MICROCAPITAL BRIEF: Netherlands Development Finance Company (FMO) Loans $5m to Vitas Palestine for Microfinance

The Netherlands Development Finance Company, which also is known by its Dutch acronym FMO, recently loaned USD 5 million to the microfinance institution (MFI) Vitas Palestine. FMO sourced the funding from MASSIF, an investment vehicle it manages for the Dutch government that is meant to act as “a catalyst for the private financial sector, while stimulating financial inclusion in developing countries.”

Vitas Palestine General Manager Alaa Sisalem stated, “I am proud FMO had decided to start its first activity in Palestine with Vitas Palestine…. This loan is vital in helping Vitas Palestine continue fulfilling its mission to provide financial products and services that respond to our clients’ needs and foster the long-term development of individuals, their businesses, their families and the communities they live in, especially during this critical time in which the entire world including Palestine is facing the COVID-19 pandemic.”

Vitas Palestine was launched in 1994 as Ryada – a name it still uses in Gaza – to provide home-improvement loans. It also offers loans for land, apartments and business purposes via seven branches in the West Bank and Gaza. As part of its credit assessment process, it reviews government data intended to reduce the odds of loan proceeds being diverted to support violence. As of December 2019, Vitas Palestine had a loan portfolio of USD 51.5 million.

Vitas Group is a for-profit holding company that operates financial services companies in Iraq, Jordan, Lebanon, Palestine and Romania. It also a has a franchisee that launched in early 2019 in Egypt. As of March 2020, the group has an aggregate portfolio of USD 230 million outstanding to approximately 90,000 micro-, small and medium-sized enterprises and households. Vitas Group was founded by Global Communities, an NGO working to improve the lives and livelihoods of vulnerable people. Global Communities generated revenue of USD 180 million during its 2019 fiscal year.

Established in 1970, FMO is 51-percent held by the Dutch government and 49-percent by private sector institutions. The bank works toward the UN’s Sustainable Development Goals by funding capacity development as well as placing debt and equity investments in sectors such as agribusiness, financial institutions and energy. For the year 2019, the bank reported a net profit of EUR 120 million (USD 131 million) on an investment volume of EUR 2.9 billion (USD 3.2 billion).

By Jessica McLeod, Research Associate

Sources and Additional Resources

Direct contact with Global Communities

FMO press release
https://www.fmo.nl/news-detail/9fc7842f-3e08-4390-96e5-73cd9a06d215/reaching-the-unbanked-in-the-palestinian-territories

Vitas Palestine homepage
https://vitas.ps/

Vitas Group homepage
https://www.vitasgroup.com/

Global Communities 2018 annual report
https://www.globalcommunities.org/publications/Annual-Report-2018-web.pdf

Vitas Group 2018 annual report
https://www.vitasgroup.com/sites/default/files/Vitas_2018_Annual-Report-6-21-19.pdf

Vitas Group Social Performance Report 2019
https://www.globalcommunities.org/publications/Vitas%20SPR2019_Final.pdf

Previous MicroCapital news on Vitas Palestine
https://www.microcapital.org/microcapital-brief-calvert-impact-loans-5m-global-communities-vitas-palestine-ryada-housing-microfinance-mortgages-west-bank-gaza/

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