IFC Study on the Microfinance Market in West Bank and Gaza Identifies Gaps, Makes Recommendations to Advance the Sector

IFC, the private sector arm of the World Bank Group, today launched a microfinance market study of the West Bank and Gaza to highlight the market characteristics and critical issues that need to be addressed to promote a vibrant microfinance sector. These include outreach to clients, product development, and establishing regulations. The study will help address gaps and find ways to advance microlending.

The study was funded by IFC Advisory Services in the Middle East and North Africa – PEP-MENA – and the Palestinian Network for Small and Microfinance, and was conducted by Planet Finance. It estimates demand for microlending in the West Bank and Gaza at 190,000 clients, with a market size of $157 million.

The study reveals that about 90 percent of microentrepreneurs, who are mostly active in trade and services, lack access to financial services. Most of the loans requested by microentrepreneurs are less than $2,500; and these are needed to expand businesses, start new activities, and finance assets and working capital. The study also identifies the need for noncredit products such as insurance, money transfer services, and pension funds.

IFC Country Officer Youssef El Habasch said, “This study demonstrates our ongoing effort to support the microfinance sector in the Middle East and North Africa. The sector serves the poorest segments of society by providing crucial access to financial resources.”

IFC has been active in microfinance development worldwide over the last decade and has committed $500 million to microfinance institutions. As of 2006, these activities have made a difference in the lives of about 3.5 million entrepreneurs.