Jordan Times
Thursday, December 7, 2001
By Kimberly Harrington
From the Baqaa refugee camp to the streets of Hai Nazzal in east Amman, thousands of new businesses, owned and operated exclusively by women, are springing up with the assistance of the Microfund for Women (MFW).
Founded in 1996 as the Jordanian Women's Development Society, the MFW has since disbursed some 61,000 loans totalling JD10 million to its low-income, all-female clientele.
The MFW currently counts approximately 6,000 active clients who use their loans to develop already established microenterprises such as mini-markets, flower shops, bookstores, fruit and vegetable stands, sweet shops and clothing stores.
Operating out of ten branch offices –– Irbid, Zarqa, Russeifeh, Baqaa, Jerash, Madaba, Wihdat, Hai Nazzal, Jabal Nasser, Nuzha –– and a head office in Jabal Luweibdeh, MFW's 52 employees work tirelessly to serve clients who do not have access to formal lending institutions, such as commercial banks.
MFW General Manager Bassem Khanfar explains: “We are reaching these people to [motivate] them and make them part of the economic cycle in the country.”
But the impact of the MFW goes far beyond just the development of women's businesses. It also has a profound and highly positive effect on the daily realities of its clients by empowering them as decision makers and income earners within their households.
According to Dima Nabil Bseiso, a training officer at the MFW: “You can see the major changes in their lives. Our clients are really becoming independent units –– they know their rights. They enlarge the circles of society they interact with by dealing with banks and credit agents, and they believe in themselves and their capabilities.”
Terri Kristalsky, deputy component leader of the Sustainable Microfinance Initiative at the AMIR Programme, agrees. “Microfinance allows women the opportunity to develop careers as entrepreneurs that will benefit both them and their families. Business ownership not only provides financial rewards and additional family security, but often promotes a heightened sense of self-worth and increased self-sufficiency.”
Since 1999, the USAID-funded AMIR Programme has provided copious technical and financial assistance to MFW in an effort to develop the microfinance industry in the Kingdom.
MFW was recently recognised and praised by Her Majesty Queen Rania as a tool for empowering women in Jordan. At the recent Arab Women's Summit in Cairo, the Queen lauded the MFW's aptitude in helping women to engage in self-empowering businesses and entrepreneurial activities.
What is Microfinance?
Microfinance, or the process of lending small amounts of capital to the poor so that they may invest in and develop businesses, has been a thriving practice for nearly twenty years in regions like Southeast Asia and South America.
The rousing success of the first large-scale microcredit company, the Grameen Bank in Bangladesh, has given rise to thousands of such lending institutions throughout the world.
The World Bank estimates that there are currently 7,000 microfinance institutions in operation, with a clientele of nearly 16 million. Many of these institutions, such as MFW, focus exclusively on women clients from both urban and rural communities.
Methodology
The field office in Wihdat Camp is located in an inconspicuous side street. Clients and staff alike must climb three stories to reach the modestly marked entrance. Inside, the furnishings are Spartan –– plastic tables and chairs, several desks, file cabinets, and a single fax machine to deal with communication. No computers.
Yet, the atmosphere is welcoming. Photographs of smiling clients and staff line the walls. Spirited chatter fills the air. In all field offices, clients are made to feel at ease in their surroundings, which facilitates the client-lender relationship.
The simple office is deliberate, to make women feel more at home, and is part of a series of strategies known in the world of microfunds as “best practices.”
The implementation of such internationally recognised practices has also added to the success of MFW.
The system of group guarantees, another “best practice” technique, relies heavily on peer pressure and character references, instead of formal collateral, to encourage loan repayment. Clients begin their relationship with MFW by forming a group of four to six women from their neighbourhood and applying for loans ranging from JD200 to JD500.
Though each group member operates her own separate business, all group members are responsible for the timely repayment of loans by their peers. This method, also known as joint liability, has helped MFW boast an impressive repayment rate of over 99 per cent. Women in the group take out a first loan as a group, then a second. Once they, as a group, have paid back the loans and established their character reliability, they are eligible for individual loans, which range from JD600 to JD2,500.
When it comes to repaying loans on time, what has been learned when men are compared with women? According to Khanfar, “If you look at repayment rates as one of the indicators, the results are really astounding. I think women in general are better at paying back their loans. Many women want to prove themselves and their competence through paying back their loans on time.”
Research also indicates that women have a greater sense of responsibility towards their families and are more likely to spend any additional income on the family rather than themselves.
Cultural Adaptability
Though the MFW bases its methodology on many of the tenets of prior successful microlending institutes across the globe, it has also adapted to the particular cultural and social needs of its primarily Muslim clientele.
Supplementary loans during high volume selling seasons, such as Ramadan, Eid al-Adha, and the beginning of the school year, are provided on a yearly basis.
Annually, twelve outstanding clients are awarded an all-expense paid pilgrimage to Mecca as a token of the MFW's appreciation of their exemplary business practices.
An effort to foster a sense of community among the women is achieved through an annual lottery, non-financial recognition awards, and MFW-sponsored bazaars where clients may display and sell their products. Such innovative and responsive procedures have made MFW, in the words of Khanfar, “the leading microlending institution in Jordan.”
Future
Khanfar has high expectations for the future of the MFW, as it makes an effort to gain a broader and more diverse capital base. “Since the first day, we have been looking for sustainability and an ongoing programme. Ultimately, we would like to become a bank for women.”
Until that point, MFW has signed an agreement with the AMIR Programme and the Citibank that gives it more options for accessing capital. Through this process, the MFW will be able to receive commercial funding from local banks against a full-credit guarantee from Citibank Jordan.
For more information, visit Microfund for Women's website at: http://www.microfund.org.jo