A first for Syria - Grameen-Jameel joins hands with Aga Khan Agency for Microfinance
Grameen-Jameel, a social business that serves the Arab microfinance industry, has announced it has facilitated a multi-million dollar credit facility for the First Microfinance Institution (FMFI) Syria, part of the Aga Khan Agency for Microfinance (AKAM), to help improve the lives of 2,700 underprivileged Syrians through credit, deposits and other financial services.
Under the financing scheme, Grameen-Jameel issued a guarantee to support US$2.7 million in local currency financing (125 million Syrian Pounds). The guarantee backed a commercial overdraft facility disbursed by Bank Audi Syria, the first commercial bank to lend to the microfinance sector in Syria.
"We are proud to collaborate with the Aga Khan Agency for Microfinance, who is renowned in the Arab region and globally for its leadership in serving the less privileged," says Zaher Al-Munajjed, Chairman of Grameen-Jameel. "We hope this is the beginning of a constant collaboration between our two organisations.”
Although this is Grameen-Jameel’s first deal in Syria, the company has closed, to date, around US$20 million in partial credit guarantee transactions. The guarantees have been leveraged 2.2 times on average to raise US$44 million in total commercial financing for its partner microfinance institutions.
“This financing will support our ambitious outreach plan," says Jean-Lorenz Ehrentrant, CEO of FMFI. “Together with Grameen-Jameel we aim to empower the underprivileged to start their own business.”
In November 2007, laws were introduced that allowed for the establishment of non-bank financial institutions (NBFI) and FMFI is the first microfinance institution to receive a license under these new regulations, which allows for savings mobilisation through deposits. Syria is the first country in the Arab region to enable the formation of NBFIs through a legal framework.
Ehrentrant added, “As part of our social responsibility strategy, we will bear the risk of providing them with loans to unleash their entrepreneurial potential, expand their staff base and ultimately improve the lives of even more people.”
With poverty remaining a critical problem in the Arab world, microfinance targets the 75 million people in the region who live on less than US$2 a day by providing them with access to financial services. Grameen-Jameel is currently working with 11 MFI’s in 7 Arab countries to help them increase the breadth and depth of their outreach.