MICROCAPITAL STORY: The United Nations Relief and Works Agency (UNRWA) Provides Loans for Young Women Entrepreneurs in Syria through its Microfinance and Microenterprise Department (MMD)

The Syrian Microfinance and Microenterprise Department (MMD) of the United Nations Relief and Works Agency (UNRWA), an agency of the United Nations (UN) providing basic services to Palestinian refugees throughout the Middle East since its inception in 1950, financed over 4,700 loans in 2007 totaling USD 13.3 million, according to Mohammad Al-Khatib, the Acting Credit Operation Manager at the Syria National Office. The microfinance institution (MFI), which distributes loans to both individuals and groups, concentrates its efforts in the Palestinian refugee camps of Al-Amin, Saida Zeynab, and Yarmouk. However, the program is also open to Syrian nationals, as a recent UNRWA-Syria press release states.

The MIX Market, the microfinance information clearinghouse, reports that the UNRWA first began using microfinance as a means to increase employment in the West Bank and Gaza in 1991. Today, in the aforementioned Palestinian territories, the UNRWA’s MMD operates with 2007 total assets of USD 18.8 million and a loan portfolio of USD 10.6 million, reaching nearly 12,700 borrowers. In the last five years, the MMD has not attained operational self-sufficiency higher than 83 percent and reports a debt to equity ratio of 28.2 percent. An April 2006 Planet Rating report assigned the MMD a “C” rating.

As indicated by both Planet Rating’s analysis and a report released in January by the Consultative Group to Assist the Poor (CGAP), the demand for microfinance services in Syria is high (54 percent of the Syrian population lives under the poverty line) and the economic environment is becoming more conducive as a result of sustained economic growth and recent legislation. Syria’s real gross domestic product (GDP) has hovered around 3 percent annually since 2004 and the Syrian Legislative Decree (no. 15) of February 2007, entitled the “General Microfinance Decree,” provides for the Central Bank of Syria (CBS) to give licenses for “Social Financial Banking Institutions” (SFBIs) with the expressed intent of providing microfinance services. There is room for new market entries with only one significant MFI other than the UNRWA operating in the country of population 19.3 million: the Micro Credit Facility Syria (MCF-SYR). The MCF-SYR is a member of the Aga Khan Agency for Microfinance (AKAM) network. For more information on AKAM, refer to the MicroCapital Profile and a recent press release posted by MicroCapital.