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Context - The needs of the sector in Palestinian Territories:
Since the beginning of the second Intifada in 2000, the Palestinian Territories have become increasingly impoverished, one of the main negative effects is the constraining of the local market, representing a reduction in the economic activity of the Palestinian microentrepreneurs, leading towards a deteriorated quality of life. To illustrate the impoverishment of the Palestinian Territories, the percentage of Gazans who live in extreme poverty has been on the rise from 21.6% in 1998 to nearly 35% in 2006.
By other hand, within the context of the current economic crisis, the Palestinian Microfinance Institutions (MFIs) have experienced sharp financial losses and have been forced to drastically curtail their operations, resulting in a near total shut-down of the microfinance sector. Particularly, the 2006 salary crisis of the public sector had a negative impact on the quality of the portfolios of most of the Palestinian microfinance institutions, representing significant losses in their capital structure.
Under this context, the informal sector and the microenterprises have played an important role in the recovering process of the Palestinian economy; thus, it is essential to strength and continue developing the microfinance sector in the Palestinian Territories in order to create local mechanisms that efficiently and effectively counter the rise in poverty and the long-term trends of disillusionment and hopelessness.
For microfinance to grow and become a durable source of finance for the microenterprises of poorest populations of the Palestinian Territories, the sector and its MFIs must embark on structural and institutional changes designed to create a self-sustainable and viable industry.
In the Palestinians territories, the three largest microfinance providers (UNRWA, FATEN and CHF Palestine ) account for 71% of clients and 64% of loan portfolio.
Consulting and Technical Assistance
Projet: Enhance economic prospects for Palestinian microentrepreneurs
Expertise: Institutional strengthening
Description: An extensive work on the regulatory framework has also been conducted to influence the national authorities regarding the microfinance regulation. 6 training of trainers for Palestinian MFIs have taken place and more than 50 trainers have been trained by a senior expert. A microentrepeneurs awards has taken place in October 2008, rewarding the 3 best entrepeneurs for their innovation and achievements.
Microfinance partners: Sharakeh (Palestinian microfinance network) + 8 MFIs
Financing: European Commission, Portland Trust, Evens Foundation, Al Gurhair
Projet: Two-tiered program of support to Palestinian MFIs
Expertise: Institutional strengthening/Upgrading
Description: This program aims at providing a technical support to Palestinian MFIs that have identified specific weaknesses requiring an intense capacity building. A large amount of the work is concentrating on procedures and internal control to enhance transparency and efficiency. It also aims at raising awareness about the microfinance sector in the Palestinian Territories.
Microfinance partners: ASALA, FATEN, CHF, ACAD, PARC (cooperatives), YMCA
Financing: Luxembourg Cooperation for Development
Projet: Enhance economic prospects for Palestinian microentrepreneurs
Expertise: Institutional strengthening
Description: Planet Finance and Sharakeh (Palestinian network for microfinance) have launched in 2007 a 3-year program cofinanced by the European Commission to support the Palestinian microfinance sector by creating local expertise, reinforcing MFIs local capacities and strengthening the microfinance network. An intensive work on the network governance has been carried-out.
Microfinance partners: Sharakeh (Palestinian microfinance network) + 8 MFIs
Financing: European Commission, Portland Trust, Evens Foundation, Al Gurhair