Should Successful Arab MFIs Expand their Role Post the Revolution

In a previous post, I wrote that Enda-Inter-arabe (Enda-IA) is the only sustainable MFI in Tunisia and it has more than 160,000 active borrowers served through a network of 65 branches distributed all over the country.

Since the revolution, Enda-IA has been facing a lot of internal and external pressures regarding the role it should play to help the Tunisian people. These pressures are coming from:

• Enda’s management and staff who feel that they need to serve their country in a very critical period.
• Tunisians who live abroad and want to help.
• Ministers and Officials in the temporary government facing the challenge of huge unemployment especially among the youth.
• Tunisia’s new political parties who are in a race to build an electoral base in just few months (to be able to stand in front of other old parties), and who see Enda’s clients and branches as a great opportunity in this regard to reach out to the grassroots population.
• Donors who also want to either begin working in Tunisia or to expand and diversify their previous work.

So, here we are with an MFI which has to prepare itself for a new era where, for the first time, there is serious talk about new microfinance law/regulations. This would bring opportunities and challenges such as transformation, competition, hopefully new services such as savings and insurance, bigger loans, the possibility of making greater use of technology/mobile phones etc. On the other hand, it is under pressure to deal with other developmental priorities which vary from tackling the ultra- poor, providing training and financing to start-up of small businesses for youth to create employment, political and citizenship education, to dealing with refugees from Libya and receiving some donations from overseas to fix schools and kindergartens in rural and remote towns and villages.

This might not be exactly the case in other Arab countries such as Egypt where there is a strong NGO community. But even in Egypt, MFIs with outreach to few hundred thousand clients who come to the branches at least once a month, if not more frequently, are very attractive to political parties. Also, the urge to do something to create jobs and to contribute to solving the problem of unemployment is common among Arab MFIs. The question here is: should MFIs play that role?

Though all of the above are tempting and legitimate reasons, I think MFIs should be very careful and avoid moving into playing new roles which require completely different skills and that might jeopardize MFI success and ability to widen and scale up that success. MFIs should focus on what they manage to do best which is providing financial services to the poor and work to increase the depth,¹ breadth,² and scope³ of their outreach which will definitely contribute to the development agenda of their countries but with more guarantees for success.

¹ Depth of outreach refers to the poverty level of an MFI’s clients

² Breadth of outreach is the number of clients served by an MFI

³ Scope of outreach reflects the variety of financial services an MFI offers