Diagnostic Report on the Legal and Regulatory Environment for Microfinance in Lebanon

This report examines the banking and microfinance sectors in Lebanon, as well as the legal and regulatory environment for microfinance. It provides recommendations for policy related activities in Lebanese microfinance. The report states that Lebanon enjoys a liberal economy based on market-led dynamics and private ownership. The financial sector in Lebanon is well-developed with a sophisticated commercial banking sector and a well-managed and active Central Bank. Lebanon has approximately 20 microfinance providers (MFPs), which offer microcredit and business development services. Challenges facing the microfinance sector include political and economic instability, and lack of competition Recommendations highlight the importance of:

• Well-designed capacity-building programs;
• Encouraging partnerships between MFPs and banks;
• Explicit law regarding outsourcing, and transformations;
• Clarifying the anti-money laundering law;
• Establishing a credit information market;
• Exempting loans granted by all types of MFPs from stamp duty taxes;
• Subjecting all institutions engaged in lending to the same minimum reporting obligations.