Microfinance in Palestinian Territories

After Lebanon and Jordan, we continue our series on microfinance in the Middle East. Today, we propose you an article about microfinance in Palestine, 3rd country in which MicroWorld wishes to extend its action.

All microfinance institutions in Palestine, work under an organization named Sharakeh. It was formed in 2002 and functions as a voluntary coordinating body that speaks for non-profitable and non-governmental microfinance institutions in this country. Their aim is to provide financial services and loans to small businesses. Through this network, demand for micro credit has known a rise in the past years.

As Sharakeh believe that Palestinians have the skills and determination to get out of poverty and thus improve their way of living, microfinance institutions give a helping hand in the construction of a better Palestinian society. The project of Sharakeh through the microfinance institutions is to empower citizens and help them, by providing NGOs the skills, tools and funds to address social needs and promote self-reliance among poverty. So even though microfinance institutions worldwide and in Palestine aim for financial sustainability, an integral part of their mission and vision is not only the alleviation of poverty but also the ability to attain decent health services, improve nutrition and enroll in basic and higher educational system.

The members of Sharakeh are divided in two categories:
- Microfinance providers (MFP) : 9 active members.
- Microfinance institutions (MFI): 4 associate members

The MFP is a multipurpose institution which provides microfinance services while the MFI’s primary activity is to make provision for microfinance services. These institutions have by end of 2011, reached a gross loan portfolio estimated at 139.7 million US dollars and active borrowers numbered to 47,836. Demand for micro credit has spread by word of mouth and is attracting more investors. The number of active clients receiving loans from microfinance institutions has grown by an average of 27 annually since 2007. Microfinance institutions use the income generated from interest rates and fees on loans to cover their operational costs. Thus this will encourage sustainability and provide the means to use their lending capital over the long term. Micro loans and small credit provided by members do not exceed 5000 US dollars whereas small loans may go up to 25,000 US dollars.

Microfinance institutions in Palestine are growing very fast. They are being supported to move towards commercialization on an international level. However, the political and difficult economic situation requires that microfinance institutions need to be careful in their growth. The tightened closures and extreme constraints like checkpoints and road blockade between cities, villages and camps have forced people to search for living through small micro productive activities. Thus since 1967, these exceptional constraining political, economic and social circumstances facing Palestinian society have made Micro and Small Enterprise (MSE) sector especially important. Assisted by microfinance, MSE have been playing an increasing role in securing minimum income for living.

Between 2007 and 2011, demand for micro credit in Cisjordanie and Gaza has gone from 20,000 to 43,000. With only 19,6 % of the potential microfinance market covered and almost 50% of Palestinians in the West Bank and Gaza living below the poverty line, the demand for microfinance services remains strong and will reach a demand of 77,000 by 2015.

MicroWorld Operations Team is actually in Palestine to integrate a new MFI: ACAD. Follow this integration day by day on our blog and on Facebook and Twitter

To see pictures of the MFI integration, click here

Source: Mix Market, Nouvelles Agence Ma'an, Cette semaine en Palestine and Paperblog

This article is part of the special report: