The Role of Microfinance and Financial Services in Building Resilience

Frontier Innovation in Financial Inclusion 18th Microcredit Summit

Mission

Improve the quality of life for small business owners, microentrepreneurs, and poor households through the provision of credit, aiming at sustaining jobs, decreasing unemployment, reducing poverty, economic empowerment of women, youth and the aged, and the provision of income generating and asset building opportunities for Palestine refugees and other poor and marginal groups

Facts & Figures as of 31 December 2015

Indicator West Bank Gaza Jordan Syria Total

Number of Branch Offices 8 3 7 4 22

Number of Staff 147 62 136 57 402

Cumulative Number of Loans

113,176 112,267 81,337 91,369 398,149

Cumulative Value of Loans($) 158,769,722 145,015,460 97,412,434 52,724,730 453,922,346

Number of Active Loans 12,796 3,434 15,163 8,164 39,557

Outstanding portfolio($) 9,950,647 4,550,802 9,677,096 1,075,055 25,253,600

Portfolio at Risk 5.13% 2.30% 4.06% 0.18% 7.26%

No. of Loans Disbursed during 2015 11,888 3,678 13,293 9,334 38,193

Value of Loans Disbursed($) during 2015 15,574,999 5,483,060 14,241,735 2,599,001 37,898,795

Socio-Economic Impact

Political Crisis

Impact of Crisis on Clients / Syria

The below results were based on a sample survey of active clients of 7,965

•Displacement: 71.3% of clients fleeing from their homes

•Looting and closure of businesses: 61% of all businesses were damaged.

•Destruction and loss of housing: 55.7% of houses were damaged of these 14% were completely destroyed

•Income and expenditure: 82.5% of clients suffered drastic decrease in their monthly income, of these 16.4% were completely without income

•Clients coping strategies: 87% of clients decreased expenditures on food, 90% decreased expenditures on clothing, and 86% on housing needs

•Hardships of clients and their households: 48% suffered from lack of Shelter, 44% from shortage of food, 56% shortage of medicines, 35% shortage of clean water

Crisis Management / Syria

A. Operations:

• Continued lending through opening three branches in safer areas/ allocating staff to these areas

• Implemented a decentralized approach in lending with proper controls to cope with the lack of communication

• Adaptation of the MIS to the needed decentralization of financial and operational processes

• Introduced new lending products considering market changes and demand (moveable projects)

• Increased the internal audit functions and scope

• Rationalized operational costs

• Close monitoring and follow up on all market changes, security issues and its effect on clients

B. Staff•Staff security is first priority

•Strengthened effective communication channels among staff

•Strengthened team work and staff unity despite any political beliefs

•Empowered staff towards decentralization in decision making

•Capacity building of staff to handle combined functions

Impact of Crisis on Clients / GazaThe below results were based on a census survey of all active clients of 3,289 by July 2014

•Displacement : 35% of clients fleeing from their homes

•Hosting others : 25% of clients hosted other families (average of hosting duration was 21 days)

•Damage of businesses : 16% of clients’ businesses were damaged during the war with estimated loss valued at $2.7 million, labor at businesses declined by 11% and revenues by 39% on average•Destruction and loss of housing: 38% of houses were damaged out of which 7 % were completely destroyed

•Monthly income : 57% of clients suffered from falling their monthly income

•Clients coping strategies : 78% decrease expenditure on food, 65% reduced daily meals, 51% reduced food consumed by adults towards their children.

•Obstacles of clients and their households: 48% suffered from lack of Shelter, 44% from shortage of food, 56% shortage of medicines, 35% shortage of clean water

Crisis Management / Gaza

A. Operations:

• Continued lending under most critical situation;

• Intensive follow up with clients to assess the effect of the crisis on their businesses;

• Directing the lending towards the appropriate economic sector (trade and services) with effective guarantee mechanisms;

• Concentrate on renewed clients to contain the risk;

B. Staff:•Staff security is first priority

•Capacity building of staff to handle combined functions to decrease cost

•Train staff to handle crisis and adaptation to change

Success Through Crisis

• In 2011, Zayed started planting his own agricultural land with tomatoes, parsley, lettuce and spinach,..

• Zayed started to look for a source of financing to secure a working capital when he became a regular client by 2012;

• Zayed’s business was negatively affected by Israeli war on Gaza in 2014.

• Israeli tanks ruined Zayed’s land, resulting in total losses of about US$ 16,000.

• With the ending of the war, Zayed started to look for means of support since he lost his investment and income

• Zayed succeeded in resuming the farming of his land and soon started to generate income with the support of UNRWA’s microfinance loans;

• He earns an average monthly income of US$ 700

Client Name : Zayed Husein Jame'Age : 39 YearsLocation : Azzanna – Khan YounisDependents : 6 DependentsType of Business : Agricultural land

Loan No. Loan Product Loan Amount

US$ Loan Start Date Loan Status

1 MEC US$ 500 19 April 2012 Closed2 MEC US$ 800 14 October 2012 Closed3 MEC US$ 1,000 3 October 2013 Closed4 MEC US$ 1,500 13 May 2014 Closed5 MEC US$ 600 15 September 2015 Closed6 MEC US$ 1,500 3 February 2016 Active

Client History Profile

Success Through Opportunity & Determination• Jehan is one of the most hardworking micro-entrepreneurs who

succeeded in supporting her family despite her serious illness and the disability of her husband and two eldest children;

• Jehan runs a business for planting and producing thyme (Za’tar) in addition to honey production;

• Before 1997, Jehan used to work as an Arabic language teacher in Tulkarm, because of the disability of her two children, she left her job to take care of them and of her husband who also became sick

• In 2003, Jehan began her business when she started to harvest the fresh thyme and sell it to few customers;

• To meet the demand, Jehan planted a piece of land of five dunums with thyme, and got assistance from her husband and children

• "All family members work in the business including my two disabled twins as they need to strengthen their hands, and this made us a stronger family“, Jihan said.

• She started to market small quantities of her honey production outside the country in the United Arab Emirates through non-governmental organizations;

• In 2010, Jehan started to receive UNRWA’s financing through the Microfinance Department to secure the needed materials to plant and produce thyme;

• her business development was financed through six loans valued at JD 7,500 received over six years

• Jehan is an exceptional example of determination and hope; Regardless of sickness and disability in her family, she says that: "life shouldn't stop at this point or any point, one must stay strong".

Client Name : Jehan Ismail Ibrahim TubehAge : 45 yearsLocation : Tulkarm/ Kafr JamalDependents : 6 personsLoan Purpose : Thyme production

Loan No. Loan Amount (JD) Loan Start Date Loan Status

1 500 4 January 2010 Closed2 1,000 19 December 2010 Closed3 1,500 16 January 2012 Closed4 1,500 20 February 2013 Closed5 1,500 18 March 2014 Closed6 1,500 15 April 2015 Still Active

Client History Profile

Thank you

UNRWA’s Microfinance Departmentwill keep supporting its clients through providing

the financial services