Home » FINANCE » IFC Report Not Optimistic on Arab World’s Microfinance Sector

IFC Report Not Optimistic on Arab World’s Microfinance Sector

In a new study, the World Bank’s investment arm International Finance Corporation (IFC) said the Arab World’s microfinance sector is facing serious challenges in view of the external risks, security concerns, and over-indebtedness.

The study, conducted in conjunction with Sanabel, the Microfinance Network of Arab Countries, said tackling those problems will be key to spurring the development of the industry. Microfinance, long considered an important tool in the fight against poverty, has grown at a much slower rate in MENA over the last six to seven years, than it has in other parts of the developing world.

“Microfinance can be powerful catalyst for boosting economic growth and improving the lives of people in developing countries,” says Sahar Tieby, Sanabel’s Executive Director. “This study documents the key risks facing the sector as perceived by stakeholders in the hopes that they can work together to address them.”

The study titled, "Voices: An assessment of the perceived risks facing the microfinance sector in the Arab World", surveyed industry players, including financial service providers, donors, and regulators, in 10 Arab countries. External risks, such as security challenges and macroeconomic downturns, were cited as the most serious issues facing the industry. There were also concerns about the over-indebtedness of borrowers, staffing, widespread competition, and political interference.

“By identifying and addressing the barriers to the growth of the microfinance sector, we can increase access to finance for micro-entrepreneurs and low income households across the region, enable them to increase incomes, build assets, and reduce their vulnerability to external shocks, helping to tackle poverty and boost shared prosperity.” says Mohammed Khaled, IFC Senior Microfinance Operations Officer in MENA,

The report marks the first in a series of studies on the microfinance sector to be developed by IFC and Sanabel. The initiative is part of IFC’s wider efforts in MENA to expand access to finance, support to micro, small, and medium enterprises, and create jobs. Globally, IFC invested $987 million in microfinance projects in fiscal year 2015, and launched 59 advisory projects with microfinance institutions.

Leave a Reply

Your email address will not be published. Required fields are marked *