Grameen Jameel

Improved access and innovation – two key factors for the advancement of the microfinance sector in the Arab region

Interview with Fatina Abu Okab, Program Manager, Grameen-Jameel

By Miranda Beshara, Arabic Editor, CGAP’s Microfinance Gateway*

April 2015

Arabic version of the interview

Grameen-Jameel was established as a company in 2003 and incorporated in 2007 as a joint venture between Grameen Foundation and Abdul Latif Jameel Community Initiatives. Grameen-Jameel Microfinance Limited is considered as the first social business in the Middle East and North Africa. As of December 2014, GJ has been operating in 11 countries in the MENA region and Turkey and has partnered with 21 MFIs reaching more than 2.5 million new clients through MFI Partners. In terms of financing, Grameen-Jameel has a total loan portfolio of around 12 million dollars and total financing raised through guarantees valued at around $53 million. The percentage of female clients in our partner portfolio reached 63.1%.

The Arabic Microfinance Gateway sat down with Fatina Abu Okab, Program Manager, Grameen-Jameel (GJ) to discuss the main highlights from its new strategic direction for the coming five years in the region.

Grameen-Jameel has recently announced that it is revising its strategic plan for the coming five years to meet the region’s changing needs. What are the main highlights of the new plan?

GJ has reviewed its strategic plan in light of the evolving needs of the regional microfinance industry. We aim to do great rather than good and to do it smarter rather than better. It is not a different mandate; we are rather widening the scope. GJ will have a renewed focus on enhancing the offering of new services such as microinsurance and mobile banking. GJ will also position itself as an equity investor for Tier One MFIs interested in transformation. We will work with our partner MFIs to explore new product development and new distribution channels with an increased focus on youth and SME growth. Improved access and innovation are two key factors for the advancement of the sector in the region.

 

How does Grameen-Jameel select its MFI partners?

As all investors, GJ has a set of criteria for due-diligence and partner selection. We look at the vision and mission of MFIs; they have to have a strong social focus, to be somewhat sustainable or on the path to achieve sustainability, and serving women is part of their mandate. That said, we don’t only look at the investment risks but we also look to identify development needs so we could tailor a capacity building plan for each partner. With Tier 1 MFIs*, we focus on their specific needs; transformation being one of them, and with Tier 2 MFIs*, product development and capacity building are included.

Moreover, our partnerships are not tied to financing. GJ looks into long-term strategic partnerships. We organize exposure visits so smaller MFIs could learn from larger ones in our partner network. We also organize partner meetings periodically to exchange on needs and challenges and foster peer learning.

What other sorts of partnerships is Grameen-Jameel fostering in order to support financial inclusion in the region?

In addition to our core business of providing finance with competitive prices and building the capacity for growth of MFIs in the region, GJ has been involved over the past couple of years in several global partnerships with the aim of further promoting financial inclusion in the region.

For example, we have partnered with AXA insurance to support and facilitate the process for our partners to develop and offer the much-needed microinsurance services and products. We have partnered with Kiva to support crowdfunding for microentrepreneurs in the MENA region. We have also partnered with the MIT D-Lab to identify the needs for solar energy by the poor in Morocco in partnership with Al Amana. GJ is close to having a viable product, and will pilot it in order to replicating the experience and scaling-up the deployment of such livelihood technologies through the microfinance industry in other countries of the region.

 

Bankers without Borders® (BwB) was launched by Grameen Foundation in 2008 and managed by GJ in the MENA region. How has been the experience so far with the program in the region?

The BwB program is very interesting as most MFIs started as NGOs then they have developed organically. There are lots of similarities between banks and MFIs as financial institutions so bringing this global expertise to the MFIs at an affordable price has been successful. It enabled MFIs to benefit from a global pool of 18,000 business and banking experts at affordable costs. The experts volunteer their time and knowledge and the MFI only incurs the logistical costs. It also exposed the skilled professionals to the microfinance industry so in a way it is bridging the gap between the two sectors. In recent years, more local banks are participating, further making the program closer to the country context and more affordable to MFIs. It is a win-win situation. GJ is managing and coordinating the program in the MENA region and Turkey. The program is open to all interested MFIs and not only GJ partners.

At the 2014 Sanabel conference, GJ has awarded three leading MFIs for their innovation, leadership and sustainable growth respectively. What do MFIs in the region need to do in order to stay ahead of the curve?

Each and every MFI in the region is working very hard within the challenges of its local context. The key to stay ahead of the curve is to adhere to the social mission and to balance between financial and social performance. Poor people need a range of financial services and products, so MFIs need to understand their clients and to offer them more than microcredit. They should expand and promote financial inclusion and access in terms of offerings (new products and services) and market segments (new clients). MFIs also need to innovate; yet innovation should not come with complexity. There are lots of initiatives around the world; to adapt one of them to your local context is in itself innovative. We don’t need to reinvent the wheel and it doesn’t have to be only technology-driven in order to be innovative. If an MFI has the appropriate leadership, listens to its clients and respects them, and thinks outside of the box, it will achieve the desired sustainable growth.

There are promising policy changes across the region that will eventually improve financial inclusion. What is your take on that and what more is needed to have an enabling environment for financial inclusion?

The recent policy changes across the region are great achievements. They need to be coupled with education and awareness at several levels in order to bring about real change. For policymakers, they need to learn more about the microfinance industry and the special needs and behaviour of clients at the Base of the Pyramid in order to have a regulatory framework that would be more and more enabling in terms of financial inclusion. For MFIs, they need to prepare themselves in order to cope and adapt as well as benefit from the new regulations to increase their outreach, and grow their portfolio. All stakeholders need to be better informed in order to further financial inclusion.

How do you see the role the funders should play in order to advance financial inclusion in MENA?

 

First and foremost, all the stakeholders in the industry (not only funders but also policymakers, providers, support institutions) need to support the development of the required infrastructure that would allow the growth of MFIs to achieve their vision and mission. Investors and funders in particular need to promote responsible finance more effectively and efficiently. Also, there is a need for enhanced transparency between stakeholders in order to share experiences whether it is a success or a failure so we could all extract lessons learned. Finally, more coordination is needed in order to complement efforts for greater impact.
*Since 2000, CGAP’s Microfinance Gateway has been the go-to resource for individuals and organizations working to advance financial inclusion for the world’s poor. Today, it is a multilingual family of websites in EnglishSpanishFrench, and Arabic​, delivering content to more than 1 million annual visitors from over 200 countries.

 

* According to MICRORATE: Tier 1 MFIs are mature, financially sustainable, and large MFIs that are highly transparent. Tier 2 MFIs are small or medium sized, slightly less mature MFIs that are, or are approaching, profitability

Alex Counts
“The growth and development of the microfinance sector in the region have been possible thanks to the resourcefulness of the social entrepreneurs who lead Arab and Turkish microfinance institutions and the clients who borrow from them. Crowdfunding through Kiva platform will bring in the region additional resources to bring opportunity to even more borrowers”

Fady Jameel
“The role of youth in the region needs to be fostered to allow them to play a significant role in the positive changes that are happening across the Middle East and in the region. All of us, individually, could make a difference by supporting those who do not have access to capital and who face staggering unemployment.”

Zaher Al Munajjed
“For more than a decade, Grameen-Jameel mission has been of tackling poverty and job creation in the Middle East. This partnership with Kiva is a new milestone in our journey to play a vital role in engaging individuals to support with generosity all the underprivileged and unemployed individuals in our region regardless of where they reside.”