SYRIA: Microfinance to combat drought

Up to 1.3 million people are affected by drought in Syria/Photo: UN

Farmers and herders are being targeted with microfinance in an effort to relieve drought-related poverty in Syria. Widely used across the developing world since the 1970s, Syria has relatively few providers.

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“Microfinance can be an important tool for relieving poverty and improving livelihoods both by directly raising income and indirectly increasing the sense of empowerment or ability to access education,” said Mohammed Khaled, Middle East and North Africa representative of the Washington DC-based Consultative Group to Assist the Poor (CGAP).

Over 1.3 million people have been affected by the drought which started in 2006, according to the UN. Last month UN Special Rapporteur Oliver de Schutter said 2-3 million people had been pushed into extreme poverty in Syria, with many thousands having left the northeast region for the cities, with no source of income.

Microfinance initiatives are targeting both those who have moved to the cities and those who have remained in the area.

In drought-prone areas the Aga Khan Foundation is working with its subsidiary, the First Microfinance Institution (FMFI). FMFI provides 25 percent of its loans, which range from SYP 3,000-150,000 (US$65-3,247), to the agricultural sector. Much of the microfinance is targeted at measures to combat drought.

“We have concentrated efforts on improving the productivity and efficiency of water used for agricultural use,” said Mohamed Seifo, head of the Aga Khan Development Network in Syria. “FMFI has given loans to farmers to adopt modernized drip irrigation systems.”

Drip irrigation is more efficient than surface irrigation, with 90 percent of water used by the plants, compared to less that 60 percent with the latter.

These new systems save water and increase production, and have indirect effects such as increased incomes, reduced labour, reduced costs for fuel and the elimination of the need to build costly water holding tanks.

Help for herders

Herders have been given loans to purchase new livestock – 80-85 percent of animals were wiped out by the drought, according to UN figures – or to buy fodder.

General loans are also being given for drought victims to start businesses. FMFI has given loans to more than 75,000 families in over 180 villages while a new bank, Ibdaa, was launched last month.

Experts warn that while microfinance can be useful it has limitations in terms of responding to drought victims’ needs.

“Microfinance is not a solution for everyone as not every poor person can be an entrepreneur,” said Khaled of CGAP. “We see around 25-30 percent of businesses successfully reinvesting and growing.”

Khaled also said it may be better to give grants. “Loans can cost more in terms of organization and may not be paid back, which can affect the whole lending culture.”

Experts also told IRIN that farmers should not be encouraged by microfinance to go back into livelihoods where they are unsustainable.

Microfinance has been underdeveloped in Syria. Only 41,500 out of a potential one million microfinance recipients were reached in 2008, according to a study by CGAP.

However, while its expansion is being advocated, some academics, such as Milford Bateman, have argued that there is no clear proof that microfinance works.

“Syria needs more institutions but we have hopes they will grow,” said Khaled. “People can argue about the effectiveness of small loans, but people have a right to access credit.”


Theme(s): Natural Disasters, Aid Policy,

[This report does not necessarily reflect the views of the United Nations]