A retail shop for Isaad -- a 40-year-old blind mother of four. A bakery for Ibrahim -- a 45-year-old man with special needs and father of two. A carpentry workshop for Asaad -- 35-years-old, also with special needs, father of three. A retail shop selling women clothes for Inaam -- a 37-year-old widow with special needs.
All small operations, they are just a few examples of what loans of US$200 to $3,000 can do to change people's lives for the better, providing income and security. They are among the 1,000-plus loans NEF (Near East Foundation) has granted in Lebanon over the past 10 years at a total value of about $750,000, generated from less then $80,000 in seed money.
Ten years ago NEF set up community-based credit funds in Lebanon with the necessary technical and financial support in partnership with Human Concern International (HCI) and the Jacobs Family Foundation. We are all proud to say these funds are now run independently by five local nongovernmental organizations serving the entire country--Dar Al-Sadaka in Zahle; Islamic Social Welfare Association, Saidon; Caring for the Handicapped Charitable Association, Nabatiyeh; Islamic Women's Association and Beit Azzaqat, both in Tripoli. A minimum 25 percent matching contribution was made by each of the local NGOs.
SELF HELP/ SELF WORTH
Small loans and technical support for people in need can be a very valuable asset on the path towards self help and greater self worth, making a big difference in the lives of many people. With credit, poor families can capitalize on investment opportunities before them, initiating new, diverse, income-generating activities or expanding existing projects. Home industries, for example, often require few new skills beyond those already available within the household. In addition to bringing a sense of achievement, the repaid funds become available to help someone else in their community.
However, many families cannot raise the capital necessary to harness existing skills and resources. Too small and insecure to attract financial institutions, unmet capital needs of the poor represent lost opportunities and marginalized economic participation. Poverty persists because usual resources cannot respond appropriately to people's needs and prospects.
Cutting through, NEF was one of the first American organization's providing micro-credit services to the poor with breakthroughs in Macedonia in the 1920s. NEF has a long history in Lebanon as well, going back to the 1930s, and from the beginning a decade ago, NEF's credit program there aimed to strengthen the ability of community-based institutions to foster that lost potential.
Many communities manage a variety of resources--land, water, information, technology-- to meet individual and collective needs...why not credit? So we built on these local management systems by combining appropriate capital inputs with local institution building. The provision of seed funds, training, and implementation support by NEF and its partners "enabled" these communities and promoted their self-care.
Summed up Roger Hardister, NEF Vice President for Program Development: "This is just one more--and a very good--example of what we have seen over and over again. Given proper orientation and training, credit funds provide NGOs across a wide spectrum with meaningful alternatives to respond to the diverse problems and needs of their clients. With credit," Hardister continued, "you can tailor the service to the individual and his or her family in a way that more limited, traditional programs are unable to do."
CASE IN POINT
In 1998 NEF conducted two intense, six-day training workshops on micro-credit for the staff of ISWA, located in Lebanon's southern sea city of Saidon. Topics included fundamentals like credit policies and procedures, client and business selection, bookkeeping and financial management. The training was followed by technical assistance at ISWA's offices to launch a community-based credit fund. Targeted beneficiaries included widows, unemployed breadwinners, and individuals with special needs.
It started with $14,000 in capital provided by NEF, HCI and the Jacobs Family Foundation, with a $5,000 matching contribution from ISWA. To date 374 loans valued at roughly $330,000 have been granted with a 92 percent repayment rate. Now ISWA's credit program is an established grassroots microfinance institution with a systematic and sustainable structure.
MORE TO DO
The success of these credit funds in creating small business start-ups, as well as the high rate of loan repayment, clearly indicates this is a viable strategy for investing in community development. Consequently, NEF wants to expand the program.
However, it is also apparent to us that additional follow-up and linkages among credit funds are required to firmly establish the base for local management and future program expansion. Furthermore, additional business and financial awareness is needed by loan beneficiaries. And loan officers themselves need more training in business and financial consultation to help their customers manage productive, profitable, sustainable, household-based enterprises.
In short, NEF focuses on helping people to acquire the knowledge and skills necessary to earn a better living and lead a better life. And this may mean a focus on basic needs or on organization development to help people participate in the building of their nation. Livelihood enhancement requires both--effective support strategies for people's self-help efforts and the transformation of institutions working with them.
ELSEWHERE
Besides Lebanon, NEF and its partners currently are engaged in community-based credit programs and technical assistance for microfinance institutions in Jordan, Sudan, Djibouti, Egypt, and Mali.
"Our involvements are less sizeable than some agencies," NEF's Micro-Finance Regional Coordinator Majdi Qorom commented, "but I think we can point with pride to the innovative quality of what we do and its regional impact upon others in the microfinance field. We can certainly be proud of what our program has accomplished for thousands of families in the countries where we are involved," he added with emphasis.
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[ Any views expressed in this article are those of the writer and not of Reuters. ]
