Palestine Monetary Authority Launches Microfinance Strategy in Palestine in Cooperation with the World Bank and Sharakeh
Ramallah - Under the auspices and participation of the Prime Minister, Dr. Mohammed Shtayyeh, His Excellency the Governor of Palestine Monetary Authority, Mr. Azzam Shawwa, launched the Strategy of Microfinance in Palestine (2019-2023), in a ceremony held today at the Municipal Theater in Ramallah Town Hall, in cooperation with the World Bank Group and the Palestinian Network for Small and Microfinance (Sharakeh), in the presence of representatives of the banking and non-banking financial sector, chambers of commerce, economists, academics and representatives of international institutions. Prime Minister, Dr. Mohammed Shtayyeh, addressed the importance of this strategy considering it the backbone of the effort of the government, as this sector was based on strengthening the family economy and the more work was directed towards the lower levels, the better the economic and social support; therefore worked to move people from need to production and to make a qualitative leap. The Prime Minister thanked Palestine Monetary Authority for its efforts in this area.
The Prime Minister pointed out that the Microfinance sector needed partnerships with banks, and to mobilize new funds from Arab funds, because 85% of companies in Palestine were family and small businesses and employ less than ten people. The Prime Minister expressed hope that lending institution loans would contribute to the government's strategy of cluster-based development and specialization in geography, which would lead to the integration of different clusters, and would continue the infrastructure, which would create development with its horizontal and vertical dimensions.
The Prime Minister touched on the importance of strengthening women's economic standing to enhance their political role and their place in public life, calling on lending institutions to make an effort to lend to women.
Dr. Shtayyeh said that lending institutions were required to integrate in their work rather than compete, reduce the cost of loans, focus on marginalized areas, especially villages adjacent to the Wall to create a resistant economy, measure the efficiency of the loans they grant, and have a social message.
His Excellency the Governor of Palestine Monetary Authority, Mr. Azzam Shawwa, thanked the Prime Minister Dr. Mohammed Shtayyeh for his kind sponsoring and attending the ceremony, which reflected the vitality of this esteemed government, which is ably led by Dr. Mohammed Shtayyeh, which followed up on everything that would lead to the progress of our homeland and our people, under the guidance of his Excellency the President of the State of Palestine, the historic leader Mahmoud Abbas, may God bless him.
His Excellency the Governor said that the launch of the Strategy of the Microfinance Sector in Palestine, was as an additional step in the development of the microfinance sector and as the beginning of a new phase of its growth and prosperity, in line with the directives of His Excellency the President and the government policies to strengthen the resilience of citizens and to ensure justice and social welfare.
Mr. Shawwa added that the microfinance sector was a key lever and a central pillar of financial and social stability, as well as a key building block in the Palestinian national economy through its development and social role by reaching out to marginalized and disadvantaged groups in society and giving them the opportunity to integrate into the official financial sector and providing them with basic financial products and services that are essential for their active participation in the economic cycle. Mr. Shawwa also noted the role of the microfinance sector in promoting the economic standing of women and young entrepreneurs.
His Excellency the Governor of Palestine Monetary Authority explained that although the Palestinian economy faced a number of challenges, the microfinance sector had achieved growth rates that had exceeded the stage of inception, and since 2010, the number of active customers for this sector had more than doubled, and the sector had experienced growth rates averaging about 14% annually. Microfinance products and services are provided by 9 companies serving approximately 83,000 active borrowers, and the existing portfolio is valued at approximately US$270 million, according to Mr. Shawwa.
Mr. Azzam Shawwa thanked the World Bank Group for their support during the preparation phase of this strategic framework, and praised the contributions of many partners, particularly the Palestinian Network for Small and Microfinance (Sharakeh), and the German Agency for International Cooperation (GIZ), as well as the Financial Sector Reform and Strengthening Initiative (FIRST) and local partners the members of the National Committee for the Preparation of Strategy, Ministry of Finance and Planning, and Ministry of National Economy for their great cooperation and in depth dialogue.
Mr. Alaa Sisalim, Chairman of the Palestinian Network for Small and Microfinance (Sharakeh), addressed the achievements of the lending sector, where the number of active lending companies in Palestine reached nine companies, which were able to withstand and maintain their capital and growth despite all the crises they had experienced over the course of 30 years. The sector grew at a rate of 36% per annum until 2018. The active portfolio of members of the Palestinian Network for Small and Microfinance (Sharakeh) in the West Bank and Gaza Strip amounted to about $260 million distributed to 80,000 customers, 36% of whom are women and 47% young people. The value of loans disbursed since the establishment of the sector amounted to about $1,355 billion, disbursed to approximately 575,000 households. Mr. Sisalim noted that the interest rate in Palestine was one of the lowest compared to the Middle East and the world.
Mr. Sisalim called for a guarantee fund for loans for marginalized groups, to reduce risk, to provide government guarantees to lending companies to support and assist them in obtaining local and external financing, to amend investment promotion laws, and to allow lending companies to provide a variety of financial services, including saving, supporting the technological environment and related laws, especially for the financial sector, for their positive impact on reducing operating expenses.
Effective microfinance can create the foundation for a fully integrated financial sector. Importantly, small-scale lending can support people’s economic resilience in a conflict affected environment,” said Kanthan Shankar, World Bank Country Director for West Bank and Gaza. “The World Bank sees new opportunities in supporting the new Palestinian Microfinance Strategic Framework, it lays downs strategic directions for diversifications in products and clients, particularly towards women and youth. Such transformative social and economic interventions are essential in the Palestinian context to support livelihoods and create needed jobs.
The ceremony included a presentation on the strategy presented by Mr. Mohammad Manasrah, Director of Supervision and Inspection Department at Palestine Monetary Authority, a film on the development of the specialized lending sector, and a paragraph honoring the participants in the preparation of the strategy and the makers of success stories.
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