Access to financial services for unbanked people is key to improve and sustain their standard of living. FMO is therefore proud to announce the signing of a USD 5 mln loan with Vitas, a microfinance company that operates in the Palestinian Territories, where more then 50 percent of adults do not use banks or banking institutions. Vitas’ mission is to support unbanked people by providing them the financial resources needed to support their economic activity and improve their level of income. The majority of their loans consist of an amount between USD 1,000 and USD 5,000, mostly to owners of market stalls.
Funding to small entrepreneurs
Huib-Jan de Ruijter, Director Financial Institutions at FMO: “Through Vitas, FMO has the opportunity to reach the underserved in the Palestinian Territories for the first time. In these changing and challenging times we are confident our support will help Vitas continue their funding to small entrepreneurs, who together form the backbone of the economy. Vitas has shown by its mission and track-record that it plays an important role contributing to economic development in various sectors and countries in the region. We look forward to our collaboration.”
Vital to its mission
Alaa Sisalem, General Manager of Vitas Palestine: “I am proud FMO had decided to start its first activity in Palestine with Vitas Palestine. This new cooperation and partnerschip with FMO will positively affect the quality of life of our clients. This loan is vital in helping Vitas Palestine continue fulfilling its mission to provide financial products and services that respond to our clients’ needs and foster the long-term development of individuals, their businesses, their families and the communities they live in, especially during this critical time in which the entire world including Palestine is facing the Covid 19 pandemic.’’
With a growing population of which more than 70 percent is under the age of 30, and one of the highest unemployment rates in the world (50% in Gaza in 2018), economic growth and financial inclusion is high on the priority list of the Palestinian authorities. Although there were hopeful signs for economic recovery in 2019, the outlook for 2020 is not positive due to the COVID-19 outbreak, which makes counter-cyclical investments even more important. The collaboration with Vitas fits in with FMO's strategy to increase its activities in the Middle East and North African region. The funding will be provided by the Dutch government’s MASSIF fund, which aims to take early investment risks and act as a catalyst for the growth for the private financial sector, meanwhile stimulating financial inclusion in developing countries.
Promoting loans to SME clients and providing them with access to capital will empower local entrepreneurs and support job creation. The loan facility will help to create and maintain jobs, especially for young entrepreneurs, and is therefore fully aligned with Goal 10 of the UN Sustainable Development Goals (SDGs), Reducing Inequalities and Goal 8, Decent Work and Economic Growth.
Vitas Palestine (formerly called Ryada) started as a project in the Gaza Strip in 1994 under a cooperative agreement between USAID and Global Communities (formerly CHF International). Vitas Palestine has evolved into a program with its own portfolio, serving low to moderate-income individual business and home owners who cannot access mainstream credit sources. It has expanded its branches, number of clients, product offering and gross loan portfolio significantly and is now one of the largest MFIs in Palestine. Since its inception, Vitas Palestine has disbursed 37,652 loans valuing $171.7 million. Vitas Palestine has ten branches throughout Palestine that are located in Gaza, Khanyounis, Hebron, Nablus, Beit Lahia, Qalqilya, Jenin, Tulkarem, Durra and Ramallah. Vitas Palestine’s vision is: “All people with a desire and capacity to improve their lives should have access to the financial services they need to help them realize their potential and become full social and economic participants in their communities”. Vitas Group is a commercial holding company created by Global Communities (formerly CHF International) in 2009 as a long-term vehicle for fulfilling Global Communities’ mission in microfinance and small- and medium-enterprise finance.