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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 14 / July 2005 |
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Editor's Note: Microfinance in the MENA Region
When the United Nations Development Programme released the first Arab Human Development Report in 2002, the news on economic development was not good. While progress had been made in areas like health and education, growth in per capita income was the lowest in the world except in sub-Saharan Africa and labour productivity was low and declining. According to the World Bank, the current situation is not much better: with an unemployment rate in the Middle East and North Africa (MENA) of 15%, almost 100 million jobs must be created by 2020. The need to generate greater economic prospects in the MENA region is obvious. How to accomplish this may be less apparent, but this issue of Microfinance Matters highlights people and organizations that are creating just such opportunities. This month's Featured Guest is Mr. Bassem Khanfar, General Manager of Jordan's new National Bank for Financing Microprojects, and former General Manager of a leading Jordanian microfinance institution (MFI) Microfund for Women. Mr. Khanfar has been and continues to be at the forefront of developing the microfinance sector in his country. This issue's Reports from the Field provide snapshots of a variety of exciting and disparate initiatives that collectively demonstrate the region's potential and demand for microfinance. MENA countries are enthusiastically embracing the International Year of Microcredit, garnering high level support for microfinance and promoting the tremendous accomplishments of local microentrepreneurs. A regional leader in microfinance, Egypt is launching a comprehensive national strategy which seeks to coordinate the efforts of the government with donors, MFIs and other actors in the sector. In Yemen, the United Nations Capital Development Fund (UNCDF) has been a pioneer in supporting the creation of a microfinance sector in a challenging environment, while Iraq is currently at the beginning stages of building a microfinance sector despite current turmoil. Successes in the region can be found in the Palestinian MFI Faten, which has recently achieved self sufficiency despite operating under the duress of the second Intifada, while microfinance is also flourishing in Syria's harsh Jaba al-Hoss region. While the majority of microfinance activities in the MENA region are limited to microcredit, Carlos Silva-Jauregui, Lead Economist at the World Bank emphasises the tremendous potential for remittances, and Dahlia Dahlia El Hawary and Wafik Grais argue that offering Islamic Financial Services will meet the needs of an underserved market. Women's World Banking's gender research in Morocco, however, reiterates the daunting social challenges women face as the primary clients of microfinance. The Arab world's efforts to promote microfinance have been gaining increasing momentum at regional and international levels. Local leaders, donors, the Sanabel network and the Consultative Group to Assist the Poor (CGAP) have recently launched a regional initiative to increase access to financial services in the region, and those leaders, like Queen Rania of Jordan, an Emissary for the International Year of Microcredit, are speaking out on the need to expand the sector. Despite these efforts, opinions from the microfinance community regarding donor effectiveness in the region are mixed, as demonstrated in the Voices of Microfinance section of the newsletter. While financial services are currently available to only about 20% of poor people in MENA,[1] this complex region has a long way to go to build inclusive financial sectors. But as this issue of Microfinance Matters demonstrates, it's off to a good start.
Vanessa Ward
(1) Brandsma and Burjorjee, "Microfinance in the Arab States: Building Inclusive Financial Sectors," 2004.
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