Program Name: Lebanon Investment in Microfinance (LIM)
Objective: To help Lebanese micro and small enterprises increase sales, create jobs, and advance economic growth through improved access to finance.
VEGA Lead Member: International Executive Service Corps (IESC)
Years Implemented: 2009-2015
The Lebanon Investment in Microfinance (LIM) program implemented by the International Executive Service Corps (IESC) administered grants to microfinance organizations operating in rural communities around Lebanon. These organizations then disbursed loans to micro-enterprises in the tourism, ICT, and agribusiness sectors. Through increased access to finance and business development services, LIM helped microenterprises increase their incomes and create new jobs. USAID expanded the program in 2013 in order to help serve regions that have been impacted by the Syrian refugee crisis.
The challenges that impede women entrepreneurs in Lebanon are numerous and complex. Loan collateral is a principle hurdle. Although women have the legal right to own property, many do not due to social pressure. In rural areas in particular, women typically live with their parents until marriage. When a married couple purchases a home, the property is commonly listed in the husband’s name. Consequently, even if the wife contributed financially to the purchase of the home, she cannot leverage the house as collateral if the husband is not supportive of the loan.
Another hurdle is finding a guarantor. LIM partners and clients frequently identified this as a constraint: many women are unable to find someone willing to guarantee loans. Particularly in rural areas, women are expected to assume the role of homemaker, and families and spouses are often reluctant to support women who aspire to something different.
The current economic situation in Lebanon, however, is pushing more women into the workforce and into entrepreneurial roles. “As a result of the [struggling] economy, women are starting businesses to support their families. This has added [an income generation] responsibility on women in addition to their family responsibilities,” said a loan officer at one of the LIM Program’s partner MFIs.
The LIM program facilitated $9.5 million dollars in grants were recycled to facilitate 14,000 loans with a total value of $32.5 million. These loans helped create 3,000 new jobs and sustained 20,000 more. Among these, 6,000 loans, or 42.9 percent, went to women-owned businesses. These loans to women totaled $11 million, or 33.8 percent. Women assumed 1,900 (63.3 percent) of the new jobs and held 9,000 (45 percent) of the sustained jobs.
The MFI Response
- The LIM Program strengthened the Lebanese microfinance industry and reduced financial constraints that impede women’s entrepreneurship. LIM left behind more robust lending institutions with more women borrowers from diverse regions in their portfolios, a national microfinance association, and tangibly improved livelihoods for women borrowers. These efforts make it easier for women to access finance, grow their businesses, and participate in the economy. If the assisted partners continue on this path, the influx of successful women-owned businesses will strengthen Lebanon’s economy at the macro level.
- The vast majority of MFI representatives believe that it has become easier for women to access finance over the past five years. Targeted marketing campaigns and increased capacity to finance women-owned businesses helped make this possible. A telling result is that many MFIs, particularly the smaller ones, now see women as a key component of a healthy portfolio and have incorporated this into their business strategy, citing women clients as vital to growing their portfolio today and in the future.
- During the assistance period, LIM trained MFIs and their loan officers on how best to reach and serve women and encouraged them to hire more women, including loan officers, who can make potential women borrowers more comfortable discussing their financial and business needs. LIM conducted trainings on developing loan products for women’s groups and on women’s empowerment and confidence building. LIM also sponsored MFI management attendance at global learning events, such as the Women’s World Banking Conference.
- Risk capital allows MFIs to take more of a risk on women and expand their portfolios, particularly to rural women;
- Staff training on how to market and listen to the needs of women borrowers is key;
- MFI staff must understand women’s roles in the household and business and design products around those needs, e.g. education loans or emergency loans;
- There should be increased accessibility to start-up loans, which often go to youth entrepreneurs;
- The sector will benefit from more industry sharing of best practices and more business development services for clients;
- More capital is needed to help grow women’s portfolio, but could be more focused on commercial capital rather than grants.