It is not hard for a Lebanese to detect my disguised Egyptian Arabic accent, so it’s been quite common for me to be asked how long I have been in Lebanon, whether this is my first time, and of course what I’m doing here in Lebanon every time I meet someone. Most recently this happened to me at a local Resto-Pub in Hasbaya after a 10km hike. The Resto-Pub owner, Fayez, and I quickly got to talking and as usual it wasn’t long before I was aked ”What do you do here in Lebanon?” Although, I’m fluent in Arabic explaining what micro-finance means is really hard!

Fayez (middle, in black), Mirage Resto-Pub owner & his friends

Microfinance in Arabic translates literally to: Small Funding (التمويل الأصغر) or Small Loans (القروض الصغيرة). To the average Lebanese (or Arab for that matter) this is not something that they are used to hearing. So, I usually get a couple of raised eyebrows, puzzled looks and then the follow-up questions start streaming in: “Oh so you work at a bank? In the loan department?” or “You mean you’re an accountant?” or the more sophisticated in the series of follow-up questions “Yes, those loans for small business owners, right?” I usually struggle a bit; I take a deep breath and I start explaining what micro-credit and micro-finance is. I tend to throw in words like: “lack of access to the banking system“, “Mohamed Yunus” and “giving the poor financial stability”. But even after a little bit of explaining, I still don’t know if I’m getting the point across. And I often find that when I say “loan” people immediately ask “How can I get one for my business?” These regular occurrences made me start wondering what do Microfinance Institutions (MFIs) around the world to overcome this challenge and lack of knowledge on the subject by the general public? And how important is it for the common person to really know and understand what microfinance really is?

In my search, I decided to turn to Al Majmoua to see what they have done in the past and are doing about the subject of microfinance awareness in Lebanon. In a country of 4 million people and 18 recognized sects it is hard to maintain a non-religious, non-political, independent face. During my last field visit, while Wisam, the Loan Analyst and I were waiting for a borrower to come home we started chatting with a shop-owner. He asked us what we were doing and who we worked for. Wisam went on to explain who Al Majmoua is and what the mission was. The shop-owner looked at us smiled and said “Sounds good, but who are you with?” A question that is extremely expected and normal in Lebanon, most organizations have some sort of political and religious affiliation, but Al Majmoua doesn’t and plans on keeping it that way.

Aside from local municipality billboards, a limited number of radio ads, and an innovative Taxi-side ads, Al Majmoua has never been involved in large scale promotion campaigns using TV ads or billboards mainly because of the high cost of such campaigns. Beyond that Al Majmoua’s awareness campaigns about microcredit have been focused on policy makers, funders, and universities through local community meetings. Additionally, being out in the open and marketing heavily means people will start asking questioning Al Majmoua’s political and religious affiliations.

Al Majmoua Taxi Campaign in 2000 (Source: Al Majmoua 2000 Annual Report)

These are some of the many challenges that Al Majmoua faces when it starts thinking about it’s marketing and awareness campaigns and strategies, especially since the organization has been very cautious and succeeded since day-one with its own staff and clients to remain non-partisan, apolitical, non religious and non discriminatory organization in Lebanon. Top 3 things Al Majmoua can do to market its mission without getting too many questions:

• Town-hall: hold town-hall meetings in communities they don’t currently operate in to educate potential borrowers about microfinance and Al Majmoua’s mission.
• Non-financial Services: start a referral program to the non-financial services it offers to other NGOs who work with diverse communities.
• Microfinance Clubs on University Campuses: partner with universities to help start and establish Microfinance Clubs/Student Groups on university campuses where students can act as Al Majmoua Ambassadors.

I had been living in my beautifully spacious room with an extra bed to host visitors for about a month when the landlord informed me that I will have to move to the smallest room in the house because a big group of performers and artists are coming and they had booked all the big rooms in the house in advance. I was really not looking forward to leaving the room; I had made it my own, put pictures and postcards up, friends had come and stayed with me in it, but most importantly I had no idea how I was going to fit all my belongings that now seem to have grown in size into the smallest tiniest room in the house.

My old spacious room in Beirut

But no matter how much I didn’t want this move to take place or how worries I was about my stuff fitting I had to make the move. So, I spent 3 hours of my Sunday moving things from one room to the other. After I had moved everything out of my spacious room into my now very tiny room I paused, looked around and was amazed at how everything fit. All my things suddenly had a new place in this new room. They and I somehow made it work. We adapted very quickly.

My new small room in Beirut

This sense of quick and sudden adaptation reminded me of my field visits the previous week. I went to the field on Tuesday right after a highly anticipated speech by Hezbollah‘s leader Hassan Nasrallah about the recent U.N. court issued indictment of 4 Hezbollah members  in the 2005 assassination of former Lebanese Prime Minister Rafik Hariri. I watched the Nasrallah speech with a group of friends over dinner. The reaction was underwhelming. Everyone spoke of how important his speech was, but no one quite knew what this importance meant; at least I didn’t, until I went to the field that week.

I met with 6 borrowers and every time the loan analyst, Wisam, and I would ask them how business was going. They would smile (often point at the TV if they had one) and say “Terrible! As you know, but what can we do but wait and see.” I asked directly if the impact of such speeches and political changes is felt so quickly by the common citizen and the answer I received from all those I have asked was the same “This is Lebanon!” As one of my dear Lebanese friend’s lightly put it “we wait for one (could be anyone) person to make a speech so we can plan our lives accordingly. War or no war. Stability or instability.”

It seems like one thing the Lebanese have learned to do over years of conflict and unrest is to adapt. In many ways they’ve made their things fit into many small rooms over the decades, just like I have this past Sunday.

Heba Gamal is a member of KF15 and works with Al Majmoua – The Lebanese Association for Development in Beirut, Lebanon – check out their Kiva Partner Page. Also, join the Friends of Al Majmoua lending team now!

“It is when you give of yourself that you truly give.” – Gibran Khalil Gibran, The Prophet

Having grown up in Egypt, I know that family is an important part of daily life in the Middle East. So, when it came to my Kiva Fellowship – I knew that in Lebanon I was going to be well-fed, watched over and taken care of. What I didn’t know is how this family-style love I was too familiar with was going to translate into the workings of micro-finance in Lebanon.

Al Majmoua's Headquarters in Beirut, Lebanon

When I arrived at Al Majmoua‘s Headquarters in the heart of Beirut, I was met by the head of Human Resources and Business Development, Alia. After a thorough 2-hour overview and introduction to Al Majmoua; one of my first questions to Alia was how long she’s been with the organization (followed, of course, by where the best place for lunch around was). The answer was: “10 years!” The idea of someone being in one organization for that long caught me by surprise, but it wasn’t until I started meeting other Al Majmoua team members that I started realizing that there’s something that keeps people here this long. Dr. Youssef, Al Majmoua’s executive director, has been with the organization for more than 11 years. Nadine, Al Majmoua’s Kiva Coordinator and Research & Development Assistant has been with the organization for more than 9 years. She’s done everything from being a Loan Analyst to Internal Auditing to HR and now Kiva. Nadine even left Al Majmoua for a year, but quickly found herself back at Al Majmoua.

This sense of familial love and belonging isn’t just apparent by the number of years people have been here; it’s in their attitude! In a country such as Lebanon, where sectarianism has had a long and tragic impact on the people and the country – it’s refreshing and inspiring to watch a network of ~170 employees all over Lebanon maintaining a family style work environment.

On my first field visit at the Beirut Branch, the Branch Supervisor, Diala, sat me down for a thorough introduction of the branch operations and procedure. During our conversation she said something that stuck with me: “Everyone at Al Majmoua behaves as if this is their home.” Later that day, I was introduced to Ismail, an Al Majmoua Loan Analyst. He was going to be my guide for the day. The plan was to go meet 2 new borrowers and check on a couple of existing Kiva borrowers.

Ismail's "Motto"

I had been carefully asked and semi-warned the day before by Nadine that I will be joining Ismail on his scooter or as the Lebanese call it “Motto”. Ismail was zooming through the Palestinian refugee camps and neighborhoods only like a local from the area would. Micro-finance is highly dependent on social relationships and reputation within the community. Ismail is a local; when he walks the streets of Beirut’s suburbs and refugee camps people know him as their neighbor. During our field visits, we ran into his father-in-law and cousin separately.

When Al Majmoua first started in the late 1990′s half of its staff was made up of former borrowers. Now with ~170 employees and 14 branches across Lebanon, Al Majmoua still tires to keep the family connections strong. Today, roughly 30% of the loan analysts are former Al Majmoua borrowers themselves or  are friends and/or relatives of current borrowers. Utilizing SMS technology, Al Majmoua’s HR team sends out job vacancy ads to their pool of borrowers to get referrals and applicants. This sense of “community first” extends to the interactions between borrowers themselves and how they view Al Majmoua.

Father & Son Al Majmoua Borrowers - Beirut, Lebanon

In “relationship-driven cultures”, like Lebanon, personal relationships are built on the basis of social interactions especially within the family and community.  My first stop with Ismail was a new female borrower, Nadia; she heard about Al Majmoua through her  sister-in-law who is on her 3rd loan cycle. Next we stopped to check up on longtime Al Majmoua borrower Mohamed and his son, Salah, a recent Al Majmoua borrower as well. During our visit, borrowers greeted Ismail and I like family. Often inviting us into their homes or businesses for an afternoon drink or snack. They often asked Ismail if he had received a call from a friend or a relative that they had recommended Al Majmoua to. Word-of-Mouth seems to be the organization’s strongest and most effective marketing tool.

Besides being well-fed and taken care of  as part of the family, I’m thrilled to be a temporary family member of an organization that stays true to itself and its community!

Last Friday, the 26th November, I was lucky enough to spend the morning with Georgette, one of Al Majmoua’s loan agents based in their Nwayri office, in Beirut.

Georgette had very kindly made time to take me around to see some of her clients, for whom I wanted to write journal updates (the short emails letting lenders know how the people they’ve loaned to are getting along, particularly in relation to their loans & businesses).

Although we only spent a morning together, I was immediately reminded of what an integral role the MFI loan officers/agents play in the whole industry of Micro Finance, without whom no amount of good will, policy and planning could effect the very real social & financial benefits that organizations like Kiva and Al Majmoua aspire to achieve.

More than once during our conversations, Georgette mentioned that there is “no such thing as a bad client, only a bad loan”. Although I think I may have heard these words before, I possibly hadn’t realized to what degree they ought to be the mantra for all micro finance delivery and, as in Georgette’s case, quite often are.

Georgette - Al Majmoua Loan Agent

Georgette has worked with Al Majmoua for 12 years and as a Loan Agent in Nwayri for the last 5. As we drove around the neighbourhood in which she works, it became clear that Georgette was very much a part of the community, stopping every few minutes to exchange a few words with people as we wound our way through the narrow streets perched on the hills overlooking Beirut.

During the morning, Georgette mentioned that she took great pains to look at the household & business budgets of her clients when they applied for loans. She would never, she insisted, allow them to take on a loan that was beyond their means to repay, even if they technically qualified for a larger amount. To do so and have them fall into arrears with their repayments, would indicate that the amount loaned was “bad” and not the client themselves. Rather than do this, Georgette described how she would suggest a more reasonable sum and take the time to explain her decision to the client, who would, invariably, end up agreeing with her reasoning.

Georgette is very aware that to allow her clients to over extend themselves, risks subverting the very mission Al Majmoua strives towards, namely to “improve the quality of life of the most vulnerable by providing them with appropriate tools to make their way out of poverty with pride”.
There is a definite line between helping people to improve their lives through access to credit & simply allowing them to become so indebted that their day to day lives are dictated by the necessity of servicing their creditors.
In an industry that is increasingly attracting large capital funds, overly excited at the prospect of interest rate returns in excess of more traditional investments, it is reassuring to know that the well being of individual entrepreneurs remains at the heart of Al Majmoua’s work.

As we drove around Nwayri, stopping to speak to active clients, past borrowers, their families and their neighbours; discussing how business was going, the length of time clients were queuing at the post office to make repayments and all manner of other local news, it became increasingly evident that Georgette is as much a sister, a neighbour, an aunty & a friend to the people she works with as she is a Loan Agent disbursing loans on behalf of Al Majmoua and Kiva. In return, Georgette’s clients are, in her eyes, much more than a quota of case files but an extended family who look forward to meeting one another & keep in touch during the holidays.

As Kiva lenders, you can rest assured that your funds and your desire to contribute to the improvement of your fellow beings’ lives are in safe hands with Loan Agents like Georgette and her colleagues at Al Majmoua. Having met & spent time, not only with Georgette, but also with Arab, an extremely resilient Loan Agent from the Tayouneh office, I have not failed to be impressed with the professionalism, energy & compassion with which they approach their work.

If are interested in supporting the work of Al Majmoua, you might consider joining their Kiva lending team where you can receive & exchange news about Al Majmoua´s work as well as join forces in supporting individual borrowers with whom Al Majmoua are working.

Josh Richards is a Kiva Fellow in KF13, working with Al Majmoua – the Lebanese Association for Development, in Beirut, Lebanon.

This morning (15th November 2010) I sat down at my desk and discovered that a loan request for $1000, that I had posted onto Kiva’s website last Friday, had gone live & been fully funded over the weekend – by just 2 funders!

public sculpture - Beirut

I cannot help but feel a little lighter in my seat with a big grin forming on my face, having played the tiniest of roles in linking two lenders, from Dallas & New Orleans in North America, with a painter from the Lebanon who needed to repair his van. A single, wonderful act of solidarity between 3 people, via Kiva and Al Majmoua.

Now obviously, as a long´ish term lender on Kiva myself, I realise that loans are posted & funded in huge numbers, every day, from all over the World – business as usual in the field of micro finance. So all the more surprising to experience such a buzz at reading “This loan has been FULLY FUNDED by 2 lenders!”, in this one particular instance.

However, since coming to Beirut 2 weeks ago, I’ve come to realize that the Kiva Fellowship program can be full of the most unexpected surprises.

As Caroline, another Kiva Fellow in Beirut, wrote (Phoenix from the Rubble), I also had quite a mixed bag of emotions upon discovering that I was set to spend the next 4 months living & working in Beirut. On the one hand, the excitement of being a step closer to working for Kiva and one of their partners abroad, on the other hand, a certain amount of trepidation that it was in an area which elicits quite fraught associations, based on the limited exposure in the international media & consciousness that Lebanon receives, often based solely on the regional conflicts of recent years.

However, a little bit of research revealed that Lebanon had been nominated in the top 10 destinations to visit in 2009, by both the Lonely Planet & New York Times, which went a long way to allaying my initial concerns & those of my friends in the UK.

The reality I have found upon arriving in Lebanon has been even more enlightening, a different “kettle of fish” altogether (or “pot of prawns”, as our Kiva Fellows Program Coordinator, Julie, might say).

From my first night celebrating Halloween in Gymmeze, dancing with numerous Beirutis dressed as Vampires, bloody Mummies & killer Zombies, to the overwhelmingly awesome & beautiful caves of Jeita, I have found numerous sides to the Lebanon that I had never anticipated.

Place d´Etoile

In Lebanon, & even within the city of Beirut itself, there is an amazingly complex racial, religious & political demographic which I can expect to only superficially comprehend, even by the end of my time here 3 and a half months from now. But in the streets, markets, security barricades, cafes, bars, offices & taxis, I have been lucky enough to meet the most friendly, chatty people you can imagine, the ubiquitous “Welcome to Lebanon” being uttered with almost comical frequency.

The city itself seems to be a patchwork of smart new housing & business developments, older French colonial & traditional Arabic architecture, semi derelict buildings pockmarked by bullet & shell holes, hastily rebuilt neighbourhoods with minimal facilities and whatever else I’ve yet to encounter. The sight of which, gives some clues as to the varied & extreme circumstances people have experienced here, in recent & not so recent years.

However, as will be no surprise to most people, other than perhaps those who, like me, have had the luxury of living in countries where stability & security can be largely taken for granted, the country and the people here seem to strive onwards with immense energy & resilience.

The MFI I am working for, Al Majmoua, has gone from strength to strength since it’s inception in 1994 as a Save the Children micro finance program, becoming fully autonomous in 1998. Al Majmoua now has somewhere in the region of 25,000 active clients, maintaining a portfolio of well over $10,000,000 USD with a resolute & dedicated team of 125 employees working in 14 branch offices across Lebanon and their head office in Beirut.

Aside from Al Majmoua’s internationally recognized successes as a micro finance institute, facilitating the inherent entrepreneurial spirit of the people living in Lebanon and their desire to grow, recover & develop both their lives & the country, Al Majmoua performs many more social roles for the communities within which it operates.

Aside from the fashion shows, trade fairs, business development & diagnosis workshops, networking forums, personal development courses and other non financial services Al Majmoua offers, they have also been able to utilise their skills, local knowledge, contacts & facilities to assist with post conflict recovery and emergency response and distribution.

As a result of the 2006 war, 30% of it’s clients had sustained damage to their businesses and/or lives with whole communities facing considerable difficulties. In partnership with international aid organizations & NGOs, Al Majmoua opened 15 safe spaces in the most affected areas to host children for a few hours a day, offering sports, educational & cultural activities helping more than 1,000 children cope with the stress of that summer & the tense atmosphere at home.

words on the street - "It Shouldn´t Hurt to be a Child"

Another partnership resulted in Al Majmoua being able to replace equipment for 353 of their micro entrepreneurs who had had their businesses heavily damaged or destroyed. Yet another partnership saw the distribution of emergency kits to the families of 150 clients who had been displaced by the conflict.

During this time, Al Majmoua maintained it’s full repayment policy, rescheduling loans for those most affected and granting grace periods of 1-6 months where necessary. Incredibly, in the year following the conflict, Al Majmoua had managed not only to recover without any external financial assistance or subsidy, but to attain 40% growth, that same year they became a partner MFI with Kiva.

If you would like to support the work of Al Majmoua & their borrowers further, you might like to join the Al Majmoua Lebanese Assoc. for Development lending team, a group of Kiva lenders funding Al Majmoua borrowers.

In fairness, these first couple of weeks as a Kiva Fellow have not been a complete “bed of roses” (or a “sofa of cyclamens”, Julie?). It has taken a lot of energy & resources to move country; finding accommodation was a difficult, protracted & worrying affair; trying to shake Caroline’s colleague by the hand, only to have her jump back a few feet made me feel like a cultural idiot; being a temporary worker in a new organization & trying to get to know a new team can be tricky at the best of times; and the occasional moments doubting my own ability to be a useful addition to the office were quite disheartening.

However, any difficulties have been far outweighed by the innumerable rewards of my fellowship experience thus far. I am working with great people, for a fantastic MFI, on behalf of an inspiring company, in a fascinating & beautiful part of the world. The sun is shining, the kebabs are delicious and the work is always interesting & enlightening.

Getting used to local customs & practices will be a continual learning process and settling into work will come with time, as it invariably does. But as I come to the end of the first day of my third week as a Kiva Fellow, I cannot help but look forward to what is in store in the coming weeks & months, what surprises lie around the corner, what preconceptions will be challenged & what misconceptions will leave me (&/or those around me) laughing, cringing or shaking heads in despair.

If you are even slightly tempted or intrigued by the idea of joining the Kiva Fellowship program, I would highly recommend exploring further.

Salam,

Josh Richards is a Kiva Fellow in KF13, working with The Lebanese Association for Development – Al Majmoua, in Beirut, Lebanon.

The Microfootball Superstars - Staff from Al Majmoua and Ameen

It is a bit of a strange site to see German, Italian, French,  Spanish, and Brazilian flags hanging from balconies and waving from car antennas all over Lebanon. But this is the excitement that is brewing in Lebanon as it prepares for the 2010 World Cup. Café owners all over Beirut are investing in bigger, better televisions and stocking up on water pipe tobacco and food goods that will surely be demanded by their customers during the football matches. Al Majmoua borrower, Ryad, is busy updating his popular café and looking to purchase a 52” television before this year’s tournament. He is rooting for Brazil. As Kiva Fellow, Isaac, mentioned of microentrepreneurs in Mozambique—the lively spirit of this global football extravaganza often results in expanded opportunities for microfinance borrowers.

In the middle of the action

Although I am already tired of Shakira’s football anthem that seems to play on repeat on the local radio stations, I cannot help but join the wave of enthusiasm for this year’s World Cup. In fact my excitement is so great that I decided to organize a friendly match between Kiva’s Lebanon partners, Ameen s.a.l. and Al Majmoua in order to celebrate this football season. Both partners are leading microfinance institutions in Lebanon and also major competitors.

As expected in the Middle East, the match started a few minutes late. But for one animated hour, the crowd (staff from both organizations) cheered on the teams as they played a skillful match. With Al Majmoua wearing white, Ameen sporting bright blue, adrenaline pumping and faces smiling, the match was a fantastic success. It was really terrific to have a diverse blend of staff from the field teams and main offices take part in the match. Some loan officers traveled more than two hours just to play! The match started out quite close, but Al Majmoua reigned victorious and ended the night with an amazing 9-2 win.

The Al Majmoua fans...and yes, they are cheering for KIVA!

As the sole Kiva representative and therefore most “neutral” observer, I tried to instill some order as the referee. But, I quickly realized that sometimes you just have to let boys be boys and, let men be boys as well, and work out the supposed handballs, fouls, and deflections for themselves.

Not only was the match a great chance for Ameen and Al Majmoua staff to meet one another, but also an opportunity for each respective staff to socialize with each other. The Operations Manager (and also Al Majmoua team coach) commented that he was pleased to see some new faces from the field staff who he had not yet met. There was even talk of starting a microfinance football league in Lebanon….

It has been a real pleasure to work with both of these outstanding field partners. I really admire their ability to respect one another and deliver high quality products and services. The friendly teasing on the football field was yet another illustration of how these two organizations are able to stay true to their identities and still engage with their competitors in a healthy and productive way.

In Lebanon, football fever is spreading fast in a major way at the micro-level.

Nishita Roy is a Kiva Fellow (Class 10) serving in Lebanon. Get involved with Kiva’s Lebanon partners, Ameen s.a.l. and Al Majmoua, today! Make an impact by lending to a Middle East entrepreneur today!

Kiva Love: Sarah, the Al Majmoua Kiva Coordinator, and I

Al Majmoua was originally started by Save the Children. It has since become an autonomous organization, but continues to implement youth initiatives in conjunction with Save the Children. In Lebanon, Al Majmoua oversees the Siraj program, which is a leadership initiative designed for young people in Lebanon, Yemen, Egypt, Jordan, and Palestine.

The Siraj film crew and Al Majmoua Business Development staff

The most recent Siraj project was a short documentary film created by a group of 25 students from the Lebanese International University (LIU). With the help and guidance of Al Majmoua, the students decided to create a film that illustrates the challenges of Lebanon’s poor people. They spent nearly four months to do the necessary research and visit poor people all over Lebanon. The result was a compelling documentary with high quality cinematography and well structured interviews featuring several low-income people in Lebanon. I thought that the mix of Arabic music and excerpts from the “Slumdog Millionaire” soundtrack were fitting for the film. The students were able to articulate the realities and individual challenges of poverty in a dignified way. I resonated strongly with this point as Kiva aims to achieve the same objective.

Although he was busy running around for the event, the student group leader, Ali, managed to share his comments on the film (please see video):

“The film is very important for us because it is a way to show a real picture of the suffering and poverty in Lebanon for the students and the young people. In Lebanon it’s only the politicians and people with power who talk about the suffering of the poor. Through this film we are letting poor people express themselves”.

As a result of Al Majmoua’s work serving low-income borrowers all over Lebanon, it was able to connect the students to many local contacts and resources for the film. The fact that Dr. Youssef Fawaz, the Executive Director of Al Majmoua, participated in the event as a speaker was extremely telling of the value Al Majmoua places on such initiatives.

Although the film was presented in the middle of a busy work and school day, the student group successfully recruited more than 50 of their peers from LIU to attend the event, as well as the Representative of the Minister of Youth and Sports, the Director of Public Relations of LIU, and an economic development expert from the United Nations Economic and Social Commission for Western Asia (ESCWA). ESCWA comprises 14 Arab countries in Western Asia: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, the Sudan, the Syrian Arab Republic, the United Arab Emirates and Yemen.

When you invest in Kiva, you invest in local field partners.

Please remember that when you lend to Kiva borrowers, you are also investing in Kiva’s local field partners. It is in large part due to the trust and confidence that Kiva partners instill in local communities that they are able to provide much needed financial and non-financial services to low-income borrowers all over the world. And when you take the example of Al Majmoua in Lebanon, it is easy to see how these partners can play a major role in shaping the next generation of leaders. It is a sad reality that we must continue to address poverty in our communities and countries, but there is something uplifting and reassuring when young people are actively engaged in the discussions and the solutions.

One voice and one story at a time, the future is yours to change, “ya shabab”.

Nishita Roy is a Kiva Fellow (Class 10) serving in Lebanon. Get involved with Kiva’s Lebanon partners, Ameen s.a.l. and Al Majmoua, today! Make an impact by lending to an Al Majmoua entrepreneur today!

There was an army officer with a huge machine gun trying to speak with the man. I yelled at the officer to help get the woman out of the car. He (not surprisingly) ignored me. Eventually the officer convinced them to leave. That was it. I could only imagine what this woman would face later. I yelled at the officer and asked why he didn’t do more? What good were his bulging muscles and oversized gun if he could not help this woman? He responded very matter-of-factly, what more can I do?  It’s his wife.

I yelled back saying that it didn’t matter if it was his wife, sister, mother, or a stranger on the street. In any case, it was wrong. He mumbled back and reluctantly agreed that it was wrong. He really just wanted me to be on my way.  This just happened to be in Lebanon, but it was a powerful reminder of how violence against women is all too often tolerated and encouraged in the Middle East and around the world.

In March, the Economist published an article about Arab women’s rights. It included a survey of 15,000 Egyptian youth in 2009: “67% of female respondents believe that a husband is justified in beating his wife if she speaks to another man”.

I have to say I am not surprised by the Economist’s report. When I was living in Egypt I witnessed a woman get slapped by her husband in the middle of a crowded mall. She had wanted him to buy medicine for their son. On another occasion, I heard the wails of a young girl getting lashed by a belt when visiting a friend in one of Cairo’s poorer neighborhoods. Apparently her brother was beating her, presumably for talking to a boy without permission. In both cases, no one said anything, did anything.

Kiva supports women all over the world. A borrower from Lebanon.

I myself fell victim to violence from a partner in Egypt.  After more than a year in the relationship, I found myself begging for my life, pinned against a wall being choked by a man who I had once considered so sweet and kind. The doorman stood by watching. He also said nothing, did nothing. My boyfriend at the time said with a wicked smile, “can’t you see? No one is going to help you because you are the woman and I am the man”. Sadly, in that moment, he was right. Fortunately I was able to escape and leave this abusive relationship.

So how can we change our societies to say something, do something? How can we take women out of the violence equation?

Microfinance.

Well, not just microfinance. It will take a multi-sectoral approach. But there is sufficient data to suggest that women’s economic empowerment (through microfinance) can help reduce partner and targeted violence.

Over 80% of entrepreneurs supported by Kiva are women. A borrower from Kenya.

Although it should be noted that women may face greater safety risks in the short-term until governments and communities are educated about and comfortable with microfinance programs.

A 2004 report by members of the Consultative Group to Assist the Poor (CGAP) notes that “increased contributions of resources to household led to increased self-worth and declining levels of tension and violence” for SEDF (a microfinance organization) clients in Bangladesh. It also found that microfinance “program participation led to increased self-confidence and improved status within the community” for Freedom from Hunger clients in Bolivia and Ghana.

The CGAP research team surveyed 1300 households in Bangladesh and found that:

• Women with loans were less likely to be beaten;
• Women with schooling were less likely to be beaten;
  

  Microfinance can lead to social empowerment for women. Kiva borrowers in Pakistan.

• Non-microfinance women were 3 times more likely to be beaten than Grameen clients and 2 times more likely than BRAC clients (Grameen and BRAC are two of the largest microfinance organizations in the world).

A 2007 study on the Intervention with Microfinance for AIDS and Gender Equity (IMAGE) in South Africa found that:

• After 2 years, the risk of past-year physical or sexual violence by an intimate partner was reduced by more than half;
• Reductions in violence resulted from a range of responses enabling women to challenge the acceptability of violence, expect and receive better treatment from partners, leave abusive relationships, and raise public awareness about intimate partner violence;
• The findings, both qualitative and quantitative, indicate that economic and social empowerment of women can contribute to reductions in intimate partner violence.

Through its work, Kiva has invested in over 270,000 women entrepreneurs. Although the world may not be getting any kinder, women are getting stronger and fighting back—with microfinance as their weapon.

Nishita Roy is a Kiva Fellow (Class 10) serving in Lebanon. Get involved with Kiva’s Lebanon partners, Ameen s.a.l. and Al Majmoua, today! Invest in one of Kiva’s female borrowers right now!

*Please note that women pictured are to show some of Kiva’s women borrowers, but does not in any way suggest that they have suffered from domestic or partner violence.

Ameen: The “Commercial” Approach

Ameen (meaning “trustworthy” in Arabic) has made its mark through sophisticated partnerships with international organizations such as USAID and CISCO systems. Ameen only lends to individual borrowers and is able to offer financial services in almost every corner of the country due to its relationship with four of the country’s commercial banks.  By working closely with commercial institutions, Ameen is able to significantly reduce operational costs and offer a competitive array of products. Lebanon has an incredibly well developed banking industry (more than 60 banks are operating), which is hard to believe given that you can drive from one end of the country to the other in only a few hours and the estimated population is approximately four million people.

I was at first surprised to find that Ameen only offers individual loans, which counters the common perception of microfinance as a group-based model. However, after speaking more with Ameen’s management as well as reading a 2008 report on the microfinance industry in Lebanon published by the IFC, it is clear that individual lending is preferred by a significant segment of current and prospective borrowers. Cultural and social reasons are cited for this preference. I can imagine that the uncertainty that comes from thirty years of sporadic conflict and war make it difficult to engage in economic partnerships with one’s neighbors and friends.

Thus far, I am extremely impressed by the high level of professionalism and organization at Ameen. In terms of Kiva, Ameen offers loans using a “direct-lending” approach where borrowers have much more contact with loan officers.  I am interested to see how Ameen negotiates between its commercial and direct-lending methodologies and how this impacts organizational processes and borrower experiences.

Al Majmoua: The “NGO” Approach

Al Majmoua (meaning “the group” in Arabic) feels more like a typical non-profit organization when you walk into its headquarters (relaxed and with a lack of adequate storage and staff space), but that is somewhat of a skewed impression when one learns of the organization’s substantial loan portfolio and total staff of more than 120 employees.

Al Majmoua has established itself as a strong competitor in Lebanon’s microfinance sector due to its range of financial and non-financial services and deep-rooted community relationships. From my understanding thus far, it seems that Al Majmoua is one of the few microfinance organizations that offers a substantial set of non-financial services such as financial literacy and vocational trainings, generally free of charge and open to all community members. Also interesting, it provides loans to Palestinian refugees as well as service workers, such as Filipina women who make up a large portion of private housekeepers in Lebanon.

I was able to meet several Kiva clients with one of Al Majmoua’s most experienced loan officers. The loan officer is of Armenian background and has grown up in Lebanon. She took us to visit her clients in the predominantly Armenian section of Beirut, Burj Hammoud. Based on my experience working closely with microfinance clients in Jordan with FINCA International, I was surprised by the high quality of products (in this case clothing imported from Turkey), and that borrower businesses were quite formal with rented or owned store space.

The commitment of the Al Majmoua staff is clear from the headquarters staff as well as the loan officer we met. I am curious to see how Al Majmoua continues to fulfill its social objectives with the entrance of new competitors and increasing pressures to keep costs low without compromising service quality.

Now in week 2 of my fellowship, several points stand out to me regarding the country’s microfinance industry:

• The market is relatively small (200,000  maximum potential borrowers), and there is increasing competition amongst organizations;
• There is not a strong focus on group loans and women borrowers are more difficult to access than other countries in the region and internationally;
• The lack of specific microfinance legislation and sophisticated banking sector allows organizations to operate relatively freely and engage with international investors;
• The definition of “micro enterprise” is vastly different (larger) from many of Kiva’s other partners in less developed countries, and also varies greatly by country within the region.

In Lebanon, diversity and differences have bred conflict for generations, but have also contributed to a country that can apply a sundry of strategies to its economic, social, and political development. Based on Kiva’s field partners, it seems that alternate approaches to microfinance are to be expected and more importantly, are successful.

Nishita Roy is  Kiva Fellow (Class 10) serving in Lebanon. She is working with Ameen s.a.l. and Al Majmoua. Get involved with these Lebanon field partners today!

I’ve traveled up to the mountains, down to the valley and along the coast to meet borrowers. The scenery at each place has been drastically different: the northern Bekaa valley is flat and somewhat arid; Mount Lebanon – lush and green; and the Southern coast – flaxen and dotted with palms. Regardless of where I’m headed, the day always starts off with a near-death experience involving a scooter, car, truck or, when really lucky, a semi (nothing like having your life flashing before your eyes to give you that extra jolt of energy in the morning).

After surviving the car-ride to one of Al Majmoua’s branches (Al Majmoua has nine branches located all over the country), I meet the Loan Analyst (LA) I will be trailing for the day. The LA serves as my guide, translator (for when I struggle with the language) and general hero in life. Each LA has over one hundred clients and knows everything about them from how their businesses are going, to the number of kids they have, to what repairs they need done on their houses. From there, we start our rounds – visiting the borrowers.

The Lebanese people are known for their hospitality (and 4 pounds in one month later, I can vouch for it). Regardless of where I am meeting the borrowers (their homes, grocery stores, workshops..) I am always offered at least one strong cup of Arabic coffee. Declining is almost never an option. After accepting the cup (and I don’t drink coffee) the fun really starts. I ask my questions in Arabic: How long have you had your business? What hardships do you face? What are your dreams …and finally, the dreaded: How did the loan change your life? I dread this question because I always butcher this phrase at least twice while on the field. Loan is qard in Arabic; qird is monkey in Arabic- you can guess which word I tend to use. The general consensus is: Many clients have not seen the monkey funded by Kiva but they find the loan to be very helpful. This is where the Loan Analysts (my heroes!) jump in and explain to the confused clients what I was trying to say.

Despite all the awkwardness and confusion that my garbled Arabic generates, these field visits are what bring everything together: I meet the nineteen year old boy who single-handedly supports his family of five by giving little kids rides on the pier on a mini-train attached to his motorcycle (the only business of the like in the area), the store-owner who is working tirelessly to put his four kids through college, the woman selling clothes out of her war destroyed home that she one day hopes fix. I meet people who are determined despite set-backs and generous despite their financial situations. At the end of the day, I am a sweaty, jittery mess desperately seeking the bathroom courtesy of the 5th cup of coffee – and I love it.

Alia Rafeh is a Kiva Fellow who is working with Al Majmoua in Lebanon this summer. To lend to Al Majmoua’s clients on Kiva click here: Al Majmoua currently funding loans.

The noise from the screaming kids (in-flight entertainment system was broken-lovely) and exasperated parents dies down to a quiet murmur as we start to get our first glimpses of the Mediterranean and the Lebanese shoreline. The entire plane is silenced by this stunning view – sandy beaches, rocky coasts and plummeting cliffs.  All the last-minute nervousness and doubts I had when boarding my plane from the US (quitting my job given the current economic climate,  leaving my rent-controlled apartment, getting rid of my goldfish…) melt away as I watch the electric blue waters of the sea and recognize various Lebanese landmarks – this is why I came here.

This country is rich in history and culture , it’s capital –Beirut- was once known as the “Paris of the Middle-East”  .  Fifteen-years of civil war seriously damaged the country’s economic infrastructure. Lebanon started to recover but the war of 2006 set the economy back yet again. However, what I admire most about this country and its people is their ability to bounce-back- nothing phases them – they just pick-up where they left off and rebuild as necessary . I came here because I wanted to see the power of microfinance in improving these peoples’ lives and in aiding to restore this already-on-the-mend “Paris of the Middle-East” to its former glory – it’s time again for Lebanon to be recognized for its rich heritage,  its  peoples’ “joie de vivre”  and its breath-taking beauty.

Alia Rafeh is part of KF8 and will be working with Al Majmoua in Lebanon  for 11 weeks where she will attempt not to completely butcher the language. To fund borrowers from Al Majmoua  on Kiva, click here.

Jail in Beirut wasn’t really a high-security sort of place. Most of the “prisoners” were being led around without handcuffs, and no one was carrying a weapon. People were actually fairly friendly. My holding cell had only a few people in it when I arrived: two women who had apparently had a longer day than myself, and two men who had clearly over-dressed for the occasion by my standards. Ahmad had seemingly called ahead for a reservation, because he arrived with pita bread and labneh cheese in a shopping bag. He offered me some, but I wasn’t really in the mood to eat. He was there for some sort of immigration issue. The other guy whose name I didn’t catch said he was there “for cocaine.” With me, I had my folder of useless paperwork, my handy planner, keys, wallet, cellphone. When I finished my cigarette, I fished around in my pocket for my used and gently abused cell that I had just acquired for ten dollars the day before and flipped through my planner for a helpful number. The first one I came upon was a colleague at work, who I managed to get through to. The warden saw me on the phone– I made no sincere efforts to hide my call– and decided it was time to process me. That meant saying goodbye to the phone, my belt, shoelaces, money and my pen. I had a real mammoth of a metal pen at the time and understandably they wanted to take it away– it was definitely passable as a weapon. Not certain how long I would be there, I protested enough to at least keep the ink cartridge so I could write to pass the time… I already had a grandiose plan in the works to record my memoirs by matchlight and sneak them out of jail with the guards inside hollowed out cigarettes. I also insisted that I get my phone call. For a good twenty minutes I had a yelling match with the warden, refusing to move an inch until I got my phone call. I don’t think the Lebanese typically get one, but I had a terrible feeling that if I didn’t get in touch with the embassy, it would be awfully easy to get lost for a while down there. Begging and pleading finally won out and I was allowed my call to the embassy. I had enough time for a quick “Here’s my name, I’m in jail, please get me out of here” before the phone was snatched away and I was led down a long corridor to meet my new cellmates.

I spoke to some of the prison guards (They weren’t exactly guards, more like custodians. They had no billyclubs or handcuffs and from what I could tell spent most of their time sweeping the place.) who showed me around and found out they were almost all from Sudan and here in Lebanon on working papers from the U.N.. Really nice guys. We walked by cell after cell, each one filled with maybe 30- 35 prisoners, each one maybe 10×20 meters in size. Some were more crowded than others, but there seemed to be enough space to at least sit comfortably. The cells were covered on the far wall inside with prisoner’s dirty plastic shopping bags filled with clothes and toothpaste. The hallway had fluorescent lights hanging down from the low ceiling which dimly lit the passage with a hazy yellow glow. Huge fans blew around hot, damp, salty air, and there was a shelf for shoes outside of each cell. By the time we reached my cell, number 12, the last one at the end of the hall, I had made friends with a jovial guard, Hadool, who was happy to learn that I was from New York. Hadool had a sister living in Queens and gave me a pack of cigarettes as a welcome present “If you need anything, let me know” he whispered to me through the bars as the door was shut anew.

I don’t think I’m going out on a limb if I say that I stuck out a bit. My cellmates were all gathered in circles in their respective corners, many not wearing shirts, talking amongst themselves and sneaking glances over to the new guy. I quickly found out that these divisions were by homeland– the Sri Lankans in one corner, Indians in another, Palestinians, Iraqis, Thai; they all had their own enclave. I was welcomed by an Iraqi man wearing nice jeans who immediately started my inquisition. I got the impression he was the enforcer. He asked why I was there, and I said I really wasn’t sure, and he asked where I was from, and all I could manage was a feeble “Eh, far away.” Not content to leave it at that, his friends pressed on- “What, like from Australia?” Now I’ve never in all my travels misled people about where I’m from. Those who have traveled around a bit know that it’s tough sometimes, particularly recently, to say you’re American. Not just out of fear of a degree of embarrassment, but in some cases, out of fear for your safety. But I honestly think it’s kind of a responsibility of those who can travel to be totally honest and represent our country well. That said, in this situation, surrounded by imprisoned men from places where America isn’t exactly a nice word, and not knowing how long I would be spending with these guys, I admitted that yes, I was from Australia. The enforcer caught a knowing grin, “Welcome,” he said, “Welcome to Lebanon.” I felt a faint tinge of regret as I let out a sigh of relief and returned his greetings.

I struck up a conversation with a man sitting to my left on the sleeping pads who I learned was a doctor from Iraq who had been imprisoned for 54 days after being detained for immigration issues at a border crossing into Lebanon. At this, I swallowed hard, but he assured me that I would be out in a few days at worst. Countries that have embassies, he explained, always send people down to help. The guys from Thailand and Saudi Arabia got fresh clothes and food every morning. He was not so lucky.

I was only there for maybe half an hour when a military officer came to get me. I was hoping this was my ticket out, but my respite was brief. I handed him some documents and back I went. Another hour went by, and I was let out again. This time I was led past all the cells to an office where I sat counting the minutes as I watched the officers clock out one by one, grab their jackets and berets, and head out the door. My chances of leaving seemed increasingly grim as time passed, but at what seemed like the last possible moment, ‘le directeur’ emerged from his office. He came over to me, asked another officer who I was, tossed me a quick wink as if to say “Yella, let’s go” and we headed out the door. I don’t think I’ve ever be so happy to breath fresh air in my life.

In all, I was only in jail for the day. And to be honest, it wasn’t all bad. I was a bit concerned what spending the night would be like, but I met some interesting folks and learned an important lesson. I never really did find out why I was put in jail, but it doesn’t much matter, and I can assume it had a lot to do with the approach I took toward dealing with the military officers at General Security. I was quite sure based on my experience living here so far that assertiveness was the right tactic, but looking back, I was clearly mistaken. It was foolish to assume that I knew beyond doubt what I was doing, and I obviously should have shown some more deference to people who had a lot more power than I did.

Reaching into my pocket as I left the General Security compound, it occurred to me that after everything, at the very least, I had gotten a free pack of cigarettes out of the deal from my Sudanese friend. I think I’ll be saving those as a souvenir. Now how to explain this to my mother…

(So the following actually took place a few weeks ago, but by request, I’ve written an exceedingly long account of everything that happened. Certainly not a typical Lebanese experience, but an unfortunate twist of living in a strange land…)

I think my first thought when they shut the cell door was something along the lines of “Oh. Okay. So that’s what happens when they put you in jail… Crap.” And I’m not a smoker. I don’t smoke cigarettes. But I clearly remember my second thought being “Man, I need a cigarette.” It had been a long day.

The story really begins the day before. I believe my last post actually referenced this marathon of bureaucracy and I think I gave some grand advice about never loosing your passport in Lebanon, which I stand by. I also made the connection between the folks I was dealing with at the Lebanese General Security office and the insufferable French commander from the movie The Battle of Algiers, Colonel Mathieu. Unfortunately, I didn’t know just how accurate that comparison was. The only difference may have been that for all his authoritarianism, at least Colonel Mathieu had a real solid sense of humor.

On Tuesday I went back to one of the Lebanese General Security buildings as instructed at 9am, hoping to get the simple police report that my embassy hold told me I needed to show them and that a dozen Lebanese officials of various rank were unable to produce without signatures from the Prime Minister, Waldo (Where is he?), and Batman himself (Christian Bale would not suffice, I would have to find the Batcave). What I learned from the day before, and from my first two weeks in this country as a whole, was that generally speaking you can’t accomplish much unless you are assertive and refuse to let people step on you. This mantra served me well on Monday and when I came to the military wing of the GS Office on Tues, I was convinced of my tactics. I was sticking to my guns. Unfortunately- and there are a lot of unfortunately’s in this tale- I did not factor in the simple truth that military men are not civilians and do not take kindly to assertiveness. They had bigger guns than I did. After getting the run-around for a solid three hours, I was terrified that my application for a police report would get lost amidst the literally thousands of papers and carbon copies piled on desks throughout the building– not a single computer, photocopy machine, or even filing cabinet for that matter in sight. I told a few people that I wasn’t leaving until I got my police report and was pretty satisfied when I was brought to the office of an important-looking guy in new fatigues and shiny boots who was wearing his beret indoors. The man sat me down and told me, “I think… eh, you might have to pay 70,000 Lebanese pounds [just over $25] in order to get this processed immediately.” Given his hushed tone and seeming uncertainty with the truth of his statement, I was convinced this man was asking for a bribe. I would later be told by higher authorities that this was not a bribe at all, so in hindsight I clearly made a poor judgment. But at the time I was sure of my impression, and reacting as much to the insanity of the whole situation as to what was just told to me, I cracked an incredulous smile. The general’s face went blank and showed that he had no idea why I was smiling. “He really expects me to grease his palms for this,” I thought to myself. My smile broke into a chuckle, and for a few solid seconds the chuckle gave way to a deep, Santa Clause, belly rumbling guffaw. This time the general’s face was not skeptical nor inquisitive, it was flush with rage. I was directed to get out of his sight immediately, and I complied, only to realize that I didn’t know where to go next. Finding myself in another sticky situation, I returned a few minutes later to ask what I could do. I ran into even more angry words and curses, this time in English. After standing in the hall of the fourth floor of the General Security building for a good twenty minutes as a few military guys stared and others tried their hardest to ignore me, I took out my pen and started writing down the names on the doors of the various offices. I thought just in case I finally met someone who was helpful, I could explain where I’ve been. Or at the very least it would improve my Arabic handwriting. The bystanders were apparently not aware that I was a student of the language, and assumed I was getting ready to tattle on the aforementioned angry important-looking guy. It was about when he found out about this that my fate was sealed I think. There were more rooms and more generals and more signatures, and along the way I picked up one and then another escort with guns, but since they were carrying around an official-looking report I thought perhaps I was nearing the end of my journey. Unfortunately (there’s another one), that wasn’t my police report, it was my receipt. For jail.

Things started to feel wrong when I was sitting in one nondescript office next to my new entourage and a soldier came over and told me to put on some handcuffs. I had a brief moment of panic, but when I refused, everyone in the room had a good laugh, and I gathered they were just trying to lighten the mood a bit. They didn’t push the issue and although I thought the joke in poor taste, I let it slide. After this pit stop, we were off to a police jeep which was parked outside. I happily bounded into the back seat like a puppy on his first trip to the park. Thinking back, these guys must have never had an easier time transporting someone to prison. Of course I asked where the field trip was headed, but the only response from the driver and his accomplice up front was that we were headed to “Chez le directeur.” I thought perhaps this was finally it. I had figured out how to speak to the head honcho. I was going right to the top. The director. In a jeep. Fantastic. I would be on my way back to the embassy for my new passport in no time. Unfortunately, my dreams began to fall apart when the police jeep made a hard turn into what appeared to be a tremendous cement parking garage beneath an overpass. Led from the truck down a dark, wet stairway with several armed guards standing sentinel it seemed an inauspicious home for a directeur, and it was unlikely we had stopped there for coffee and donuts on the way. Still, when the clanking of doors became audible, then dozens of jail cells became visible, and then a man with a large manifesto before him demanded my name, I gave the boys the benefit of the doubt. Wasn’t it possible the prison warden was the one I needed to speak to? In a flash as the door of the holding cell slammed shut, however, I finally put the pieces together with all the excitement of a foreigner who has just found out he is going to jail. “Does anyone have a cigarette?”

So, I’ll let my thoughts cool, and as per my last promise and inresponse to some comments (thanks for those, I love the feedback), a bit more about al Majmoua and the role Kiva plays in this whole microfinance thing…

(Disclaimer: I was not a finance major, so I shall do my best to relate the financial info as I have interpreted it to those who are still new like me. For those better versed, feel free to correct me where I go astray…)

Majmoua began as a microcredit program in 1994 under the stewardship of Save the Children. Until about 1999 alMajmoua lent primarily to women and primarily to solidarity groups, not individual borrowers. This of course followed the Grameen model by using the “moral guarantee” of a lending group where there was a scarcity of fixed assets from which to draw. Just before the new millennium however, al Majmoua began expanding its reach and opened up its loans to men and to individual borrowers. Now, with a staff of nearly 90 and $8 million in outstanding loans, al Majmoua has broken its operations into various departments tailored to the needs of very different populations. Under the microcredit umbrella, the Poverty group lending division dispenses loans starting at $100 which are mainly geared toward rural women who have few marketable skills. There is also a non-Poverty group lending division which focuses on those who have established businesses but still lack the capital needed to take out individual loans or loans from an established bank. Al Majmouaalso provides individual loans to more established customers, vulnerable workers (who aren’t borrowing money for their own business, but cannot access formal credit markets), seasonalworkers (in agriculture or tourism, who experience periods of access to capital and periods of no access to capital), families who request home improvement loans, as well as a few Small and Medium Enterprises (SMEs). Alongside their credit services, al Majmouaalso provides their clients with financial education, business management assistance, and skills training. This last opportunity is unique in that al Majmoua tries to tailor their training to skills which will have an immediate and significant impact on their clients ability to work in their region. Many vocational schools here teach skills such as hairdressing, tailoring, or car repair that have already saturated the various markets. Training unskilled workers in these trades provides little benefit. 90% of these non-credit services are being given to women (about 4,000 people in total) and are largely subsidized by grants given to Majmoua from various international donors. That said, the credit side of al Majmoua has been self-sufficient since about 2004. Since then, a small profit has enabled the MFI to lower interest rates and expand their portfolio. Still, in order to sustain more growth, al Majmoua needs more money. 

Generally, in order to have enough capital to sustain growth, any MFIwhich is not grant-subsidized will need to borrow money from one of the huge international investors such as Deutche Bank, Merrill Lynch etc in order to provide loans to its developing entrepreneurs. When the MFI makes a profit (from interest on their loans), as Al Majmouadid in 2006, this money becomes available to increase the number of loans that can be given out, but often the demand for loans outstrips the amount of safely available capital. Thus the MFI must themselves borrow in order to lend. While they aren’t borrowing enormous sums by international banking standards, the MFI’s are still being charged 10% interest on these loans from the Big Banks. Let’s say Majmoua, for example, looks to borrow $1 million to replenish its stock of capital and keep expanding its reach within Lebanon. If that $1 million comes from a Big Bank, the MFI is passing on a $100,000 cost to its clients, who will see this in the form of higher interest rates for their micro-loans. If the MFI can obtain a Aaacredit rating from one of the few international credit rating agencies (basically the highest possible garunteethat the company has a stable portfolio of investments), then it can get its capitalfrom a local investment bank at a lower rate, say 6% interest. The Aaa rating is difficult to obtain however, involves its own costs in auditing etc, and is still a significant sum.

Enter Kiva. Kivaintroduces an entirely new concept by offering a source of investment capital for the micro-banks at 0% interest. Because Kiva is given free use of PayPal, there are no transaction costs either. That means that when an individual logs onto Kiva and donates $25, that $25 goes directly, in whole, to the MFI of choice, and is in turn lent out without any cost to the MFI. The money is shipped from the debit card of the donor in New York to the account of the MFI in Beirut to the hand of the dress seamstress on Abd al Wahabstreet. This is a truly revolutionary concept, because it gets rid of a whole lot of middle men. Yes, you say, but isn’t the MFI still making money off of poor people? In a way, yes. But the alternatives aren’t so great, the on-the-ground costs are still enormous, and as I mentioned they do much more than just lend money, i.e. job training. Wa’Allah, perhaps that’s a discussion for another time.

Next time: who are the Majmoua clients? Until then, m’aa salaama, with peace,

JJ, fee Beirut

I will be spending the next 10 weeks working with one of the leading Lebanese microfinance institutions, Al Majmoua, and soaking up as much of this incredible country as possible. I’ve been in Beirut now for about five days, and I’ve decided to decide nothing just yet. Beirut has been at various times terrifying, invigorating, frustrating, beautiful, mysterious, and hilarious.

Echoing a trend from the blogs of many of my fellow Kiva Fellows, my first exciting experience here was vehicular. Not vehicular homicide, nor even manslaughter but damn near close. You see, Road Rules don’t exist in Beirut per say: it’s more like, whoever is on the road, rules. At least that’s what every driver thinks. Taxiing from the airport, my cab driver proved his worth by skillfully weaving between oncoming mopeds and inter-city minivans who cared little for the appropriate direction of travel. Clearly my guy was from the mountains, because the ride was much more slalom skiing than it was driving. Most drivers here don’t hesitate to drive the wrong way down roads, drive backwards down roads, stop in the middle of highways to pick up passengers, blow through what few stoplights exist, or park in any direction or on every conceivable inch of open asphalt. And then, of course, there’s the incessant honking, which, roughly translated, could mean anything from: “Hey, good morning,” to “Do you need a taxi?” to “Are you SURE you don’t need a taxi?” to “You had better move because I’m probably not stopping.” There are of course variations in between, and its always an exciting part of any walk to find out who wins those epic showdowns between oncoming cars who meet on a one-way road.

I spent much of my first weekend in Beirut getting lost in order to get my bearings, as every good traveler knows to do when most streets don’t have names and addresses are described by the big buildings near which they are found. I ventured out looking for an apartment to rent and instead took a grand tour of the city. I walked down the sea hugging promenade of Corniche, through the center of Lebanese nightlife in Gemayzeh, around the luxury condos of Achrifiyeh, across the former Green Line into neighborhoods plastered with posters of Hassan Nasrallah, and eventually found myself standing in Place De Martyres, for many reasons the heart of Beirut, though nothing stands there now save a small iron statue and a tent-museum honoring Rafiq Hariri. The surrounding neighborhood of Solidere was left a wasteland after it had been the epicenter of the horrible violence of the nearly 30-year Lebanese Civil War. Now, it is an haute-culture heaven, paved with granite and infused with all sorts of chic cafes, alongside such traditional Lebanese shops as Salvatore Ferragamo, Porsche, and Dunkin Donuts.

This of course is the new Beirut. And though every block has its share of condemned buildings still bearing gaping wounds from decades of shelling, the center of this city is as far from the past as can be. It seems like that was the intention. As is the case in so many modern developing capitals, Beirut is full of contrast. This point was reinforced during my first field visits at Al Majmoua with Kiva clients, but I promise, I will get to that for the next post. I fear I’ve written too much already. Until the next time, m’aa salaama, with peace,

- JJ, fee Beirut