Making Microfinance Work Better in the Middle East and North Africa

This report presents findings on the growth of microfinance in the Middle East and North Africa. It compiles information from two World Bank surveys of microfinance institutions in the region, one assessing developments as of the end of 1997, and the other as of the end of 1999.

The report presents the following findings:

• The microfinance industry has nearly doubled;
• Egypt remains the leading provider;
• Countries such as Lebanon, the West Bank and Gaza did not experience growth as they went through a process of restructuring and consolidation;
• Average outstanding loan balance dropped because of new programs and the inclusion of women;
• Most microfinance programs are local NGOs, foundations or cooperatives;
• Ten microfinance programs served 80% of the region’s clients;
• Programs were ambitious in their expectations of the future;
• Formerly, small programs grew by more than 600%;
• The attempts of some programs to raise funds commercially have met with legal and regulatory obstacles.

The authors conclude with the following recommendations:

• MFIs must raise funds commercially, including taking deposits;
• NGOs must transform into private companies, banks or non-deposit taking financial intermediaries;
• Donors should be prepared to meet new training needs;
• Policymakers should create legal environments appropriate for growing microfinance.