Regional demand for micro-financing could triple say experts

The demand for micro-financing, or small loans, in the Middle East could triple over the next few years, according to experts at the World Economic Forum (WEF) in Jordan, which ended on Sunday. “Micro-finance is very important in the Middle East and of a target set to help some 100 million underprivileged families in 2005, the Middle East reached only one million families, so there is a lot of room for growth of micro-finance institutions and micro-entrepreneurs in the region,” Muna Sukhtian, a Micro Fund for Women (MFW) NGO board member, told IRIN in the capital, Amman. Participants discussed ways in which governments, donors, financial institutions and NGOs could maximise the benefits of micro-financing, particularly in the Middle East and North Africa (MENA) region. Micro-finance institutions currently serve an estimated 900,000 clients in the MENA region, according to experts. Yemen, Egypt, Jordan and the Occupied Palestinain Territories (OPT) are among the poorest countries in the region. The provision of small loans and other financial services to the poor has emerged as a powerful weapon in the war against global poverty, participants said at the WEF conference. “For many households, particularly those in rural regions, micro-finance offers the only feasible path to job creation, a critical consideration for a region with some of the highest demographic growth rates in the world,” said WEF moderator Safwan Masri, vice-dean of the Columbia Business School in the USA. Amro Abouesh, a senior advisor to the chairman of the Banque du Caire in Egypt, one of the largest commercial banks in the country, argued that commercial banks were well positioned to serve micro-finance clients and were increasingly recognising the attractive returns available. “Experience has shown that poor borrowers are surprisingly good credit risks and micro-lending now ranks as one of Banque du Caire’s safest non-collateralised lines of business,” Abouesh said. “The session closed with the recommendation that the regulatory framework should adapt to allow for the development of a micro-finance bank. This follows the Moroccon model where they started to include micro-insurance, housing loans, and health care and support, as well as the Bangladeshi model, which developed regulations to start savings accounts for small scale entrepreneurs.” Sukhtian added. More than 1,300 participants attended this year’s two-day WEF forum between 20-22 May, on the shores of the Dead Sea. The list of attendees included key public figures as well as prominent private sector organisations and NGOs from the Middle East, Europe, Africa, the USA and Australia.