33931 - Al Majmoua

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Summary of Investment Information

Project Number

33931

Company Name

THE LEBANESE ASSOCIATION FOR DEVELOPMENT

Date SPI Disclosed

Mar 6, 2014

Country

Lebanon

Region

Middle East

Projected Board Date

May 15, 2014

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Nov 1, 2024

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : May 23, 2014
Signed : Sep 25, 2014
Invested : Nov 25, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The project involves a senior loan to the Lebanese Association for Development (“Al-Majmoua” or the "Organization"). Proceeds of the loan will be used to support Al-Majmoua’s loan portfolio growth and increase access to funding needs of micro entrepreneurs and low income people in Lebanon, especially women who represent 52% of total clients.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

(i) Funding: IFC will be providing medium/long term funding to support Al-Majmoua''s growth in the microfinance sector in Lebanon and reach out to more of the under served segments of the market. The loan would also assist the MFI to better manage their asset and liability position at the time of limited funding opportunities.

(ii) Access to finance: The proposed Project would support Al Majmoua, one of the leading microfinance providers, to expand its outreach and serve a larger number of low-income people in Lebanon. The social impact of the proposed project would be significant especially that women account for 50% of total clients.

(iii) Job creation: MSMEs are key contributors to job creation in the Country. Developing a vibrant MSME sector, with reliable access to finance, can play a significant role in private sector led economic growth, generating employment and providing opportunities to the poor and under-served groups.

(iv) Demonstration effect: Through this project, IFC is expected to act as a catalyst by encouraging other investors, especially local banks, to fund the microfinance sector and bridge the financing gap facing this sector. Furthermore, and when regulatory environment allows, Al Majmoua will consider/assess transforming from its local NGO status into a financial institution company regulated by the Central Bank. This will be a successful example for other NGOs to strengthen their institutional capacity, implement best standard practices, and to be regulated by the Central Bank.

IFC''s expected additionality will be in providing long term funding, which otherwise is difficult to obtain from the local market, especially for microfinance institutions. This will support Al-Majnoua in growing its portfolio and outreach and to better target underserved low income micro-entrepreneurs, especially women. The long term nature of the loan represents a stable source of funding and accordingly would facilitate better liquidity management and enhanced ability to reach out to the targeted underserved segments.

E&S Category Rationale / Risks and Mitigation

Environmental and Social Categorization Rationale:

The Project consists of a senior loan of up to $3 million to Al-Majmoua with a tenor of up to 4 years to support the MFI''s loan portfolio growth and branch outreach and to increase access to funding needs of low income people in Lebanon. The overall portfolio risk is considered to be limited since the company is focused primarily on microfinance for working capital purposes, purchase of fixed assets, ICT-related purposes in rural areas, home improvement, and seasonal loans for agriculture-related purposes and the Project has been classified as Category FI-3 according to IFC''s Environmental and Social Review Procedure. For this Project, the client will be required to screen loans against the IFC Exclusion List and Lebanese E&S laws and regulations.

Contacts

For Inquiries About the Project, Contact

Khaled Walid Qutob
Tel: +970 - (2) - 5366-211
Email: mailto:KQutob@ifc.org

Fatma Sidky
Tel: +20 (2) 2461- 4288
Email: mailto:FSidky@ifc.org

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