A conference on the challenges of microfinance in Lebanon was recently held at Beirut’s Haigazian University, The general manager of microfinance institution (MFI) Ameen, Ziad Halabi remarked, “….only 28.4 percent of the market has been served, so we still have a gap of 71.6 percent in the market.” According to a 2008 study published by the International Finance Corporation (IFC) and Grameen Jameel Pan Arab Microfinance Ltd., microfinance in Lebanon has a potential customer base of 190,000 clients. Mr. Halabi added that Ameen grew 40 percent in 2008, adding 35 staff members and that 1,000 more staff is necessary to reach the potential clients.
According to MIX Market, the microfinance information clearinghouse, Ameen held a gross loan portfolio of USD 10.6 million and served 11,238 clients by the end of September 2008. Ameen also reports total assets of USD 13.6 million, but does not report the return on assets or equity. The debt/equity ratio was 405.44 percent. Ameen was initially a microcredit program created by the Washington DC-based non-profit CHF International in 1999. Ameen registered with the Central Bank of Lebanon in 2007 to become a financial instiution.
The study that Mr. Halabi refers to was funded by the IFC and Grameen-Jameel Pan-Arab Microfinance Ltd and was conducted by the Frankfurt School of Finance and Management. The study, entitled “Lebanon: A Diagnostic Study on the Demand for Financial Services by Micro and Small Enterprises”, found that Lebanon’s microfinance market is worth USD 286 million and meets 11.5 per cent of the country´s demand for microfinance . The study recommends that existing MFIs be upgraded rather than new MFIs be created to facilitate the expansión of the microfinance industry in the country. IFC is a member of the World Bank Group and Grameen-Jameel is a for-profit company owned by the Grameen Foundation and the Abdul Latif Jameel Group
Mr. Halabi also noted that expanding MFIs is difficult due to limited finances. He stated, “The loans sizes are small so the revenue generated by each loan is too small.” Offering a solution to the costs of hiring staff and opening branches, Fadi Asrawi, dean of the faculty of business administration and economics at Haigazian University, said, ” The introduction of mobile-phone banking now makes it possible to reach millions of people in the fraction of a second and without the high costs of establishing an extensive network of offices,” he added.
Ameen’s microentrepreneur loan ranges from USD 300 to USD 5000 for a duration of 4 months to 18 months. The loan is available to any entrepeneuer who has owned a small business for 1 year. Ameen’s SME loan for business improvement, on the other hand, ranges from USD 5,000 to USD 15,000 for up to 5 years. Ameen’s home loans for home improvement range from USD 300 to USD 5,000 for a duration of 4 months to 18 months. The Home Plus loan for home reconstruction or construction ranges from USD 5,000 to USD 15,000 for a term up to 5 years. Ameen’s personal loan for personal consumption, including travelling or weddings, ranges from USD 300 to USD 5,000 for 4 months to 18 months. Personal loans are only available to clients who have owned a business for over a year.
MIX Market lists two further MFIs in Lebanon. Al-Majmoua held a gross loan portfolio of USD 9.3 million and served 12,017 clients at the end of December 2008. Al-Majmoua reports total assets of USD 11.5 million, but does not report the return on assets or equity. The debt/equity ratio was 15.33 percent. Makhzoumi reported a gross loan portfolio of USD 426,447 and active borrowers totalling 423. Total assets stood at USD 1 million although return on assets or equity was not reported. The debt/equity ratio was 9.8 percent. Both Al-Majmoua and Makhzoumi are non-government organizations (NGOs). According to the CIA World Factbook, Lebanon’s GDP was estimated at USD 44.07 billion in 2008. GDP per capita was estimated at USD 11,100. The unemployment rate was estimated at 9.2 percent in 2007 and the services industry constituted 75.8 percent of total GDP. According to the MIX Market, Lebanon reported a deposit interest rate of 7.98 percent and a lending rate of 10.26 percent.
Additional Resources:
“Lebanon’s Microfinance Market Undersaturated”, by Dana Halawi, Published by The Daily Star Lebanon, May 2009
“IFC and Grameen-Jameel Recommend Ways to Improve Access to Finance for Micro and Small Enterprises in Lebanon”, Published by International Finance Corporation, July 2008
Ameen: Home
MIX Market: Lebanon
MIX Market: Ameen
MIX Market: Al Majmoua
MIX Market: Makhzoumi
CIA World Factbook: Lebanon
Grameen Jameel Pan-Arab Microfinance Ltd:Home
IFC:Home
By Goda Thangada, Research Assistant
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