Syria Turns to Microfinance to Combat Poverty

A regional front-runner in microfinance legislation, Syria is still struggling to find a sustainable model to finance its rural poor. Currently, NGOs geared toward poverty alleviation dominate Syria’s microcredit market, but further expansion of their role is inhibited by outdated government regulation. The entry of more private players is needed to increase market competition and efficiency, which will in turn help the microfinance network to realize its social goals.

While the government has done much to liberalize the financial sector since 2001, Syria remains under-banked and its financial services are limited. Private commercial banks are slowly expanding, having distributed US$6.4 billion in credit in 2008. However, most of that is oriented towards high-income clients and small and medium enterprises, leaving the many people lower on the economic scale out in the cold.

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