When I compare Lebanon to other countries in the region, it stands out on many levels—its religious diversity, economic resilience in the face of political conflict and war, vibrant and cosmopolitan urban life, and its varied approaches to microfinance. I have the great fortune to work with both of Kiva’s Lebanon field partners—Ameen s.a.l. and Al Majmoua—during my Kiva fellowship. Both organizations are comparable in size and in terms of share in the Lebanese market, yet each provides a unique and distinct approach to microfinance. I still have much to learn about both organizations, but it is clear that the social and political diversity of Lebanon is very much reflected in its experience with microfinance.
Ameen: The “Commercial” Approach
Ameen (meaning “trustworthy” in Arabic) has made its mark through sophisticated partnerships with international organizations such as USAID and CISCO systems. Ameen only lends to individual borrowers and is able to offer financial services in almost every corner of the country due to its relationship with four of the country’s commercial banks. By working closely with commercial institutions, Ameen is able to significantly reduce operational costs and offer a competitive array of products. Lebanon has an incredibly well developed banking industry (more than 60 banks are operating), which is hard to believe given that you can drive from one end of the country to the other in only a few hours and the estimated population is approximately four million people.
I was at first surprised to find that Ameen only offers individual loans, which counters the common perception of microfinance as a group-based model. However, after speaking more with Ameen’s management as well as reading a 2008 report on the microfinance industry in Lebanon published by the IFC, it is clear that individual lending is preferred by a significant segment of current and prospective borrowers. Cultural and social reasons are cited for this preference. I can imagine that the uncertainty that comes from thirty years of sporadic conflict and war make it difficult to engage in economic partnerships with one’s neighbors and friends.
Thus far, I am extremely impressed by the high level of professionalism and organization at Ameen. In terms of Kiva, Ameen offers loans using a “direct-lending” approach where borrowers have much more contact with loan officers. I am interested to see how Ameen negotiates between its commercial and direct-lending methodologies and how this impacts organizational processes and borrower experiences.
Al Majmoua: The “NGO” Approach
Al Majmoua (meaning “the group” in Arabic) feels more like a typical non-profit organization when you walk into its headquarters (relaxed and with a lack of adequate storage and staff space), but that is somewhat of a skewed impression when one learns of the organization’s substantial loan portfolio and total staff of more than 120 employees.
Al Majmoua has established itself as a strong competitor in Lebanon’s microfinance sector due to its range of financial and non-financial services and deep-rooted community relationships. From my understanding thus far, it seems that Al Majmoua is one of the few microfinance organizations that offers a substantial set of non-financial services such as financial literacy and vocational trainings, generally free of charge and open to all community members. Also interesting, it provides loans to Palestinian refugees as well as service workers, such as Filipina women who make up a large portion of private housekeepers in Lebanon.
I was able to meet several Kiva clients with one of Al Majmoua’s most experienced loan officers. The loan officer is of Armenian background and has grown up in Lebanon. She took us to visit her clients in the predominantly Armenian section of Beirut, Burj Hammoud. Based on my experience working closely with microfinance clients in Jordan with FINCA International, I was surprised by the high quality of products (in this case clothing imported from Turkey), and that borrower businesses were quite formal with rented or owned store space.
The commitment of the Al Majmoua staff is clear from the headquarters staff as well as the loan officer we met. I am curious to see how Al Majmoua continues to fulfill its social objectives with the entrance of new competitors and increasing pressures to keep costs low without compromising service quality.
Now in week 2 of my fellowship, several points stand out to me regarding the country’s microfinance industry:
- The market is relatively small (200,000 maximum potential borrowers), and there is increasing competition amongst organizations;
- There is not a strong focus on group loans and women borrowers are more difficult to access than other countries in the region and internationally;
- The lack of specific microfinance legislation and sophisticated banking sector allows organizations to operate relatively freely and engage with international investors;
- The definition of “micro enterprise” is vastly different (larger) from many of Kiva’s other partners in less developed countries, and also varies greatly by country within the region.
In Lebanon, diversity and differences have bred conflict for generations, but have also contributed to a country that can apply a sundry of strategies to its economic, social, and political development. Based on Kiva’s field partners, it seems that alternate approaches to microfinance are to be expected and more importantly, are successful.
Nishita Roy is Kiva Fellow (Class 10) serving in Lebanon. She is working with Ameen s.a.l. and Al Majmoua. Get involved with these Lebanon field partners today!