RIYADH (Mohamed Otaif )

The Arab Gulf Program for United National Development (AGFUND) announced setting up banks for the poor in the Arab World with the hope of fighting poverty and eliminating its adverse effects on the poor communities in Arab states, according to media reports on Sunday.

Saudi Prince Talal bin Abdul-Aziz, President of AGFUND, confirmed reports of requests received by the non-profit organization to establish banks for the poor in Jordan, Lebanon, and Sudan and declared that the proposed projects were due to be completed within a few months.

Prince Talal said the purpose of setting up banks for the poor is to alleviate the burden that falls on governments when it comes to fighting poverty and empower ordinary citizens to improve their own living conditions.

"When the poor do not have an access to other banks because of the guarantees they require, they can resort to these banks which offer them small loans without collaterals," Prince Talal said.

On the footsteps of Muhammad Yunus

The idea started with the establishment of Grameen Bank in 1976 by Bangladeshi banker and economist Muhammad Yunus, who was awarded the Nobel Prize for Peace in 2006.

Inspired by the success of Grameen Bank, whose borrowers exceeded seven million by the third quarter of 2007, Prince Talal launched a similar initiative that aims at fighting poverty in the Arab world.

The first bank for the poor was established in Yemen as President Ali Abdullah Saleh approved the establishment of “al-Amal Micro-credit Bank.”

After Yemen, the National Microfinance Bank (NMB) was opened in Jordan and has provided microcredit loans ranging from $300 to $5,000 to more than 70,000 people, Prince Talal said.

In Lebanon, “al-Rajaa Micro-credit Bank ” is being licensed, and in Sudan, a definition is being worked out for the appropriate form of the bank. AGFUND consults with officials and competent agencies in four Arab states, namely Morocco, Syria, Mauritania and Libya, to find best formula and methods for the establishment of banks for the poor.

According to Jordan’s NMB's financial statements, the number of loans offered in 2009 reached 44,616, of which 86 percent went to women. The total amount of loans exceeded 32 million Jordanian dinars ($45 million).

Banks for the poor provide microcredit services to the poorest of the poor, relying on the principle of confidence, free from restrictions and guarantees, which are normally imposed by traditional banks.

“The aim is to upgrade the living standards of this target group and to help them become self reliant and active members of society,” AGFUND noted in a statement published on its website.

More than 100 million Arabs live under poverty line and more than 15 million are unemployed and expected to reach 20 million within the few coming years.

Estimates show that more 94 percent of bank loans in the Arab world go to businessmen, and that Arab countries come at the bottom of the list of those offering loans to the poor.


(Translated from Arabic by Sonia Farid and edited by Mustapha Ajbaili)