New bank to offer micro-financing in effort to ease poverty

The Middle East’s first national microfinance bank opened earlier this week amid mixed reactions from local NGOs. The National Micro-Finance Bank (NMB), launched by the Arab Gulf Programme for United Nations Development Organisations on Monday, has been hailed as the first of its kind in the region. The project’s other stakeholders include the King Abdullah II Fund for Development and members of the private sector. The NMB seeks to finance projects for low-income individuals. It joins a long list of microfinance organisations already operating in the country, which tout micro-finance as a major vehicle for combating poverty. Currently, Jordan’s national poverty rate stands at about 14 percent. Mohammad Hmoud, NMB marketing and product development manager, explained the institution's role. "The bank is a private shareholding non-profit company, dedicated solely to the delivery of sustainable financial services to micro and small entrepreneurs in Jordan, particularly women," he said, adding that the bank would offer loans ranging from JD200 [about US $300] to JD5,000. For the most part, NGOs devoted to poverty alleviation welcomed the initiative. "The NMB will help with combating the poverty problem,” said Faris Nahhaf, head of the credit section of the Small Business Development Centre at the Jordanian Hashemite Fund for Human Development, which has worked in microfinance for over 10 years. “We’re also looking towards building a campaign programme to raise awareness about the value of microfinance, which can help people establish projects so they can support themselves." But critics of micro-finance argue that such programmes may not necessarily be the best way to combat poverty or empower women. Reem Fariz, acting secretary-general of the Jordanian National Commission for Women, argues that "the methodologies of microfinance that are currently being used may not necessarily empower women." According to an official of an NGO with microfinance programmes, who declined to be named, the NMB has a number of flaws. He cited, in particular, the programme’s lack of a savings component and training programmes. He added that micro-financed projects often failed because they do not have access to the wider markets. In addition, women-run projects could be handicapped because of the inability of some women to repay loans. As a result, the women have to borrow from their husbands or sons, a situation which can lead to problems within the family, he added. Women are widely regarded to be better borrowers. There are also cases, noted Fariz, in which women are pushed to take loans for their husbands and then left to pay them back at interest.