Empowering communities and women - Microfinance
Targeting unemployed youth and women, the “Micro-finance Credit and Services to Needy Citizens of Bahrain” Project was launched in 2009 with the aim of creating an enhanced environment for equitable, job creation and reducing unemployment in Bahrain. In cooperation with the Government of Bahrain represented by the Ministry of Social Development, and Ahli United Bank, this Project builds upon the Microstart Project initiated in 1999 with the purpose of expanding the number of beneficiaries who receive microfinance capital and instilling the concepts of sustainable development as opposed to charity and grant offering.
Microfinance - A pioneering experience in the Gulf Region
- The Micro Start project was a totally unique initiative in Bahrain and the Gulf countries as it assisted in instilling the concepts of sustainable development as opposed to charity and grant offering.
- The project had reached out on aggregate to more than 7000 clients of which almost 50% or more are women and the same percentage for youth (under 45 years)
Sustainability of the scheme and national capacity development are key objectives of this project and, therefore, the microfinance capital is disbursed though local Non-Governmental Organizations (NGOs). Initially two strong NGOs - The Children and Mothers Welfare Society and the Awal Womens’ Society -operated as Microfinance Institutions (MFIs) using best-practice microfinance standards, and disbursing US$ 100,000. A Market Survey was conducted to assess the further demand and scope for microfinance in the Kingdom of Bahrain and based upon the results; the scheme was expanding to include 6 more NGOs in various geographical areas of Bahrain acting as small microfinance institutions. Support was provided by UNDP to the NGOs in terms of capacity building programmes, training and workshops to familiarize them with the process and how the Project can support their work.
To achieve equitable job creation and sustainable economic growth, the project increases the number of new borrowers to 7000 clients with a focus on targeting youth and women entrepreneurs. Fifty percent or more of the beneficiaries are women and the same percentage is youth (under 45 years). It also facilitates the growth of micro enterprises to becoming Small and Medium Enterprises which would create further jobs as well as contribute to the GDP of the Kingdom of Bahrain.
In an independent “Microfinance Market Research” study conducted on the project, women entrepreneurs accessing loans expressed a major change in their lives; now demanding access to convenient savings products to maintain the real value of their cash savings. Based on interviews with female clients, women are more able to decide on their futures, and benefit their children in terms of food quantity and quality, access to health and education. The two initial women-focused NGOs offering micro-credit have achieved operational self-sufficiency; transforming from simple charity based organizations to those with a coherent management structure and a suitable institutional and market image.
Currently, the Central Bank of Bahrain is in the final stages of finalizing comprehensive guidelines for microfinance “Licensee Banks” that outlines all aspects related to incorporation, reporting, provision policies and compliance requirements for banks working in microfinance. The microfinance project has provided the CBB with international experiences in regulation and supervision of microfinance and has offered its assistance to review the guideline with the purpose of aligning the requirements to the specific features of the microfinance industry. Once published, CBB will be the first Central Bank in Gulf Cooperation Countries with Microfinance-specific regulations.