Whenever credit union political activists grow frustrated attheir work with federal or state legislators, when the doors seemclosed or telephone calls go unreturned, they could pause toreflect on the duties performed by MahirMomand.

Momand is the CEO of the Islamic Investment and FinanceCooperative Group, the organization charged with establishing,growing and representing financial cooperatives, the equivalent ofcredit unions in Afghanistan. These cooperatives, IIFCs, arefinancial institutions organized and managed to the tenets ofsharia or Islamic religious law. The IIFCs are being founded andgrown amid armed conflict.

This means that where credit union representatives in countrieswith established credit union industries might fight to expandcredit union powers or resist attempts to limit them, Momandworries about whether some newly formed IIFCs in some parts of thecountry can survive their board members threatened, attacked oreven killed.

In 2011 alone, Momand reported, 13 board members fromIIFCs were killed by insurgents and this has led to a small trendof staff leaving some IIFCs for fear of attack, according to theorganization.

“But we are coping with all those challenges and still makeremarkable progress,” Momand writes in an email from theorganization's headquarters in Kabul, Afghanistan, “as we are in50% of the 34 provinces of Afghanistan.”

Only allowed under Afghan law since 2005, Momand addedthat there are currently 41 IIFC's spread across 17 ofAfghanistan's provinces and that they have 83,000 members with theequivalent of $5.5 million on deposit in share accounts. They alsohave the equivalent of $23.3 million in assets, with just over23,000 borrowers holding roughly 90,000 loans worth almost $20million in outstanding balances.

But it is the loans where the question of sharia comes up. Tocomply with the tenets of sharia, a Muslim cannot lend anotherMuslim money and charge interest on the loan. So what IIFCs andother sharia compliant financial institutions have established arethe so-called Murabeha loans.

In a Murabeha transaction, the IIFC buys a property or animal orpiece of equipment with a free and clear title. The IIFC andmember  agree upon a sale price (including an agreed uponprofit for the IIFC) that can be made through a series ofinstallments or as a lump sum.

But Murabeha can have snags too. The IIFC cannot be compensatedin addition to the agreed upon terms of the contract. If the buyeris late on payments, the IIFC cannot charge late penalties. Thiscan mean that the purchaser, as part of the contract, can build late payments into the contract that are then refunded if thepurchaser is never late.

Given the social and political environment, Momandreported that politics and an effective political relationshipbuilding become all the more important for the IIFCs. Along withbuilding and maintaining relations with the national government andits ministries, IIFCs have to take particular care to reach out toprovincial and local Afghan leaders as well. The IIFC Group alsomaintains close relationships with the World Council of CreditUnions and the U.S. Agency for International Development.

To this end, in the autumn of 2011, Momand and otherexecutives with the IIFC Group organized tours of IIFCs andopportunities for leaders from the national government and localgovernments to meet their members.

Momand reported that the visits were meant to createand enhance awareness of the IIFC's significant role in theeconomic development of the rural and urban communities amongAfghan senators and the Afghan government at large. They alsowanted to seek support for the promotion and further strengtheningof IIFC's base from relevant governmental agencies in Balkh,Nangarhar and Kunar provinces.

Such trips are crucially important, Momand explained,because the IIFC Group has taken some pains to help Afghans see theIIFCs as primarily Afghan institutions, created and supported byAfghans.

“Funds and technical assistance to the IIFCs are channeledthrough the national association,” Momand wrote. “The IIFC Group isan Afghan-led institution and thus in a lot of areas peopleperceive this as an Afghan initiative rather than foreign.”

The IIFC adopted this strategy both to help forestall theimmediate risk of attack and to prepare the institutions for wheninternational troops and assistance are gradually withdrawn.

“It is going to be hard for Afghans and IIFCs particularlyshould the support be stopped,” Momand wrote. “Although a lot ofthe IIFCs are designed in a way that they become self-sustainablebefore the departure of the foreign assistance organizations. Whatit means is that the IIFCs will not be dependent on donor subsidiesand we have made a lot of progress at that end as well,” he added.

Momand explained that the national association isentering into partnership relations with some national andinternational organizations to keep the flow of funds going to theIIFCs for their growing demand of capital. “We are also forcingsaving mobilizations to be able to pay for the increasing demand onthe loans side,” he added.

The other focus of the group's relationship building has been toemphasize the IIFCs' local impacts.

As part of the autumn tour, IIFC staff and board membersdescribed the different financial services their IIFCs provide tomeet the financial needs of various segments of the people such assmall businesses, farming and households. The senators also metwith some of the borrowers who have benefited from the financialservices of the IIFCs.

The delegation had a chance to visit several members of theIIFCs, including women at their residences, and spoke to them aboutwhat type of benefits these IIFCs provide to them. On one of thevisits, an IIFC member who had been a member of Balkh districtbranch for over two years, proudly displayed a very fertile andlush field that two years before had been barren. Thetransformation was made possible by the sweat of his brow and theIIFC.

The senators were impressed with the direct tangible impact, asthey saw with their own eyes, as a result of the IIFC's financialservices, Momand reported.

While Momand noted that advocacy in contemporaryAfghanistan carries an additional edge that similar work in thecountries with established credit union industries would not, thereare a lot of similarities as well. For example, just as in theWest, Afghan advocates for IIFCs repeatedly sought to educatelawmakers about the work of the IIFC's and to demonstrate theirworth and to translate that education into legislative andadministrative progress.

This visit of the senators to the IIFCs demonstrates a greatersupport of the Afghan parliament to the IIFCs inAfghanistan, Momand reported. “IIFC Group will continueits advocacy and lobbying campaign in support of the IIFCs bothwithin the Afghan government and international community totransform the IIFCs into more vibrant and viable Afghan financialinstitutions,” Momand added.