ReSt@rts in Lebanon works to help start-ups and SMEs find micro-finance providers for growing their business
The Chamber of Commerce, Industry and Agriculture in Sidon and South Lebanon scheduled a series of meeting with the Lebanese Microfinance Association (LMFA) and other members of the Microfinance network, initiated within the framework of MEDSt@rts to update the database of all working Microfinance institutions to determine operational programmes, the specific type of financing instruments and number/type of final beneficiaries.
The study is part of the ReSt@rts project, which is an ENI CBC Med-funded capitalisation intervention that builds on an earlier MEDSt@rts project and is aimed to facilitate access to finance for young, non-bankable entrepreneurs with promising innovative business ideas in the Mediterranean.
Furthermore, ReSt@rts capitalises on the findings and outputs of MEDSt@rts to cultivate a solid basis for the foundation of the Mediterranean Microfinance Providers’ Association, developing pro-microfinance policies (such as the sandbox) in consultation with relevant stakeholders. These policies will be adopted by all the partners in the project including the Arab Italian Chamber of Cooperation, Chamber of Achaia in Greece, Leaders International in Palestine, Chamber of Commerce Industry and Agriculture in Sidon and South Lebanon, Cyprus Chamber of Commerce and Industry, Sfax Business Development Center and Ager Sarl in Tunisia.
To fulfil this initiative, each partner identifies challenges, solutions and recommendations to cope with the impact of the socio-economic and financial crisis caused by the Covid-19 global pandemic and other emerging factors that induced economic downturn and delivered a negative effect on MFI financial performance.
In Lebanon, the mapping reveals the need to cope with the financial crisis by turning this distress into an opportunity for financial institutions to offer advisory, technical and social services, in addition to encouraging the adoption of electronic lending and raising standards for lending at the local level.
During recession periods, MFIs prioritize their social mission, allowing loans to become delinquent and taking losses. On the other hand, microfinance unique business models, like group lending technology, make MFIs less sensitive to economic shocks, and more cost-efficient, than traditional banks.
Based on the fragile status of the Microfinance sector and MSMEs (the Borrowers/ beneficiaries), ReSt@rts aims for taking eligible steps to help MFIs provide loans to more underserving micro-entrepreneurs during a recession. Another feature is to share experience with the European fintech counterparts for implementing sandboxes and adapted digitalization regulations and solutions based. Promoting good practices will reflect positively on the results of the project for increasing the number of active borrowers/ beneficiaries, and it will enhance MFIs’ outreach by offering a platform to discuss funding issues and introducing blended funding facilities.