SANAD and Tanmeyah Host Responsible Finance Roundtable in Jordan

AMMAN, January 8, 2014- the SANAD Fund for MSME (SANAD) and Tanmeyah, the Jordan Microfinance Network, jointly organized a roundtable workshop on “Responsible growth models for microfinance in a competitive environment” held at Talal Abu-Ghazaleh Knowledge Forum.
 
The event brought together different governmental bodies, development agencies, microfinance practitioners and international senior experts to discuss the status and trends in the Jordanian microfinance sector. The panelists also focused on the efforts by the government and the Jordanian regulator in implementing the microfinance strategy developed in 2012 by the Ministry of Planning and Cooperation (MOPIC) with support of the German Development Bank (KfW) and GIZ. The Central Bank of Jordan (CBJ), which plays a central role in this process, was represented at the event by Mr. Mohammad Amaireh, Executive Director of the Monetary Stability Department at the CBJ.
 
The Jordanian microfinance sector has experienced continuous growth in recent years, currently representing over 276,000 clients with a total gross loan portfolio of more than JOD 118m (USD 167m). While a thriving microfinance sector is instrumental in enhancing access to financial services for the low-income population, growing competition may push microfinance institutions into practices that do not align with the social ideals of microfinance. Therefore, it is of key importance that client projection principles are respected, such as appropriate product design, pricing and delivery, the prevention of client over-indebtedness, and the preservation of client data privacy.
 
“The global financial crisis has demonstrated that responsible finance must be the basis for sustainability. It is now the right time to address responsible finance in Jordan, as it is everywhere else,” said the Chairman of Tanmeyah, Mr. Mustafa Nasereddin, in his opening speech.
 
Looking at the microfinance industry in Jordan, two key challenges need to be addressed, as Ms. Majdoulin Abu Dalhoum, Head of Civil Society Institutions and Microfinance Section at the MOPIC, underscored: “We need to ensure the availability of reliable sector data, and work jointly to enhance financial education and raise the loan customers’ awareness and strengthen their financial capability, and that includes helping clients and specially those with low incomes to behave responsibly and protect themselves.”
 
During the workshop, it was generally agreed that the initiatives on the policy level need to be complemented by a self-regulatory approach on the institutional level with regard to responsible finance practices. However, the self-regulatory approach has its limits and challenges, as Mr. Thomas Rahn, Microfinance Policy Advisor in the GIZ Program for the Promotion of the Microfinance Sector in the MENA Region, pointed out: “The impact of self-regulation depends on the voluntary commitment of sector members. Success depends on there being a strong legal framework in place.”
 
In his closing words, Dr. Klaus Maurer spoke on behalf of the SANAD Fund, emphasizing that “responsible finance is the basis for sustainability.” He added that “SANAD promotes responsible finance not only through direct technical assistance and sector events, but also by integrating it into its investment strategy.”
 
 
About the SANAD Fund for MSME

Initiated and funded by KfW Development Bank with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Union in August 2011, the SANAD Fund for MSME (SANAD) provides medium and long-term debt, guarantees, stand-by facilities and equity financing to commercial banks, microfinance institutions and other financial institutions in the Middle East and North Africa (MENA) region. The purpose of SANAD is to strengthen the local micro, small and medium enterprise (MSME) sector and financial markets in line with the principles of responsible finance. Eligible countries are currently Algeria, Egypt, Iraq, Jordan, Lebanon, Morocco, the Palestinian Territories, Tunisia and Yemen. The Fund’s activities are supported by a technical assistance facility, which provides capacity building aid to partner institutions. SANAD is a public-private partnership. Its investor base comprises donor agencies, international financial institutions and institutional private investors, including the European Commission, the German Federal Ministry for Economic Cooperation and Development (BMZ) and KFW Development Bank. SANAD is privately managed by a consortium of Finance in Motion GmbH, Frankfurt/Main and Oppenheim Asset Management Services S.à r.l., Luxembourg.

For more information, please visit http://www.sanad.lu
 
About Tanmeyah

The Jordan Microfinance Network – Tanmeyah – was established and formally registered as a non-profit institution at the Ministry of Industry and Trade in 2007 to officially represent microfinance institutions (MFIs). It plays an active role in supporting the further development of the microfinance industry, providing advocacy and raising awareness on behalf of its members, promoting information and dissemination of developments and trends in the industry. Most importantly, it supports the implementation of an appropriate regulatory environment, and will gather performance and benchmarking data for the sector.
 
It is widely agreed upon that increasing access to finance for low-income people is critical to social and economic development. If provided properly, it has the potential to increase household income and economic security, build assets and reduce vulnerability, create demand for other goods and services (especially nutrition, education and healthcare) in addition to stimulating local economies.

For more information, please visit http://www.tanmeyah-jo.org/