Micro credit programme expanding

Mohamad Abul Jadayel, a father of two in the northwestern Hama governorate in Syria, used to be unemployed for long periods of time. Sometimes he didn’t even have enough money to feed his family. But now his life has changed. “I thought of an animal husbandry project to improve my livelihood but I did not have money to implement my project. I obtained a US $300 loan from the Aga Khan Development Network [AKDN] to buy two goats. After one year, I got another $400 loan and bought another two goats. Now each goat gives 3 kg of milk every day and it’s becoming very profitable,” Abul Jadayel told IRIN in the city of Mesyaf in Hama. The former builder is one of hundreds to benefit from the AKDN’s Micro Credit Facility (MCF). The project is being implemented in four governorates and there are plans to expand into the Damascus governorate this year. “We are now the largest micro finance project in the country and AKDN is working towards establishing a national micro finance institution in Syria,” AKDN’s programme coordinator, Aleem Walji, told IRIN in the capital, Damascus. Micro credit programmes have become increasingly important in poverty reduction and small enterprise development, Walji explained. A 2005 study conducted by the United Nations Development Programme (UNDP), the State Planning Commission and the Central Statistics Bureau, found that 11.4 percent of Syrians were poor. “Microfinance plays a critical role in reducing poverty. It has considerably improved the livelihood of the poor in Mesyaf through income generation,” Ibrahim Azzour, director of the MCF in Mesyaf, told IRIN. Walji pointed out that the MCF is designed to facilitate credit to poor people and provide access to those who would otherwise not be able to obtain a loan. It is extremely difficult for the poorer sections of society to get loans in developing countries because of high interest rates and the need to provide some form of collateral. AKDN loans range from $60 to $3,000 and the period of repayment is between three and 24 months. The loan is interest free and a charge of only one percent of the total amount borrowed levied. If a second loan is taken the percentage charged is reduced. Repayment of loans has been 99 percent so far, according to AKDN officials. The facility was launched in Syria in 2003 to enable poor people to access credit to help start or expand small enterprises. Some 7,000 loans have been allocated for retail, trade and agricultural purposes and the programme has lent over $8 million, creating more than 7,000 jobs. “We’ve only been here for two years and this is already one of our biggest projects in the world and we have now identified a need for larger loans,” Walji said. Small-scale entrepreneur Hatem al-Houri, also from Mesyaf, sought an MCF loan and is now reaping the benefits. “I doubled my income when I was able to expand my carpentry workshop and was able to employ a worker,” said al-Houri. In addition, the progress of loan recipients is monitored and evaluated and intensive training courses are provided for loan recipients. “The impact assessment which we carry out has shown that many of the businesses have significantly increased their profits and borrowers expressed that they are now able to respond to changes in the market,” Walji explained.