• Photo : Al Majmoua
  • Photo : Al Majmoua
  • Photo : Al Majmoua
  • Photo : Al Majmoua





“Al Majmoua’s aim is to improve living conditions without discrimination.”

Youssef Fawaz is the Executive Director of Al Majmoua, the principal Lebanese microfinance institution with the status of an NGO. Interview.

Who are Al Majmoua’s target clients?

We don’t have target clients, although when we first started our target clients were groups of women based on the model developed by the Grameen Bank. But since 2001, we also lend to men, offering not only group loans but also individual loans. Even if overall our targets are people without access to banking facilities, the “working poor” in the craft industry, carers, or businesses, mainly townspeople, our philosophy since the start, has always been not to discriminate in any manner.

Do you only lend to entrepreneurs of Lebanese nationality?

Of course we lend to anyone of Lebanese nationality without differentiating between religions but we also lend to foreign communities (day workers, domestic staff, refugees, etc) and to people who are on the poverty line. We are also one of the only NGOs who lend to the Palestinian camps, which represent 15% of our clientele.

What are your new projects?

In 2010 we examined the possibility of setting up a project of mobile banking. The idea was to see if the use of mobile phones could diminish our costs so that we could provide a better service for our clients. It turned out to be a headache. In fact we came up against a major handicap: Lebanon is a small country and the number of clients we have is not enough to create savings on a large enough scale to motivate telephone operators to invest in this market.
Our current projects concern the agricultural sector which is confronted with a slack period every year during which it is difficult for them to reimburse their loan repayments: Al Majmoua has launched a pilot seasonal loan programme especially tailored for them.
Other projects: to offer larger loans to those of our clients who have already borrowed and repaid loans and whose businesses are in the expansion phase. For these profiles similar to SMEs our present limit of 5000 dollars is insufficient and we envisage increasing the loan limit for this category of our clientele.

What do you think about thematic loans in sustainable development?

The idea is interesting. With the Habitat for Humanity NGO we have in fact launched home improvement loans by tackling health problems and renovating toilets or kitchens, for example. The home renovation project is very popular, even more so because it includes technical assistance with a building engineer.
In 2010 we also tested loan projects for the installation of solar panels, but the results were not very encouraging…

Is Islamic microfinance present in Lebanon?

Not significantly. AQAH, affiliated to Hezbollah, doesn’t offer Islamic microfinance in the strict sense of the term, it offers interest free loans, generally with gold collateral. To avoid excluding anyone, in 2010 Al Majmoua tried offering a “Murabaha” contract (Editor’s note: Murabaha is a method of financing which allows Islamic banks to fund, in accordance with their principles, both their clients’ production requirements - stocks, raw materials, intermediate products and their investment.) using the agencies of an Islamic bank. However the test was not conclusive. One of the reasons could be that with Murabaha it is the bank which buys the object of the loan on behalf of the client. This takes too much time and dissuades the clients.

You signed the Smart Campaign for client protection: how is that working out in reality?

First of all we are committed to price transparency: none of our clients should have to pay costs, administrative fees or any other hidden expense. Secondly Al Majmoua has set up a “hotline” which all the borrowers can use if they have a problem or are dissatisfied. Thirdly on the day of the signature, each borrower is provided with a list of his rights on the verso of a reimbursement calendar which clearly specifies his loan repayments.
Then there are other less tangible issues: one of the most important of these is limiting over-indebtedness. In addition to asking the client if he has other loans pending repayment, our client advisors always do an on the spot investigation to check the client is not hiding anything. Until now, this has always helped us to avoid cases of over-indebtedness.

Are the sector regulations inadequate, as the UNO maintains?
Where specific regulations are concerned… in reality there are no regulations in Lebanon. The Microfinance Institutions (MFIs) with the status of NGOs are controlled like the other NGOs and the two MFIs which have commercial financial institution status are dealt with by the Central Bank as non-bank institutions. Special regulations for microfinance would be a good thing, provided they were well thought out and inspired by the best regulations which exist abroad.

This article is part of the special report: