Microfinance in Syria

The instability and violence that have affected Syria since 2011 have seriously disrupted the country’s economy, making microfinance work in Syria increasingly difficult and precarious. UNRWA completed a series of important quarterly reports on socioeconomic conditions in Syria, which has clarified the impact of the conflict on our clients and their households and enterprises. As it responded to the crisis, 14 per cent of clients are IDPs, with 28 per cent of client in Damascus internally displaced from their former neighbourhoods.

We began lending in Syria in 2003, at a time when there was great demand for such services and very few other enterprises providing them. By 2012, we provided 30 per cent of all microfinance lending in the country, and considered Syria to have the region’s greatest growth potential for microfinance. UNRWA was also the first microfinance programme in the country to reach full operational self-sufficiency.

Despite the current challenges, our microfinance programme remains active in Syria, even establishing new branch offices to increase our outreach. In 2015, UNRWA granted 9,334 loans in the country, worth SYP 671 million (US $2.6 million); 31 per cent of these loans went to women, who have represented a large share of our clients for several years. The overall portfolio-at-risk is less than 1 per cent, and though we have had to write off 8,648 loans by 2015 as a result of the conflict, 28 per cent have been closed and 23 per cent of the value of the debts has been collected, leaving an uncollected balance of US $318,145.

While the programme in Syria has recovered a significant share of its outreach capacity in 2015, it is unable to grow beyond its current scale due to a significant shortage of capital due to losses between 2012 and 2013, when four of its branch offices in the outlying suburbs of Damascus and Aleppo destroyed or looted and need to be closed. The current capital of the programme is just over US $1 million that is significantly below the needs of the programme, which requires additional capital of US $3 million to operate optimally within the current marketplace in four regions of the country where its branch offices are located.