The microfinance sector in Afghanistan is going through a period of reform. This is due largely to the consequences of an early emphasis on rapidly achieving operational sustainability through growth in client numbers and loans made. This focus reduced attention given to issues of portfolio quality, accountability, and meeting client interests, and was coupled with a lack of acknowledgement of the existing informal credit market. All of this laid the foundation for the current problems that microfinance institutions (MFIs) are facing with increasing client default rates and, in some cases, fraud.

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