The Microfinance

In Jordan

????

What is the collection average rate of the Microfinance firms in Jordan?

The Microfinance in Jordan

Introduction:

I would like to present a brief general presentation about the Microfinance in Jordan.

First I will talk about the Microfinance in the Arab world and how did it reach specifically to Jordan.

Then, I will mention the microfinance companies in Jordan: their policies, organizational structure and their difficulties.

And finally I will explain how these difficulties have been solved by Delta Informatics.

Professor Muhammad Yunus

Recipient of Nobel Peace Prize in 2006, recognized for his work in poverty and the empowerment of poor women since 1976. He created the Grameen Bank, a micro-credit institution that provided small amounts of working capital to the poor for self employment. Grameen Bank has loaned out over 6.5 billion dollars to the poorest of the poor. Muhammad Yunus is a member of the Board Directors for several companies in Jordan.

  

Sanabel

The Microfinance network of Arab countries

Sanabel was established in 2002 when 17 representatives from seven Arab countries gathered in Tunisia to launch a network designed to serve microfinance institutions in the Arab world. Sanabel organizes an annual conference of Arab Microfinance practitioners every year in a different Arab country.

The first Sanabel’s annual conference was held in the Dead Sea in Jordan in 2003. "Shaping the Industry's Future" was the theme of the conference. During this three-day conference, microfinance practitioners and experts, donor agencies, investors and government officials came together to discuss the development of best practice microfinance in the Arab region.

Sanabel’s annual conferences

YEAR COUNTRY THEME

2003 2004 Jordan Egypt Shaping the Industry’s future Microentrepreneur awards 2005 2007 2008 2009 May Morocco Yemen Tunisia Lebanon From Microcredit to Microfinance in the Arab Region Serving the Poor: 10 million clients by 2010 Advancing Arab Microfinance: Greater Social Impact through Inclusive Financial Services Human Capital in Microfinance: People, Passion and Value

Members & Partners of Sanabel

  Membership in the network is limited to the founders and any MFI who applies for membership and fulfills certain criteria.

Today Sanabel has expanded and has members in Egypt, Iraq, Lebanon, Mauritania, Morocco, Palestine, Saudi Arabia, Sudan ,Syria, Tunisia, Yemen and Jordan.

Sanabel’s Members in Jordan

       1- AHLI Micro Financing Company -1999.

2- Jordan Micro Credit Company (Tamweelcom)-1999.

3-Microfund For Women -1994.

4- Middle East Micro Credit Company -2000.

5- National Micro Finance Bank (Al-Watani) -2005.

6- Development & Employment Fund (Reyada) -1989.

7- Finca Jordan-2007.

Company Ahli Mmco Jmcc Mffw Def Nmb Finca

General Information about the companies

N.

Branches 8 Active Clients 5200 6 16 17 15 8 7 5000 44000 33000 40000 15000 13500 Loan Process 2 weeks 3 weeks 1 week 1 week 1 month 2 weeks 1 week Loan’s period 6 -36 Months 6 – 36 Months 2 – 48 Months 2 – 48 Months 6 – 72 Months 6 – 36 Months 2 – 36 Months Loan Amount 500 15000 $ 500 15000 $ 300 – 40000 $ 200 – 30000 $ 500 – 75000 $ 300 – 15000$ 300 – 15000$

Totals:

   By end of 2008, the total sum of Active Clients = 160,000.

By end of 2008, the total amount of loans that were declined = 100.000.000 JD.

By March 2009, the amount of new loans = 20.365.000 JD.

Services Provided by the companies

Financial Services:

 Loans  Interest rate average for a Loan depends on the policy and product: 5-20% per year.

Non Financial Services:

 Life Insurance      Show rooms Buzzards Business linkage Training courses Trips for ideal clients .(as a compensation)

2 Types of Loans

       

Individual Loans:

Men & Women Business owners House hold Loan Existing projects Start up projects (Grace period up to 6 months) Seasonal loan (Ramadan) Vehicles Loans Agriculture Loans

Group Loans:

    For women only 2-5 persons House hold loans: knitting Agriculture loans: cows, sheep, camels..

The Islamic Product

 Only 2 companies in Jordan provide a loan as an Islamic Product.

1.

2.

3.

DEF NMB FINCA (In the future) The Islamic Product is named “Morabha”.

Al Morabha

   This product provides people who would prefer to apply the Islamic way since they do not agree to take a loan with a certain percentage of interest. They can choose the Morabha.

Morabha includes in it’s contract 3 subjects: the company, the trader and the client.

The company buys the product from the trader and resale it to the client when the purchase price is known and must be agreed upon in advance. The profit is around( 6%-7%).

Vision & Mission

The vision and the mission of the microfinance companies in Jordan are quit similar in their targets.

The vision is to improve the low income and productive poor people’s social and living standards through micro and small sized enterprises. The mission is to provide the financial and non financial services to the Jordanian's lowest income so they can create jobs, build assets and increase their income.

Difficulties of the companies:

1.

2.

3.

4.

Competition Similarity in their products Division by areas. (North, Center and South) Duality of a client.

Duality of a client

  The client can be so “clever”: go to a company to ask for a loan and right after he signs the contract, he goes to another company and asks for another loan. This is what we call Duality.

In order to stop this duality, all companies had to sign an agreement at the Ministry of Planning in accordance with Delta’s company in 2007

Delta Informatics

  Delta is an informatics company, that provides to all companies an online contract of an active client: In a case a client has signed an agreement with one company, can’t go to another company unless he has finished his active payments. Since it was established in Amman in 1993, Delta Informatics has helped the firms achieve a competitive advantage through the following issues: 1. Reduced costs 2. Increased productivity 3. Higher revenues

The Answer to my question at the beginning of my presentation:

The average Of the collection rate is: 92% - 99%.

How is it so high???

The Answer is: The Organizational Structure in all firms.

Organizational Structure of a company

Board of Directors External Auditor General Manager Internal Auditor

Organizational Structure of a company

General Manager Operation Department Finance Department M.I.S Department Marketing Department H.R Department

Organizational Structure of a company

Operation Department Operation Manager Credit Manager Branches Managers Supervisors Loans Officers

Conclusion

    Jordan is well known as a supportive and active client of the world’s Microfinance.

Microfinance in Jordan is specialized with it’s organizational structure.

Their Vision and Mission are to create and build strong financial projects and products in Jordan.

Companies know how to overcome their difficulties and they reduce poverty in Jordan and that’s how they accomplish their goal.

Thank you for your presence

Samer Abu Dalo