Microfinance in the Palestinian Territories and Jordan – similar challenges, but also similar solutions?
With a warm “welcome in your second home Jordan” Mohamad Amaireh, Head of the Financial Stability Department at Central Bank of Jordan (CBJ) and the microfinance technical committee team from the CBJ welcomed the PMA Division Chiefs for microfinance supervision and for licensing, Mr. Motaz Abu Mwais and Anan Al Samiri for a technical knowledge exchange session in January 2014 in Amman. The PMA offered to report about their experience with microfinance regulation and in particular the licensing.
In the Palestine Territories, most commercial MFIs have received licenses until late 2013 as ‘specialized lending institutions’ by the PMA. Prior to that, the PMA undertook a thorough look into the institutions, analysed their performance, governance and internal procedures against its expectations concerning soundness of business and consumer protection, and gave advice as to where improvements are to be made for the licence. The way has not been without challenges both for MFIs and PMA, and required the institutional readiness and a row of targeted trainings and (legal) advice for the supervisor beforehand.
The PMA representatives introduced their light prudential approach towards regulating the microfinance sector in the Palestinian Territories and shared their experience with issuing the first licenses of MFIs with their CBJ counterparts. How many human resources of the supervisor have been involved in the process, how is consumer protection being integrated, how can the supervisor be prepared in terms of internal capacities, were some of the questions from the interested audience. The PMA and the CBJ concluded the session with exchanging their visions for both the Palestinian and Jordanian microfinance market in the future.
In Jordan, the CBJ also intends to set up a licensing scheme, for which legal preparations are at final stage. What obstacles and challenges might occur on the way to a microfinance license, has now been an interesting field of exchange with the PMA.
The GIZ MFMR programme facilitated this technical exchange on the first microfinance regulation and licensing experiences, whereby the CBJ made active use of learning from Palestine’s current experiences in the regulation and licensing of MFIs.
By Rania Abu Rabie