The vulnerability of agriculture production to a variety of factors, such as droughts, floods, pests, diseases, and volatile markets make agriculture financing a high-risk proposition. This is not only the case in developed countries, but even more so in emerging economies where guarantees and collateral are difficult to obtain and even harder to enforce in the event of default.

Financial institutions in these countries tend to stay away from this market segment preferring instead to deal with the lower risk categories of individuals, corporations, other financial institutions, and governments. 

Faced with this issue, the Agriculture Development Fund (ADF) changed their strategy and started lending funds directly to small and medium sized enterprises (SME) in the agricultural sector. 

The ADF in Afghanistan was set up by the Agricultural Credit Enhancement Programme, a U.S. Agency for International Development funded programme, through a USD 100 million grant to the Ministry of Agriculture, Irrigation and Livestock. Initially only set up to offer conventional financing, during the first year of their operations, the ADF experienced significant demand for Islamic financial services.