Jordan Times
Wednesday, October 13, 2004
Queen lauds microfinance
initiatives
By Rami Abdelrahman
AMMAN — Her Majesty Queen Rania yesterday underlined the need to combine
microfinance initiatives with `business incubators' to further boost credit
projects in the Kingdom and reduce running costs.
The Queen's comments were made during a visit to the Microfund for Women (MFW)
as part of the 2004 Middle East/Africa Region Microcredit Summit Meeting of
Councils (MEARMS) which opened on Sunday in Amman. During the visit, Her Majesty
met with 23 women beneficiaries of the MFW and discussed obstacles hindering the
expansion of their businesses and ways to further improve their ventures.
Although the women entrepreneurs described how microloans had helped them
increase their household income, they also detailed the problems affecting their
ventures including a lack of sufficient marketing channels, high interest rates
and poor working environments.
Several women described the difficulties of working from home and their
inability to differentiate between the running costs of their houses and their
businesses when accounting for net income. Such costs include electricity, water
and the necessary equipment.
“When I use my tools at home the electricity bill goes up and when the bills
come in I can't tell one from the other, and then I cannot decide how much net
profit I made because I lose track of my costs,” said Etaf Badwan, who runs a
small carpentry workshop from her home in Amman.
Queen Rania's suggestion aims to establish work environments where such women
can meet and make use of the facilities and space for their microfunded
projects.
According to Jordan River Foundation Director General Maha Khatib, there is only
one such `business incubator' in the country located in Amman. She added that
more incubators are needed across the Kingdom to help these women improve the
nature of their businesses.
Most of the 23 entrepreneurs who displayed their products yesterday said that
they had already established their projects before applying for microcredit, and
that they did it to either expand their business, or reinvigorate their
businesses after incurring losses.
Zohor Mashaleh, who has been making and selling drapes and linen in Zarqa for
the past 10 years, said she turned to microcredit one year ago to purchase new
equipment for her business.
Muyassar Masri said she has been making and selling fishing nets during the last
five years with the help of her unemployed husband, who encouraged her to take
microcredit after her business collapsed. All these women agreed that
microcredit had led to an increase in their household income, and in most cases,
reported it had doubled by the time the loans were repaid.
Another similarity among these women is that after taking microcredit, they were
able to employ others, mostly family members including husbands, to work with
them as a way to increase production.
Faten Abdullah said with the help of her husband and a small loan, she was able
to build a sportswear-making shop that currently employs seven workers.
Out of the 23 women interviewed, 20 said their family income was over JD100 a
month before taking the loan. After taking microcredit, their income increased
to between JD200 and JD2,000.
The number of microcredit loans among the 23 women ranged from one to 15 loans
per person, as was the case of handicraft maker Heba Nasser, who sells most of
her production wholesale to tourist shops.
According to MFW General Manager Bassem Khanfar, most women start with small
group loans and then take larger loans as their businesses expand.
However, the fact that most of the women interviewed had already established
their business before applying for microfinance gives weight to the argument
that microfinance fails to target those most in need.
According to the Jordan Human Development Report 2004, “many poor people face
significant barriers to access credit.” The report notes that the sector mainly
targets the `near poor' and “preferably those with existing businesses” as a
means to “reduce transaction costs and minimise the risks.”
Even when credit is available, notes the report, “poor people face significant
bureaucratic obstacles in establishing enterprises” such as fulfilling entry
requirements and obtaining licences.
Although microfinance for the `near poor' contributes positively towards poverty
alleviation, says the report, for the `coping poor' and the `poorest of the
poor' there are “significant risks” which may result in “greater indebtedness
and dependency.”
Khanfar told The Jordan Times that microcredit is not intended to be given to
the “poorest of the poor,” but is given to the “coping poor” whose basic needs
are already met so that they can focus on starting a project.
“The poorest of the poor need aid, they care about food and water and physical
needs, so if we give them money, they will not be able to generate more money
with it because they will satisfy their basic needs with it,” he said.
According to Khanfar, 99 per cent of the loans are repaid. He added that the
total number of loans approved by the MFW since its establishment in 1999 is
12,000.
MEARMS is organised by the Arab Gulf Programme for United Nations Development
Organisations in cooperation with the Ministry of Planning and International
Cooperation and the Microcredit Summit Campaign in Washington, DC and has
brought together over 650 participants from 75 countries.