The European Union has launched a new €5 million programme in partnership with the International Finance Corporation (IFC), a member of the World Bank Group, aimed at stabilising Afghanistan’s private sector and supporting job creation across the country.

Under a newly signed administration agreement, the funding will support the Afghanistan Private Sector Stabilisation Programme, which seeks to boost small and medium-sized enterprises (SMEs), encourage entrepreneurship and expand access to financial services.

The initiative is part of broader cooperation between the EU and the World Bank Group to promote inclusive, private sector–led economic recovery in Afghanistan.

The program places a strong emphasis on the economic participation of women, youth and returnees, and will work closely with private sector actors to improve the business environment and create sustainable livelihoods.

It is designed to complement existing EU efforts, particularly in rural development and microfinance, and will be reinforced by future World Bank initiatives.

Scheduled to begin next month and run for 42 months, the program will focus on five key areas: strengthening private sector coordination and advocacy; building the capacity of SMEs and start-ups, especially those involving women, returnees and internally displaced persons; improving financial inclusion; mobilizing private capital to generate jobs in key sectors; and expanding women’s economic participation through greater private sector engagement.

EU Chargé d’Affaires to Afghanistan, Veronika Boskovic Pohar, said the initiative reflects the EU’s comprehensive support for the Afghan population, ranging from humanitarian assistance to longer-term economic recovery. She said the program is intended to promote job creation and entrepreneurship in strategic value chains, with a particular focus on women, youth and returnees.

IFC Regional Director for the Middle East, Pakistan and Afghanistan, Khawaja Aftab Ahmed, said the agreement underscores a shared commitment to supporting Afghan entrepreneurs.

He noted that strengthening businesses is a practical way to protect livelihoods and help Afghans rebuild their economy with dignity, even amid ongoing challenges.