One of the greatest complaints by Lebanese living outside Greater Beirut is that they are left out of many development plans. Especially in the IT sector most attention is focused on Beirut where the lion’s share of action normally takes place. Rural areas, however, are left out and not thought of as places where information technology or connectivity means much. But these days this is changing, as a small micro financing program is under way. Al-Majmoua — The Lebanese Association for Development has received a $150,000 grant from the International Executive Service Corps (IESC) to support rural area entrepreneurs in the ICT sector.
This is the first time a microfinance program is aimed at businesses in IT in rural communities, according to Mahmoud Elzein, deputy country director of IESC. “Since IT businesses in rural areas are small, there are many obstacles for them to get financing through a bank whereas microfinance is much more appropriate for them.”
The program provides short-term loans of up to $15,000 to micro and small business entrepreneurs to secure the capital needed to start, as well as for established businesses to expand. The interest rates are subsidized, leaving the borrower with a 1% interest rate and the administration and other fees are waived. “The loans are dependent on the entrepreneurial spirit and a viable business plan,” said Mohammed Bensouda, country director of IESC.
To further encourage interest in the loans, Al-Majmoua has limited the loan guarantees to business capital and excluding personal assets and mortgages. “We wanted the guarantee to be flexible to encourage start-ups to take loans, so that it’s not a barrier,” said Alia Farhat, business development manager at Al-Majmoua.
Value-added program
“If it is a new client we might ask for fixed-asset collateral, which would mean if they were using the loan to buy computers, Al-Majmoua would then own the computers or office equipment during the term of the loan. We don’t go into mortgages or hold personal collateral.”
Borrowers may also get added value of the loan program through technical assistance and training from IESC. The organization already provides ICT-training programs in many rural areas and announced its support and provision of expertise to borrowers. As Bensouda pointed out, “In our program we have several local volunteer experts to assist in rural centers.”
IESC has brought several other ICT initiatives to rural areas, such as affordable wireless ICT access to 20 areas through the establishment of wireless internet service providers (WISPs) and technical training for entrepreneurs. In addition, it announced an e-tourism initiative for rural tourism establishments through internet aggregators.
In just under three months the program has lent to over 35 entrepreneurs in the South, the Bekaa and northern Lebanon. The majority of business start-ups have focused on opening internet cafés and connectivity centers.
The program is sustained through the recycling of funds as loans are paid off and reused for new lending schemes to other IT businesses. “After five years, we would have almost 25% extra capital to use in the future,” said Farhat.
For Ali Nazar, mayor of Arabsalim in the Nabatieh region, one of the major difficulties his village faces is the lack of job opportunities. According to USAID figures, unemployment and underemployment in rural Lebanon is estimated at 25%. While the program is rather small in its range and scope, Nazar is excited about the job creation possibilities as well as the opportunity to keep families connected to their children abroad via the expanded internet centers. Bensouda concurred, “The great part about it is that the program brings greater connectivity to these areas in that the local community will go to these places and use their facilities.”
At a recent press conference in Saida on the micro financing program, one of the recipients told the audience about how she, as a widow in South Lebanon with four children, was able to get a loan and open an internet shop, and is now supporting her family through the business. The loan paid for the computers and also allowed her to hire an additional employee to work in the evenings. “It’s very small scale but it adds up and makes a difference,” commented Farhat.
This program is operated in conjunction with other micro-lending efforts by Al-Majmoua, which in 2006 boasted a loan portfolio of $7 million and over 8,500 beneficiaries all over Lebanon. Since its foundation in 1994, Al-Majmoua has dispersed over $75 million through 80,000 loans. Their 2006 distribution included 37% for services and 44% for trade. Al-Majmoua began operations as the micro-credit arm of Save the Children Lebanon. Since then, it has grown considerably and now has eight offices throughout Lebanon providing not only financial services but also entrepreneur training and exhibition space. Two years ago Al-Majmoua began offering a variety of business development services focusing on gender and women’s economic empowerment.
As Bensouda summarized it, “At the end of the day, this program is about job and wealth creation for people in rural areas.”






