Microfinance

Microfinance still untapped in Arab world

By Natasha MarrianStaff Reporter
Published: December 01, 2008, 00:34


Dubai: The micro-financing industry, with an estimated potential of $5.5 billion (Dh20.2 billion) in the Arab world, where 60 million people live on less than $2 a day, remains a largely untapped area, a symposium on micro-financing heard on Sunday.

Heather Henyon, General Manager of Grameen-Jameel, a business jointly owned by the Grameen Foundation and the Abdul Latif Jameel Group, said around 100 micro-financing institutions operate across the Arab world but only 3.5 million people have been reached.

Given the global financial turmoil, Henyon argued that investing in micro-finance held less risk and was a safer asset class than any other sector.

“The financial crisis is a factor for everyone but investing in microfinance is a safer asset class than any other sector, repayments are extremely high, there is no rescheduling … it’s a safer alternative,” Henyon said.

Microfinance, considered an effective, flexible strategy in the fight against poverty, entails providing basic financial services to people without the collateral usually required by banks to enable them to start a business.

“It’s a risk-free way to make money while doing good,” Henyon said.

New products such as deposits and insurance were being added by microfinance institutions.

Microfinance institutions have a strong presence in Morocco, Egypt, Lebanon, Jordan, Tunisia, Palestine and Pakistan.

Investment partner at Morison Menon Chartered Accountants, Raju Menon, said microfinance would be more applicable to countries where vast opportunities for small businesses were available such as India and Pakistan.

Gulfnews.com

Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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