A Decade of Partnership to Reduce Poverty in the Arab World
By Alex Counts
Ten years ago, Grameen Foundation set out on a journey of partnership with the Abdul Latif Jameel Group and the Jameel family. Our collective objective was to battle poverty and unemployment in the Arab World, and a decade later, I can say that we succeeded in many ways. The partnership evolved into a joint venture, Grameen-Jameel Microfinance Ltd. (GJ) between Grameen Foundation (USA) and with the Abdul Latif Jameel-Community Initiatives (ALJ-CI) (a philanthropic force in the Arab world) to advance poverty alleviation through microfinance and other innovative approaches. As we reached this ten year milestone, I wanted to take this opportunity to celebrate what we have accomplished together, and reflect on ten “lessons learned” that can be applied to partnerships in the Arab world, and likely elsewhere.
Origins of a Partnership
Last year, Susan Davis, and former Chairwoman of Grameen Foundation said to me, “In the wake of 9/11, there was a lot of talk about developing partnerships with progressive groups in the Middle East, but few actually took the risk and did anything. Grameen Foundation took a big risk and did jump in. At the time, microfinance was tiny there. Now it is much bigger, and clearly we had something to do with that. So take some credit for your boldness and the results!” (I should mention that around the time we got going in the region, Susan was also bringing Ashoka to the Middle East and made a lot of powerful connections for us along the way.) So how did we even begin talking to the Jameel family and its representatives? Our Chairman prior to Susan was the late, great Jim Sams. As a proud Lebanese-American, he wanted us to work in the Arab World. I was open, but skeptical. We were a very small organization then but within weeks Jim had connected me to one of the most prominent Saudi philanthropists, Muhammad Jameel.
When a friend of Jim’s heard that Muhammad Jameel, the patriarch of the family, was interested in microfinance, he made some calls and next thing I knew, I was on my way to speak at the Jeddah Economic Forum in January 2002.I gave one of my more forgettable speeches at that conference, but the real value was spending many hours with Zaher Al Munajjed, an advisor to Muhammad Jameel who was tasked with figuring out how the two organizations might work together. We paced back and forth in a hotel lobby and explained how our respective organizations operated, and explored various partnership structures. Zaher, now the Chairman of Grameen-Jameel, proposed a joint venture. I was not familiar with such an approach at the time, though in time GF would start several. So I balked at the idea. Furthermore, I said that while we knew microfinance well in general, we had little knowledge of what existed in the Arab World so we would need to do an assessment, and they would need to pay the costs. While on that trip I also meet Muhammad Jameel and two of his sons, and their personal commitment to making this work made a big impression on me. Zaher and I spent the next five months negotiating an interim agreement and signed it in New York in May 2002.
Building an Organization
During the following year, we learned a lot about the needs of the Arab microfinance sector, and saw ways we could add value. By the fall of 2003, it was time to decide whether we were going to move into action, and if so, how. At our request, we tabled the idea of a joint venture. ALJ gave us a large grant for the first three years of our work together, to be supplemented by other funding we could mobilize from organizations like the Mosaic Foundation. ALJ convinced us to go slow on actually financing microfinance institutions (MFIs), perhaps worrying that our lack of regional knowledge would lead us to make an embarrassing mistake in partner choice, so we initially focused on training, technical assistance, translating key documents about best practices into Arabic, and industry building through support of the regional network Sanabel.
We hired Joe Phillips, a young American with a can-do attitude who spoke excellent French and tolerable Arabic, to be the point person from the GF side. We soon began a tradition that continues to this day of having leaders from both organizations gather quarterly to review progress. Within a year or two, we hired Heather Henyon from Standard and Poors with excellent knowledge of the region to take us into a new era. (Joe went on to be the country director of AMIDEAST, a post he continues in to this day.)
Our First Partner and Our First Investment
To make our work more tangible, let me describe how we began working with our first partner in the region, Al Tadamun, a microfinance institution based in Cairo, Egypt whose CEO, Reham Farouk, we had met through Susan Davis. At the time they had 3,000 borrowers and had just spun off from Save the Children. We didn’t know until later that they were financially on the ropes, as they had to pay back a foundation in Kuwait and barely had enough money to do so. We stepped in by providing some badly needed financing, along with some assistance that enabled them to build their capacity. First, we set them up with an Arab mentor and benefactor. Second, we set them up with the Arab World’s leading microfinance consultant who led a business-planning workshop for them that culminated in setting a goal of reaching 100,000 clients. I am pleased to say that they later reached this goal, though the recent convulsions in the greater Cairo area have forced them to contract and consolidate somewhat.
In 2005, Grameen Foundation launched what would be its signature-financing program globally: Growth Guarantees. We initially had $31 million in pooled guarantees provided by nine wealthy families, and the issue arose whether we could use them in the Arab World and if so, how. We did not know whether the local banks would lend, especially if we insisted that they bear some of the risk. Also, GF had agreed not to operate independently in the region, but only through the “Grameen-Jameel Initiative” and its evolving governance structure. Still, we both sensed a big opportunity and decided to not let bureaucracy get in our way.
Muhammad Jameel pledged $50 million in guarantees for use by GF in the Arab World, and that transactions would be done with half of the guarantee coming from the GF pool and half from his personal commitment. We worked out the procedures, and with Heather taking the lead, we closed the first guarantee for the global program in Tunisia, with our flagship partner ENDA, in January 2006. And we would go on to place $24 million in guarantees leveraging $56 million in commercial bank lending to leading MFIs in the region. There has not been a single default (though we did have one close call).
We prepared detailed semi-annual reports for the Jameels that in time grew to hundreds of pages each. During one meeting, when we were reviewing progress with Muhammad Jameel, the staff presented the case of a woman who had benefitted from micro-loans provided by a GJ partner. MJ, as we came to call him, became very animated and told us how important it was for the Arab public and policy-makers to see how entrepreneurial women can be in the region, if only they are given a chance. So, on the spot he committed to financing a series of advertisements about individual female entrepreneurs that would be aired on satellite TV reaching millions of Arab viewers. These were not fund-raising ads – they were meant to open minds to new ways of seeing women in a small business setting.
By this point, we had set up an office in Beirut inside the Jameel Group’s international operations office there. Heather was working there and assembling a small team. When war broke out between Israel and Lebanon, we needed to evacuate quickly. Heather and her husband somehow found their ways across the border to Syria. Everyone got out safely, but it was a harrowing experience.
We hastily set up an office in Dubai so we could get back into action. By this point the original three-year grant had run its course and the Jameel proposed we go with a joint venture from that point onwards. Despite some skepticism amongst my senior staff, we incorporated and launched Grameen-Jameel Pan-Arab Microfinance Ltd, which we renamed after we began operating in Turkey in 2010.
By 2007 we were largely winding down the trainings and translations, and ramping up our direct and indirect financing and customized technical assistance functions. Industry building, mainly through support of Sanabel, remained constant throughout our decade of work together.
It would be impossible to summarize all of our accomplishments, but the graph below showing the growth of microfinance from 1998 to 2012 and that marks the establishment of our alliance is illuminating. (The decrease since 2009 is the result of the global financial crisis, which caused some clients to be wary of taking on debt for their businesses, a new awareness – and subsequent discouragement – of overlapping clients who borrowed from more than one MFI, and the dislocations brought by the Arab Spring, the Syrian civil war, and turmoil in Yemen.)
Certainly GJ did not cause this growth all by itself. But we did a lot. Key outcomes include:
Furthermore, we feel very well positioned to build on these accomplishments in our second decade, and to branch out into new areas such as micro-insurance, clean energy, agriculture, health and impact investing. The active involvement of Muhammad Jameel and his son Fady, who sits on the Board of Directors of GJ, has been and will continue to be essential.
Let me conclude by summarizing ten “lessons learned” from our decade of partnership, particularly as this sparked a lot of interest during our recent celebration.
So, a decade later, Grameen Foundation has gained a strong sense of comfort working in the Arab World and Turkey, and the AJF company and Jameel family have become very knowledgeable about microfinance. At the same time, we remain steadfast in our commitment to working together and evolving to meet the needs for poverty reduction and employment creation as they exist today.
We have accomplished a lot, even though many things we have tried have not worked. Perhaps one of the most important things we have accomplished is demonstrating that organizations from different cultures, with different strengths, and different structures (for-profit company vs. not-for-profit) and sizes can effectively work together if they put their minds to it. This is especially important as we work to improve trust and collaboration between two great and frequently misunderstood civilizations – Arab and Western.
Hopefully some of the lessons we have distilled are applicable to partnerships in general, but we believe they are especially relevant in the Arab context. We welcome feedback and ideas from anyone, anywhere.
Let me conclude with a story related to the first lesson on “building trust” through taking concrete steps even if they may serve no other purpose than developing positive rapport. About two years into the partnership, ALJ had launched a Saudi microlending program with advice from Grameen Foundation and others. It was not technically within the orbit of GJ, but it was an important outcome of our partnership nonetheless. We thought it would be important, from a trust-building perspective, to highlight this achievement in our newsletter to our donors around the world, though most of them at that time were in the United States.
But we also felt there was some risk involved. What if a sizeable number of our donors – who were probably unaware of our strong alliance with a Saudi company and family learned not just about this effort to help the poor in other Arab countries, but about our involvement in something to help Saudis themselves – decided to withhold their donations in protest?
We ultimately went “all in” and put the article on the front page of one of our newsletters, which at the time was our flagship publication. The response was very positive. We only got one negative letter – a heartfelt plea from a Jewish donor that we pull back from the partnership. Dick Gunther, a Jewish-American philanthropist who was on our Board of Directors at the time, volunteered to respond on our behalf and wrote a beautiful letter grounded in both humanism and Hebrew scripture. Like many things that have happened within Grameen-Jameel, that letter represented one small step for the elimination of not just poverty, but also for advancing mutual trust and understanding among two diverse and proud organizations and cultures.
 Alex Counts is a founding Board Member of Grameen-Jameel Microfinance, Ltd. He is also the President and Founder of Grameen Foundation, a Washington, DC-based global non-profit organization.