UNITED NATIONS CAPITAL DEVELOPMENT FUND    Microfinance

Issue 14 / July 2005

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By CGAP

In partnership with regional leaders, international and regional donors, and the Arab world’s largest microfinance network, Sanabel, the Consultative Group to Assist the Poor (CGAP) is leading an initiative to boost access to financial services in the Middle East and North Africa. The initiative aims to build the capacity of retail institutions; improve the policy and regulatory environment; promote better donor coordination; link microfinance providers with local capital markets; and build awareness of best practices.

Key Endorsement

The initiative's Executive Council, chaired by Queen Rania Al-Abdullah of Jordan, Emissary for the International Year of Microcredit, and comprised of ministers from key Arab states, met at last month's World Economic Forum in Jordan. "Convening this meeting at the World Economic Forum underscores the vital role that microfinance can play in building inclusive financial sectors and equitable societies in the region," said the Queen. She added that microfinance is a powerful tool for helping large numbers of the region's poorest families invest in businesses and generate their own jobs quickly.

During the meeting, the Council endorsed the CGAP Key Principles of Microfinance, sending a strong message that the Arab world is serious about microfinance. "The Middle East and North Africa region is doing what no other region in the world has done: Agreeing on a single, common agenda for microfinance," CGAP Chief Executive Officer Elizabeth Littlefield said at the signing.

The initiative comes at a crucial time for a region that is expected to generate 50 million jobs in the next five years. Despite reaching an estimated 900,000 clients with microcredit so far, the region still lags behind others in the spread and outreach of a broader array of microfinance services.

Regional Presence

The initiative will operate from a "technical hub" in Amman, Jordan, but initiative director Xavier Reille stresses that its scope will be regional. In fact, in addition to its Executive Council, the initiative has formed a regional Consultative Group of ministers, donors, and practitioners to ensure that countries in the region are well-represented.

The work so far has been well-received. As of April 2005, four training of trainers workshops had been organized through the Sanabel microfinance network; an Arabic version of the Microfinance Gateway was unveiled at the annual Sanabel conference in December; and key documents are being translated into Arabic.

CGAP legal experts are carrying out diagnostics of legal and regulatory frameworks in several countries to provide recommendations to policy makers, donors and practitioners on how to improve the business climate for microfinance. Recommendations will be shared, in part, through workshops for government officials. A specialized helpdesk staffed by legal experts is also planned. Policy diagnostic missions have been carried out in Jordan, Morocco, Tunisia and Egypt and another multi-donor diagnostic mission was carried out in Yemen in early March. Following up on the Jordanian mission, CGAP is helping the government create a national microfinance strategy. In Morocco, CGAP is working with the Central Bank to put in place an exemplary transparency-based supervision system for microfinance institutions.

The initiative is also working with donors to set up in-country donor working groups, conduct donor training, and map out regional and national donor activities. After an initial regional donor coordination meeting in December, CGAP is now undertaking a mapping exercise of donor activity in the region. A donor training course is planned in the region for early December 2005.

CGAP has already had the opportunity to promote best practices through events covered in the regional media, such as the launch of the hub in Jordan with the Ministry of Planning and International Cooperation and the opening session of the Sanabel Conference with Mrs. Suzanne Mubarak, First Lady of Egypt. The Executive Council has also provided high-level visibility to the initiative's work, most recently by its endorsement of the key principles.

To read press coverage of the CGAP initiative for the Middle East and North Africa, please visit www.cgap.org. For more information on the initiative, please email cgap@worldbank.org.