AGFUND supports the institutionalization of microfinance industry by qualifying the Saudi NGOs to provide crediting consistent with the Islamic law

27 Nov 2012
Financial Inclusion
The Arab Gulf Programme for Development “AGFUND”, chaired by H.R.H. Prince Talal Bin Abdulaziz,  had actually achieved a leap in its trending to develop the microfinance industry in Saudi Arabia. In this regard, AGFUND organized a workshop under the theme of “Islamic Microfinance Products, within its framework of institutionalizing the microfinance industry, qualifying the Saudi NGOs active in the field of fighting poverty, in addition to changing the non-developmental concepts widely spread about helping the poor.” The end of the workshop witnessed the announcement of designing the first Islamic microfinance product for a Saudi organization in addition to a procedures guide to the financing processes and training to it. “Herfah” the co-operative multi-purpose association for women in Qassim, shall apply the trial of a microfinance that is compliant to the Islamic specifications according to the best applications and practices of this industry, benefiting out of AGFUND’s experience. This comes as an evident development of the role played by “Herfah” under the presidency of Princess Nora Bint Muhammed Alsaud, to become a model in shifting from “free loans and grants” to indulging in the microfinance industry, this is in addition to the distinguished non-financial services that “Herfah” now provides to the craftsmen. . The workshop was held at AGFUND’s main headquarters in Riyadh and went on for two days (25 – 26, November, 2012); it witnessed the participation of each of “Herfah” the co-operative multi-purpose association for women in Qassim, Saudi Credit and Saving Bank, Al-Amal Microfinance Bank in Yemen, projects department at the Arab Gulf Program for Development and AGFUND microfinance unit. Mr. Nasser Bakr Al Qahtani, AGFUND’s CEO, highlighted the keenness of HH, Prince Talal Bin AbdulAziz, on developing the microfinance industry in the Kingdom through the establishment of a bank for the poor in Saudi Arabia. Al Qahtani further clarified that AGFUND with its experience and expertise fully supports the NGO in Saudi Arabia, specifically speaking the association of “Herfah” which got engaged in a fruitful cooperation with AGFUND. Within the framework of this cooperation, AGFUND founded a lending portfolio to “Herfah” – one that functions according to the best of the microfinance applications in order to reach the biggest number of beneficiaries represented in women and ladies in Qassim province. Referring to the microfinance environment in Saudi Arabia Al Qahtani added saying: “There are a lot of services offered to the poor in the Kingdom but they actually lack the organizational work which enables them of influencing the reality of the poor segments” He also stressed that the establishment of a bank for the poor shall definitely enhance the microfinance industry in the Kingdom, referring in this regard to the importance of setting the legalizations which form the basis of such industry, following the model set by AGFUND in the countries where it had previously established microfinance banks (Yemen – Jordon – Bahrain – Syria – Lebanon – Sierra Leone and finally Sudan) benefiting out of these countries’ encouraging legalizations. During the workshop, the expert Mr. Muhammed Allaay, CEO of Al-Amal Microfinance Bank in Yemen presented the experience of Al-Amal Bank in bringing about real and actual changes in the economical chart of Yemen. He added that Al-Amal bank had become a competitor for the traditional banks due to its evident contributions in turning the capable poor into productive capacitates and grabbing broad sectors out of the poverty scope which consequently earned the bank a distinguished reputation; this of course comes in addition to the global awards which the bank reaped. Allaay provided an explanation of the Islamic products offered by the bank to its customers, stressing that the practical method lies in designing a product which meets the requirements of the beneficiary segments. He likewise noted that the bank – according to its approved products – presents a clear concept that differentiates between grants with its widely used sense and microfinance that is compliant to the Islamic regulations which in other words means “offering financing whenever the customer requires not when the financer desires.” From his part, Jebrin Al-Jebrin, the projects manager at AGFUND, noted the feasibility of microfinance and its Islamic products in achieving a positive social change, referring in this regard to one of the pioneering projects which is namely the project of involving the female prisoners “battered” in the society – this project was founded in Yemen and was financed by AGFUND and Al-Amal microfinance. He also clarified that this project has proved the feasibility of microfinance as an effective tool in empowering women economically and socially. Abdullah Bin Rashed Alabed Allateef, Manager of small and emerging projects department at the Saudi Credit and Saving Bank also participated in the workshop and noted the new vision of the credit bank regarding microfinance, stressing the continuous support provided to this industry and encouraging the civil society initiatives in serving the poor through the micro-credit.

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