A recent International Finance Corporation (IFC) study found that only 11.5 percent of the potential USD 286m Lebanese microfinance market is currently being tapped by microfinance institutions (MFIs). The study noted a lack of funding for MFIs and an underdeveloped focus on small and medium enterprises (SMEs) by commercial banks as the main inhibitors to microfinance growth.
The IFC recommends increases in scale for existing MFIs and improvements in the programs of commercial financial institutions instead of developing new MFIs. The study also pointed to a need for increased training for MFI employees, especially regarding microcredit best practices and product development.
The SMEs surveyed, on the other hand, pointed to competition, political instability and inflation as the major problems facing their growth and survival, not a lack of access to microfinance services. In fact, only 36 percent of those companies surveyed indicated interest in taking out future loans.
This report comes soon after the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) and Sanabel, the network of microfinance institutions in the Arab countries, held a conference examining microfinance in the Mediterranean region. The group concluded that only 9 million of the potential 40 million microfinance clients are currently reached by MFIs. The group also noted that government policies and a lack of diversity in services beyond micro-credit constituted the biggest obstacles to growth.
The IFC is a member of the World Bank Group. According to MIXMarket.org, the IFC had 52 active microfinance investments with assets totaling USD 225m as of September 30, 2004. For more information, please reference the MicroCapital Funds Universe.
By Greg Casey, Research Assistant
Additional Resources:
The Daily Star: “Nearly 90 percent of microfinancing market in Lebanon remains untapped”
European Union: “In Tunis, FEMIP undertakes to promote microfinance in the Mediterranean region”
Facility for Euro-Mediterranean Investment and Partnership: Home
Sanabel: Home
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