Byblos Bank, a Lebanese institution with operations in nine countries, has cited an unspecified report from the United Nations Economic and Social Commission for Western Asia (ESCWA) as arguing that the continued growth of the microfinance sector in Lebanon is hindered by inappropriate governmental regulation and a lack of reliable data on borrowers.
An estimated 11.5 percent of the demand for microfinance is being met by existing microfinance institutions, with restrictions on microlending by for-profit entities cited as a primary barrier to growth. Charitable organizations involved in microfinance cannot take deposits and cannot easily access loans from the domestic financial sector.
Microlending is not explicitly regulated by any branch of the Lebanese government, although the central bank has allowed banks to use 5 percent of required reserves for microfinance initiatives. To encourage such activity, ESCWA reportedly suggests that the government develop credit bureau and a legal structure based on enforceable credit laws and institutional regulations.
By Paul K. Kim, Research Associate, and MicroCapital Staff
About the United Nations Economic and Social Commission for Western Asia (ESCWA):
Headquartered in Beirut, Lebanon, the United Nations Economic and Social Commission for Western Asia (UN-ESCWA) is one of five regional commissions under the United Nations Economic and Social Council. ESCWA aims to promote economic and social development in the region, coordinating its activities with other groups such as other United Nations offices, the League of Arab States, the Gulf Cooperation Council and the Organization of the Islamic Conference. Member states include Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, United Arab Emirates and Yemen.
Sources and resources:
Byblos Bank, “Lebanon This Week”: http://www.byblosbank.com.lb/newscenter/economic_research/Publications/LTW/LTW-195.pdf
The Daily Star Lebanon News, “Lebanon’s microfinance sector suffers from lack of regulation”: http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=122871#axzz1DWE77US8
MicroCapital’s Microfinance Universe Profile: United Nations Economic and Social Commission for Western Asia: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+Nations+Economic+and+Social+Commission+for+Western+Asia
MicroCapital.org Story, November 16, 2010: “Microfinance Operations in Lebanon Begin to Grow”: https://www.microcapital.org/microcapital-brief-microfinance-operations-in-lebanon-begin-to-grow/
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