According to an article in Business Today Egypt, although Syria has been “a regional front-runner in microfinance regulation, [it] is still struggling to find a sustainable model to finance its rural poor.” Nonprofits dominate Syria’s microfinance industry, but face “outdated” government regulations, the article claims, including a 9 percent cap on interest rates charged to borrowers. “Sustainability has therefore been a challenge for Syrian microfinance providers, many of which stay afloat with support from international financing institutions.”
The article argues that demand can be met by lifting the 9 percent cap on interest rates and by encouraging the entry of private commercial banks into the microfinance market, which would increase competition and efficiency. CGAP (Consultative Group to Assist the Poor) estimates that there are about one million potential microfinance customers in Syria, yet less than 5 percent of them receive microfinance services.
By: Stefanie Rubin, Research Assistant
About CGAP (Consultative Group to Assist the Poor):
Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to providing financial access for the world’s poor. CGAP is supported by over thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.
Additional Resources:
Source Article: Business Today Egypt: “Syria Thinks Small,” http://www.businesstodayegypt.com/article.aspx?ArticleID=8829
MicroCapital Universe: The Consultative Group to Assist the Poor (CGAP): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29
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