RURAL COMMUNITY DEVELOPMENT AT JABAL AL HOSS

Mahmoud AsaadUNDP-SYRIA

Workshop on Microcredit-Financing and Poverty Alleviation in OIC Member StatesIstanbul, 9-10 July 2007

1. Jabal Al Hoss is in the south east of Aleppo.

2. 250.000 person

live in the area, most of them are under the poverty line.

3. It is 157 000 hectare.

4. There are 156 village and farm.

Why Jabal Al Hoss?Drought,

Annual average rate of rainfall 150 - 250 mm .

Shortage of drinkable and irrigation water.

Volcanic rocks cover %23 of the total area, and can't be reformed.

%55 of the lands need reform.

Water:

bought and kept in semi covered tankers which endanger it to pollution.

Residence:

%46.3 of population live in a single mud domes.

This dome is a multi purpose house.

People work in:

Agriculture: rainfed crops.Barley, Cumin, Wheat, Lentil

%40,2 of the villagers are landless.

Livestock keeping: sheep, goats and cows.

Migration:%40 of the population migrate

for (2-3months).%3.5 migrate for more than 6

months.

Population growth rate %3.4     %51 of them under 15. %51 of them under 15.

Illiteracy rate at the age of Illiteracy rate at the age of 13and above %58 and it is 13and above %58 and it is higher among women.higher among women. Household average size is Household average size is 9 person.9 person.

Dependency ratio 4.5% person

Population Demographic Indicators

Access to Credit

• Moneylenders from informal credit markets charge very high interest rates( 75 %(.

• 15 % can access money from formal credit markets.

• 85 % can not access money from formal credit markets : religious, complex procedures, no physical collateral.

Rural Community Development project (RCDP ) in Jabal Al-Hoss

is a joint project of the Ministry of Agriculture and UNDP.

It was approved in 1998.

Implementation started in 2000 .

The first Sanduq was established on September,

2000.

Project objective

Establishment of a sustainable network of self-reliant local microfinance institutions (sanadiq) to finance employment-generating small and micro enterprises.

Low-income people, the underemployed and the unemployed - men, women and youth.Shareholders in the village funds at Jabal Al Hoss.

Target group

Project period

Phase one: 1999 - 2002Phase Two: 2003-2007

1-UNDP offers $1,4 million.

2 -Japanese government $1.5 million.

3- Syrian government: contributes with sp.40 million and provide locations, operational costs, maintenance, and required governmental staff.

Financial Resources: 1999 - 2007

It is a self-reliant local financial institutions, concerned in funding micro investments through easy ,fast and flexible Islamic lending methods in addition to offering training, technical and social care services.

What's Villages Sanadiq?

VF. Establishment Mechanism

Establishment application

from LC

Establishment application

from LC

3-6 Months Experimental

period

3-6 Months Experimental

period

Elect 3 members for the VD

Committee 1 at least women

Elect 3 members for the VD

Committee 1 at least women

100 Members) shareholders(

Value of share 20 US$

100 Members) shareholders(

Value of share 20 US$

Injection Fund from UNDP

Injection Fund from UNDP

V.Fs Financial Resources

Membersshares

Membersshares

(UNDP)(UNDP)Retainedearning

Retainedearning

VFCapital

VFCapital

VDF.s number

9

2022

32

0

10

20

30

40

2000200120022006

VD

F.s

No

.,

Characteristics of the Village Fund Model

)1(Meet loans needs of the local community.

)2(Consider prevailed traditions and norms.

)3(Easy and flexible procedures to be applied through the local community.

)4(Financing based on the concept of Murabaha with net profits shared among members.

)5 (Good governance through committees with sound election and voting procedures.

)6 (Project management team responsible for creating awareness of microfinance practices, training of committee members.

)7 (Financial management of the funds based on standardized by-laws and statutes for each of the village funds resulting in “fair” credit decisions and low transaction costs.

)8 (Financially viable operations with repayment rates closeto 95%.

)9(Equal access to both men and women as owners and users.

)10(Central Fund:Sanadiq apex fund forliquidity exchange and refinancing.

)11(Support from UNDP in the form of matching grant equal to minimum share capital of village fund.

)12 (Support from Ministry of Agriculture and UNDP in the form of in-kind donations.

)13 (Offering loans as Al Qard Al Hassan for disabled.

Financial products

Shares:

Share value SL.1000 (20 US$) , as a shareholder can own maximally 50 share.

Any member can withdraw his share capital after at least 1 year of the date of his participation.

All the inhabitants of the village can buy shares regardless of their age.

Shareholders

عددالمساهمين

1025

34554691

60007360

0

2000

4000

6000

8000

20002001200220032006

العام

ن

ميساه

لمدا

عد

Total Shares Value

14777500 13389000

12717500

10652610

6557110

1901000

4635000

2000 2001 2002 2003 2004 2005 2006

0

2

4

6

8

10

12

14

16

1 2 3 4 5 6 7

Mil

lio

ns

Financial products Loans:

1 .Loans type: according to repayment way:*Seasonal loans repaid as a lump sum at the end of

the period, Monthly profit margin 1.25.%

*Loans repaid by quarterly installments each 3 months, Monthly profit margin 1.%

*Loans repaid by monthly installments, Monthly profit margin 0.75%

Loan term:*It is specified according to the cash flow of the economic

activity but it shouldn't exceed a 1year.*Average loan term : 10 months.

Loan size:*No more than US$ 1000 in the first loan cycle as it is

increase gradually through building the client credit worthiness.

*The maximum loan size is US $ 3000 .*Average loan size : US $ 800

Loan collateral:Two reputable grantors from the village.Signing promising vouchers.

Total Outstanding Portfolio

1.79

20.40

31.94

63.8372.59

78.29

91.85

0.00

10.00

20.00

30.00

40.00

50.0060.00

70.00

80.00

90.00

100.00

1 2 3 4 5 6 7

Mill

ions

2000 2001 2002 20042003 2005 2006

Total Value of disbursed loans: US $ 8.560 Million (11200 Loan)

%Loan Purpose

%45 farming

%2 industrial %3 Service

%10 trade

% 40 livestock

Financial products

Dividends:

Year 2001 2002 2003 2004 2005 2006

Dividend % of share value (US $ 20)

22% 29% 22% 21% 22% 20%

Non Financial services Training

/97/ training courses were conducted and beneficiaries' number (men and women) was 1688 .

literacy courses.

Non Financial services

Nursing courses

Non Financial services

Hand crafts

Sewing

Tailoring

Non Financial services

livestock andhoney bee keeping

Non Financial services

Food industry

Electronic devices maintenance

Electrical equipment repair

Hair dresser and barbers

Non Financial servicesMarketing:

For the

traditional

women products

through fairs and

economic activities.

Village Funds Challenges Legal frame work ( sanadiq legalization) Link sanadiq with banks (for sufficient fund) Independence self management through a

sanadiq board from the local community. Access sustainability levels. Wide spread nationally and regionally. Establish specialized links and unions in

production and market income generating activities.

1-President of Syria issued in Feb 2007 the legislative Decree no. 15 which provides for permitting the Credit and Monetary Council to license the establishment of a social banking and financial institutions.

2-These institutions aim to offering small and Micro finance in addition to banking and financial services

for certain section of peoples.

3-These institutions may be established by Syrian, Arab or foreign boards.

4- Minimum capital of this institutions is 5 Million US$