Damascus, Syria, 23 July 2009 - The First MicroFinance Institution Syria (FMFI-S), KfW Entwicklungsbank and the State Planning Commission of Syria signed two financial agreements today. These agreements will expand FMFI-S’s loan activities to the poorest inhabitants of Syria as well as to people in rural areas.
“It is with great pleasure that FMFI-S signs this agreement with KfW and the State Planning Commission of Syria. This partnership will allow FMFI-S to promote entrepreneurial spirit, reach further down into the poverty line and help to include the poor and marginalised segments in the economic cycle,” said Jean-Lorenz Ehrentrant, Chief Executive Officer of FMFI-S.
In 2007, the Syrian government developed and passed new microfinance legislation. More recently, the Central Bank of Syria licensed FMFI-S to be the first deposit-taking microfinance institution, which allows it to take savings as well as lend to entrepreneurs and small and medium sized businesses. FMFI-S has over 15,000 active clients throughout Syria and is the leading private-sector microfinance service provider in Syria. Originally established in 2003, as a microfinance programme, FMFI-S completed its transition to a deposit-taking institution in October 2008.
FMFI-S is a part of the Aga Khan Agency for Microfinance (AKAM). Currently, AKAM has microfinance institutions in 13 countries throughout Asia and Africa. AKAM is a leading international financial institution and its objective is to achieve the double-bottom line of maximising social return while generating growth, expansion, and sustainability. By including the poor in the formal economy and providing a range of financial services AKAM can help to enhance quality of life and improve economic security.
This first set of agreements will provide FMFI-S with a € 2.3 million loan for the expansion of the loan portfolio, a € 0.2 million grant to develop the branch network, and a € 0.5 million grant to develop new products, all of which will allow for greater access to financial services provided to a larger number of people. With these funds new savings products will be piloted in 2009. Small to medium enterprise products will be introduced and social loans will be increased.
KfW will be making an equity investment of up to € 2 million. Their participation and investment will provide FMFI-S with the financial resources and technical assistance required for rapid growth in the years ahead.
Through this partnership, FMFI-S will be able to include the poor and marginalised segments of the population in the economic cycle. In areas with scarce resources, communities tend to achieve faster economic growth when financial services are made available to the poor. Syria has started to use microfinance as a means of empowering poor and rural communities to play an active role in the socio-economic development process which has helped in increasing job opportunities.
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About Aga Khan Agency for Microfinance
Since its establishment in 2005, AKAM has brought together over 25 years of microfinance activities, programmes and banks that were administered by sister agencies within the Aga Khan Development Network. The underlying objectives of AKAM are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. AKAM is a not-for-profit, non-denominational, international development agency created under Swiss law. Its headquarters are in Geneva, Switzerland. It is governed by an independent Board of Directors. The Chairman of the Board is His Highness the Aga Khan.