Round 2 progress

We have just finished work on the funding recommendation for ABIF's second competitive round. The great news is that we eventually received a total of 22 fundable project proposals! Together these proposals envisage projects with total investment of some US$23m, incentivised by grant requests totalling just under US$7m. If we then combine this with the first round results, the potential investment incentive achievement from ABIF can be summarised as US$36m of private sector investment, incentivised by some US$9m of public funds.

Back to the specifics of round 2, based on the final grant requests submitted by the remaining applicants the other day, we have now finished ranking these projects according to the development return on the grant request. This ranking determines which are included in the funding recommendation that goes via the Investment Panel to DFID for review and approval.

The good (or the not-so-good, depending on how you look at things) outcome of the second round is that we have more potentially fundable projects than we have grant funds remaining. This means that of the 22 projects that made it through to the final stage of the competition, only the top 17 are included in the funding recommendation. This means that the anticipated (rather than potential) figures for investment and incentive will be slightly less than the potential mentioned above, but impressive nonetheless - we will only have the final calculation when the second round grant agreements are signed.

In the course of two rounds, after just 18 months of operations, we can reasonably conclude that the ABIF "pilot" is producing real evidence that relatively small grants can be effective incentives, more than justifying the investment that DFID has put into the project and the innovative approach we took to determining grant amounts.

But this of course, is only the intermediate step towards market change and improving the lives of our target beneficiaries, those results will come with time as projects are implemented and innovative products and services enter the market. In due course, we also hope to be able to talk about the positive impact of the capacity building we have done with local business development service providers.

That credible demand for grants has far out-stripped supply is a major achievement in itself, that there are any number of other potential applicants out there, is hugely encouraging both for the future of Afghanistan's economic development in general and for ABIF in particular.

Meanwhile, round 1 project implementation continues (more on that subject in a later post) and the first tangible development results are emerging. These are happy and professionally satisfying days for the whole ABIF team!