planning to implementation of the PIF, government and private sector stakeholders were engaged for an effective monitoring and supervision. The PIF approval criteria were set to achieve long-term sustainability of the project outputs. Business experience/history, market demand for products, appropriateness, and affordability of the technologies to be introduced and identification and availability of the required input services were all evaluated to ensure its sustainability. Profit generation and replicability of the practices were also ensured. The project provided extensive trainings to the beneficiaries, developed service providers capacities, and helped establishing business linkages among the VC actors to assure sustainability.

    Other sources of information

    1.The trail-blazing female entrepreneur leading Afghanistan’s growing saffron market http://www.fao.org/fao-stories/article/en/c/1272066/ 2. Saffron production is turning into a great business in Western Afghanistan http://www.fao.org/afghanistan/news/detail-events/en/c/1256933/; 3. Social Media Message coverage from USAID Afghanistan on PVC-W works. https://twitter.com/USAIDAfghan/status/1261628235055579136?s=20

    COVID-19 Impact

    COVID-19 significantly delayed the implementation of the PIF. Although PVC-W could support all the approved PIF proposals, 61 proposals had to be postponed or canceled due to the COVID-19 pandemic. Due to the recently installed facilities by the PIF, some SME (such as raisin and pistachio and cumin processing) were able to process and pack the products safely without much damage. However, these SME suffered from an increased stockpile of products due to reduced sales. The severe impact lasted only for a few months. The SME have been provided with training and information, education and communication materials to support the effective uptake of basic COVID safety measures along the value chains.

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    This initiative does not yet fulfil the SMART criteria.
    20 September 2017 (start date)
    19 September 2020 (date of completion)
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