Making Microfinance Work Better in the Middle East and North Africa
This report analyzes microfinance in the Middle East and North Africa, and offers recommendations on how to further develop the industry. Microfinance is the provision of financial services to the entrepreneurial poor, a definition with two importa...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/06/4939588/making-microfinance-work-better-middle-east-north-africa http://hdl.handle.net/10986/23982 |
| Summary: | This report analyzes microfinance in the
Middle East and North Africa, and offers recommendations on
how to further develop the industry. Microfinance is the
provision of financial services to the entrepreneurial poor,
a definition with two important features: it emphasizes a
range of financial services-not just credit-and it
emphasizes the entrepreneurial poor. The region's
emerging microfinance industry differs from those in other
parts of the world. Expectations are too high: microfinance
is not a panacea for, or solution to unemployment, for
narrowly defined, most microfinance institutions only offer
credit for business activities, and do not offer savings or
deposit services. Governments are interested in regulating
microfinance, and several countries have passed laws on
microfinance, efforts that risk jeopardizing the
industry's healthy development. Moreover, second
generation issues may slow the industry's growth,
demonstrated by the fact that many microfinance institutions
are experiencing crises, after rapid initial growth, and
need time to consolidate and restructure. Islamic finance
methodologies are being applied by new microfinance
programs, and existing programs that use Islamic
finance-some of them very large-have become more visible.
This report draws heavily on two Bank surveys of
microfinance institutions in the region, one assessing
developments as of the end of 1997, and the other as of end
of 1999. Egypt remains the region's leading provider
but has lost market share, while Morocco is second, having
experienced dramatic growth since 1997. But other countries,
such as Lebanon, and the West Bank and Gaza, saw their
microfinance industries stagnate, or even shrink. This was
mainly because microfinance players in these countries went
through restructuring, and consolidation as they faced
second generation issues. The report stipulates that for
programs to reach the scale of microfinance institutions as
in other parts of the world, they must raise funds
commercially-including taking deposits, which will also
enable them to broaden their approach to microfinance,
moving beyond credit for businesses. And, by mobilizing
savings and deposits, they will be able to serve many more
clients. Donors and practitioners alike, should be prepared
for the array of new training needs, deciding to transform
into a new legal entity, and institutional form.
Policymakers, meanwhile, should be prepared to create legal
environments appropriate for prudent, but growing microfinance. |
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