Tamkeen’s Micro-Finance Initiative for Low Income Earning Women with Ebdaa Bank
Labour Fund (Tamkeen)

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Bahrain is a small country in Arabian Peninsula of 1.314 million people, 38% of which are female while the remaining 62% are male. The ratio of women to men in the Kingdom is roughly equal throughout all age groups, especially the Bahraini population of adults at a working age. Historically, Bahrain has relied on pearl fishing, agriculture and trade for income. The main trade businesses in Bahrain were weaving and embroidery, pottery, copper work and metalsmithing, fishing, boat building, leather works, minor agro-processing and providing goods such as herbal medicines and cosmetics. Post oil discovery, Bahrain became a high income state; however, there are many people who are still getting government support. Certain families in the Kingdom till date survive with informal work such as production of food, pickles, and sweets to name a few. Even though the government supports them, this does not empower individuals but rather allows them to be reliant on the government instead. 34,542 people are depending on the government welfare support of which x are female, 10% of women are responsible for households, and the tendency of men to depend on women for income is increasing. As a result women-owned businesses in Bahrain are well represented in the entrepreneurship space, yet they are struggling with getting finance from commercial banks. Studies shows that women-owned businesses grow more slowly than their male-owned counterparts. One of the key factors associated with slower growth rates was access to finance, which includes gender-specific challenges such as lack of collateral and less control over assets. Faced with the need to provide access to finance to women-owned businesses Tamkeen and The Supreme Council of Women in conjunction with Ebdaa Bank in 2009 launched the idea of having a dedicated portfolio of US $2.65 million to provide financing for women entrepreneurs. Funding ranged from US$ 530 to US $1,362 with a repayment period from 6 months to 36 months. Tamkeen has been subsidizing 50% of the bank interest associated with funding. The entire portfolio of US$2.65 million has now been utilized and as the result of Tamkeen micro-finance project for women a total of 442 women beneficiaries have been served. Due to the success of this project the Supreme Council for Women and Ebdaa approached Tamkeen for a second time to top up the project portfolio for an additional US$2.65 million for the objective of continuing bridging the financing gap that women entrepreneurs and enterprises face to acquire micro financing, in addition, to offer lower cost micro- financing to women with existing micro enterprises and those who wish to establish new micro business activities.

B. Strategic Approach

 2. What was the solution?
Since 2008 Tamkeen has played an active role in supporting women, one of Tamkeen’s primary objective is to increase Bahraini women inclusion in the labour market and contribute to the removal of obstacles that limit women’s participation in the labour force in line with Bahraini’s Economic vision 2030. Moreover, the government has recognized the importance of microfinance towards decreasing the rate of unemployment. The idea of micro-finance was based on supporting local economic developments in developing countries, wherein the micro-finance is “to lend rather than to donate”. Micro- financing was offered informally in Bahrain by NGOs in the early seventies. There was no formal institution or bank that specialized in micro-financing until the establishment of Family Bank in 2010 as the first Islamic micro-finance bank in the MENA region and Bahrain. Since its establishment, Family Bank has served to enhance the living conditions and providing support to Bahraini entrepreneurs. Households applying for such loans have the fund used in activities requiring little amount of capital such as handicrafts, knitting, beauty salons, cold stores…etc. The support given to small business is viewed as a way to promote growth, economic activity and employment of the nation. Besides Family Bank, another Bahraini joint stock closed company has been established in support of micro projects and small entrepreneurships; Ebdaa Bank. In alignment with the Kingdom of Bahrain’s National Economic Vision, Ebdaa Bank adopts the philosophy of enabling disadvantaged categories, especially women, to improve their standards of living through self-employment. The micro-finance program is backed by a package of financing and advisory services to transform, after an interim period of incubation, to a leading status of entrepreneurship, which the Bank is keen to attain. However, even with the support of the aforementioned banks, women owned businesses still struggle with getting access to the banks finance, mainly because of high interest rate and lack of collateral. The bank used to offer financing from US$ 532 to US$7,979 to be repaid over a period of 6 months to 24 months. Tamkeen support helped elevating the financing amount to US$ 13,298 and increase the repaid period to 36 months. Thus, Tamkeen collaboration with the banks helped in overcoming the difficulties in accessing finance through reducing the high interest rate as a major hurdle; Tamkeen has been subsidizing 50% of the bank interest associated with funding. In addition to overcoming the lack of collateral and increasing the tenor of the financing period. The micro-finance that Tamkeen offered in conjunction with Ebdaa Banks enabled women participation and very much helped those women entrepreneurs with limited abilities. Furthermore, only through Tamkeen the bank was able to offer flexible repayment terms and has minimal requirements to be fulfilled in order to benefit from financing. As a result, the scheme empowered Bahraini women with limited income to be able to establish new micro business activities. The scheme gives financial support to small existing business, as well as Islamic Sharia compliant interest-subsidized funds that would help in boosting expansion, development and subsequently contribute to the national economy. Up to date, 442 women-owned businesses have benefited from Tamkeen micro-finance scheme. furthermore, in 2008 Tamkeen partnered with the Supreme Council for Women for the Photography, Transportation and Tailoring support projects. Under those projects, Tamkeen had extended its support to 40 unemployed women to equip them with the necessary skills and financial support to help them provide their families with additional income. Such support helped Tamkeen achieve its strategic objectives towards the empowerment of women by easing the accessibility to certain tools, equipment and capital to women who wish to have their own stream of income.

 3. How did the initiative solve the problem and improve people’s lives?
The Women Entrepreneurship Micro-finance Scheme has been launched with the support of Her Royal Highness Princess Sabeeka bint Ibrahim Al Khalifa -the First Lady of the Kingdom of Bahrain and Chairwoman of the Supreme Council for Women and was named after her. The scheme aims to encourage Bahraini entrepreneur women to improve their standards of living by providing subsidized Sharia compliant micro-financing to those who wish to start a business including those starting one from home, as well as existing women-led enterprises looking to expand. Bahrain is a Muslim community, and conventional interest based microfinance has always been rejected due to its non-compliance with the Islamic principles, particularly on the issue of paying of interest (known as Riba), which is not culturally and religiously accepted in Bahrain. Thus, Tamkeen micro-finance considers this cultural requirements and offers accordingly a micro-financing product that conforms to the norms of the society which increases the likelihood of acceptance and success of the project. Earlier attempts to provide conventional financing face resistance from many segments of the targeted beneficiaries The micro-finance scheme is tailored to suit the local culture and Islamic belief of women beneficiaries in Bahrain where 50% of the profit expense on the finance amount subsidized by Tamkeen. The scheme was designed based on a “ Public Private Participation” (PPP) (see figure 1) in which the impact and outreach of the scheme is maximized through the collective collaboration between the participation entities.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
A tripartite agreement was signed between Tamkeen, the Supreme Council for Women and Ebdaa Bank in 2010 indicating that the three parties involved in the scheme would discuss and agree upon a support programme for micro businesses owned by female entrepreneurs. Tamkeen had agreed upon allocating a US$ 2.65 million portfolio to be offered as financing facilities for these micro businesses through its collaboration with Ebdaa Bank. Tamkeen was already offering the Finance Scheme in 2010 through two partner banks which is a scheme dedicated to reduce the costs associated with obtaining financing facilities for small and medium businesses. As the key objective of the scheme is to reduce the cost associated with obtaining the financing, Tamkeen in agreement with the other stakeholders decided to replicate the same tried and tested structure to the micro finance scheme opting to support 50% of the cost of financing where the reduced costs will make the financing more affordable and more appealing for a wider women customer base. The scheme would be targeting women micro businesses which have commercial registrations as well as women micro business entrepreneurs who run informal businesses and are working from home. An agreement was signed between Tamkeen and Ebdaa Bank in 2010 with details of the roles and responsibilities of each party and the portfolio was offered to the public the following year in 2011. By October 2012, the entire US$2.65 million was disbursed to 442 women beneficiaries where 82% of them had their business as a sole source of income. Furthermore, 69% of the women beneficiaries were home businesses who would not be able to gain access to low cost funding without the scheme. Eligibility Criteria: • Women age group from 21 years to 65 years • Bahraini National • Entrepreneurs wishing to improve upon their existing enterprises and micro businesses as well as entrepreneurs looking to initiate new enterprises/micro businesses • Business concept Required documents: • Copy of Smart Card (National ID card) • Copy of passport • Copy of Commercial Registration (if any) • Bank statement (3 to 6 months, for business owners, if any) • Salary slip. (if any) • Any other documentation requested by the bank • A grantor required to submit similar documents

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The scheme involved three key stakeholders: Tamkeen, Ebdaa Bank, and the Supreme Council for Women. Each of these organizations have a different role to play. Tamkeen is in charge of designing the scheme and offers the financial support needed as well as monitoring the overall performance of the scheme including Ebdaa Bank’s performance and the beneficiaries’ satisfaction of the scheme and fund utilization. Ebdaa Bank’s role as the executing partner is to identify businesswomen and offer them with subsidized financing facilities to sustain or expand their businesses as well as conducting the pre and post funding monitoring. The bank works with the philosophy of enabling disadvantaged categories, especially women, to improve their standards of living through self-employment. The program is backed by a package of financing and advisory services to transform, after an interim period of incubation, to a leading status of entrepreneurship, which the Bank is keen to attain. The bank is supported by the United Nations Industrial Development Organization (UNIDO) for providing training and technical advice to ensure the optimum utilization of finances granted to limited-income borrowers, as well as the sustainability and success of entrepreneurships. The Supreme Council for Women role in this micro-finance scheme is to market the scheme and recommend potential beneficiaries as well as offer beneficiary advisory services. The center also helped in opening windows for accepting applications in all of the Kingdom’s governorates making the scheme more accessible to women in rural areas who may be unable to commute easily. Ebdaa bank cooperated with Tamkeen and all the governorates of Bahrain to open a window for the Portfolio in these governorates to make it easy for applying the application and conduct Introductory lectures of the importance of the portfolio and how much they will benefit from it, the main purpose of this was to reach the women easily since the governorates’ employees have full knowledge of the residential neighborhoods in the region. Other NGO societies such as Bahrain Women Society and Bahrain Young Ladies Association also helped in this regard. It was a significant move by the women's associations towards the scheme for example the Reef Association for Woman, encouraged the women to take advantage of this portfolio by organizing lectures in all governorates of Bahrain, explaining the benefits gained from the scheme such as providing support for women who wish to improve their standards of living by starting small projects.
 6. How was the strategy implemented and what resources were mobilized?
The Kingdom of Bahrain has taken vital steps towards a labour market reform which is an essential stride to ensure that the human capital of the country is developed and that employment is made more attractive for localization as well as to improve performances of businesses. There is a common understanding that labour market reform will impact the Kingdom’s economy and raise standards of living as well as pose a challenging commitment to the improvement of services in Bahrain. The labour market reform is the first to be initiated and is the responsibility of two entities. The Labour Market Regulatory Authority (LMRA) is the regulatory body of the country collecting levies and labour fees. 80% of this money is channelled into Tamkeen the other entity in the labour reform. Tamkeen is responsible for re-injecting the collected levies back into the country through two main streams: • Private Sector Support: assist Small & Medium sized enterprises to improve their process/systems and enhance their productivity • Human Capital Development: they implement programs to upgrade the skills of Bahrainis talent, through outsourced training. Tamkeen’s mission is to develop Bahrain’s private sector and position it as the key driver of economic development. It was established in August 2006, with two primary objectives: Firstly, fostering the creation and development of enterprises, and secondly, providing support to enhance the productivity and growth of enterprises and individuals. Through Tamkeen’s strategy as well as the support of the local businesses, a number of innovative programmes are provided to Bahrainis and businesses in Bahrain, which include training, consulting, financing, entrepreneurship support and others. These programmes help develop the capabilities of Bahrainis and enterprises and integrate new critical concepts for a vibrant sustainable private sector. Tamkeen allocated US$ 2.65 million from its budget to the Micro-Finance Scheme with Ebdaa Bank as a committed portfolio for the women micro-financing. As Tamkeen’s role is to develop projects in order to propel the private sector, the internal staff involved within the organization were responsible for the design and implementation of the project and hence no additional financial, technical, or human resources costs were borne. Ebdaa Bank dedicated four loan officers on a part time basis to this scheme and they were also responsible for the bank’s overall portfolio, thus, no additional costs were associated with operating this scheme. Tamkeen had to only budget for the costs associated with the subsidy to be offered to the beneficiaries which is US$ 64,090 for the whole of US$2.65 million scheme portfolio.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The Supreme Council for women along with Ebdaa Bank each independently approached requesting financial support for Microfinance initiatives. Tamkeen agreed to pump $2.65 million into the portfolio of this scheme for the objective of making access to finance more affordable, through lowering the financing cost and sharing the risk associated with such a loan with the women beneficiaries. Tamkeen targeted an overlooked women segment of the population; offering support to entrepreneurs and micro-businesses that face difficulties in obtaining funds from commercial banks to initiate or expand their existing ventures. The Scheme also empowers women with limited income to be able to establish new micro business activities. The Microfinance Scheme focuses on serving women in the private sector by providing financial support to small existing business, as well as low-income women to obtain Sharia’a compliant interest-subsidized funds that would aid in boosting expansion, development and subsequently contribute to the national economy. The scheme offers women beneficiaries financial support through subsidizing profit rate by 50% for financing that ranges between US$ 532 to US$ 7,979 enabling beneficiaries to benefit from more affordable financing solutions. Due to the success of the first phase of the micro-financing scheme, Ebdaa approached Tamkeen for a second time to top up the project portfolio to an additional $2.65 million bringing the total portfolio to US$ 5.3 million. Following are the main outputs of the scheme: • Tamkeen was able to offer such financing facility to a bigger segment of women in Bahrain as opposed to offering a traditional micro-finance loan with a higher interest rate. • Women working from home were limited from getting accessibility to finance since all commercial banks require security in term of collateral, in order to provide financing facilities. Tamkeen’s support to the Islamic micro-finance loan helped in subsidizing the cost of financing making it more affordable to the women beneficiaries. • Many business concepts flourished and ultimately grew with the aid of the scheme, becoming a definite success for micro business for women and family businesses. For example, one beneficiary a mother of three identified a gap in the market for traditional sweet with a modern twist, later she was able to transfer her business from home-based sweet into scrumptiously modern chocolate covered bites. Over the years, she has developed her personal unique and delicious recipes, currently she is planning of establishing her own chocolate factory. • Tamkeen subsidy towards the interest was a prominent factor towards the success of many beneficiaries, which motivated new entrepreneurs to enter the market. • Many beneficiaries re-applied to attain additional loans for further expansion and business growth. • Lack of financial management was common among beneficiaries, since most of them were unaware of the exact amount they needed. Tamkeen assistance in providing training and mentorship towards this scheme helped in educating women in this regard. Further, it helped in mitigating the risk of failure of their businesses. • Total number of beneficiaries served under this scheme as of today is 442 number with an allocated budget of US$ 5.3 million up to date. • Tamkeen’s 50% subsidy of the profit rate enabled the bank to reach out to a greater market segment, in addition to providing the bank with the required means of offering this scheme.

 8. What were the most successful outputs and why was the initiative effective?
Tamkeen through its internal monitoring team review the list of the micro-finance beneficiaries and verify the loan invoices with Ebdaa bank to check the accuracy, consistency of the loan amount and other provided information, to co confirm the amount of monthly installments, the total of interest and Tamkeen subsidy basis on 50% monthly. Such monitoring activities are carried on a daily basis and as a result a monthly report about the Micro-finance scheme performance is submitted to management in Tamkeen. The monitoring process objectives are to: • Ensure the acceptance and approval of deliverables from the scheme. • Ensure the project is delivered within the budget, on schedule, and within scope. • Supervise and manage Ebdaa bank in executing monthly activities status and work program. This includes verifying the scheme applications received from the bank. • Make the required communications with the Project Manager in charge, partners, service providers and beneficiaries. This includes site visit to our partner Ebdaa bank as well as the women beneficiaries site visit to monitor the loan amount utilization and record the progress in their business in addition to provide advisory and counseling on how to further improve/expand their business. • Ebdaa bank is required to communicate to Tamkeen the monthly activity result and any other update when required. • Conduct focus group with beneficiaries of the scheme as well as potential beneficiaries to assess the level of satisfaction from the micro-finance scheme. It is also worth mentioning that the purpose of Ebdaa bank site visit is to verify the application process of the micro-finance scheme which is carried out by the bank. The sample of applications generated will include accepted and rejected cases. The following are the activities carried out during the site visit: • Ensuring that the eligibility criteria were met and the required documents were obtained by the partner bank. • Reviewing the timeline of processing the loan applications. • Selecting a sample of the beneficiaries and reviewing their entire application process including: - Completeness of the applications supporting documents. - Eligibility criteria. - The bank approved loan amount. - Loan amount utilization purposes. - Business plan. - The beneficiaries site visit reports which stating the status of the business prior and post benefiting from the scheme. - Signed contracts and terms & conditions. - Rate of benefits based on amount. - Monthly installments. - Tamkeen 50% subsidy. - Any observations noted during the initial and final site visit to the beneficiaries.

 9. What were the main obstacles encountered and how were they overcome?
Micro financing is an area which Tamkeen is looking into bridging the financing gap available as it currently does not have projects which are specifically designed for micro enterprises. However, doubts still arise in terms of the abilities of the selected beneficiaries in running their business successfully. It is worth mentioning that there are certain traits and attitudes that make some people more suited to be an entrepreneur. This scheme will be vain if the beneficiaries are not equipped to put all those positive traits into action. This problem were overcome through providing awareness sessions prior to applying, these sessions were organized with the help of our partner Ebdaa bank. During the session potential beneficiaries will be introduced to the objective of the scheme, eligibility criteria and the expectations from the beneficiaries. The sessions also helped in emphasizing the importance of financing income generated micro-business and new ventures. Additionally, some beneficiaries need to have a better non-financial advice in terms of plans for their businesses. This issue has been solved through increasing the number of visits/follow up with beneficiaries, to help shed lights on their plans for improving the businesses. In addition, sharing success stories of some beneficiaries with the others helped in motivating them to further grow. Another challenge that was faced during the project is how to encourage women to participate in the exhibitions and fairs in Bahrain. There was also a challenge in persuading them to apply for a Commercial Registration (CR) for their business since these women were restricted by culture burdens. However, some women succeeded and they shifted their business from home to a rented premises. Finally, Tamkeen discovered that some beneficiaries were not aware of Tamkeen’s subsidy under this scheme, thus, it was solved through increasing the bank’s articulation of this scheme as well as increasing the advertisement of the same various media channels such as (newspaper, website, social media...etc.), in addition to accepting application through the Supreme Council for Women and other NGO societies which enhanced the outreach of this scheme to a greater market share of potential women beneficiaries.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
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 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Economic sustainability tends to depend on consistent financial contribution to the programme, as well as the ability to make a degree of profit out of the project to re-injected back into the scheme portfolio. When it comes to profit or return, it is worth mentioning that for every US$ 1 subsidized by Tamkeen for this project, the women entrepreneurs will obtain financing of US$5.8 from the bank. The sustainably of this model emerges as a result of repaying the principle of the loan by the beneficiaries back to the bank, which will be re-lent to another group of women entrepreneurs supported by Tamkeen loan interest subsidy. As a result, the scheme proved to be sustainable and affordable by low income earning women. Tamkeen subsidy also contributed in covering the cost of funding for the micro financing bank, as the bank faced challenges in securing adequate capital to offer to the women beneficiaries because of the risk associated with the project and the conservative nature of the lending bank. The ultimate sustainability aim for this scheme is to empower women to progress their business from their home to the market. As the customer base increased for some women entrepreneurs, they were able to move to rented premises. Such transformation to a commercialized business indicates that the financial strength and the scale of the business has improved. Thus, the requirements for micro-financing may no longer meet the new business expansion needs, therefore a bigger financing facility is required. This scheme has achieved social sustainability as well, through elevating the standards of living for the women beneficiaries, and enabled them to contribute in generating income for their families, this has positively affected their life style. The scheme further contributed to increasing women’s business knowledge via advisory programs, site visits and training sessions. The collaboration between Ebdaa Bank and UNIDO has managed to create a better informed group of women and has managed to shift the traditionally known family dynamic where the man is the main breadwinner and has in turn integrated these women into the economy as a co-earner in a house hold. In other ways, it is interesting to observe how this scheme has had a positive effect in the Bahrain economy by contributing to reducing unemployment as well as improving the financial status of certain families. When it comes to environmental sustainability, there is a concern which is that those who succeed in economic development today may be making future generations worse off by using up the earth’s resources and polluting the earth’s environments. A general rule of sustainable development is that current generations should try to succeed without compromising the ability of future generations to do the same. This is a very relevant factor for Ebdaa Bank and Tamkeen , thus, Ebdaa bank in conjunction with Tamkeen put a training program in place to educate the women using this scheme and to train them on how to use recycling as a method to cut costs. This in turn creates awareness on how going green is a beneficial approach for them as well as the earth.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The learning curve for this scheme has taught us that women can be encouraged to achieve their potential and they are a vital and growing component of the economy. Previously, they were limited from getting access to finance for their business. Tamkeen collaboration with Ebdaa bank and the Supreme Council for Women along with other NGOs created a collaborated impact which enabled all parties involved to achieve a common goal of supporting low income women in Bahrain. One of the main outcomes of the micro-finance scheme is the increase in monthly income of the women benefited from the scheme. Tamkeen loan subsidy not only enabled the bank to cover the cost associated with such funding but also helped the Supreme Council for Women to integrate women in the market, enable them to enhance the income of their families. Most of the scheme beneficiaries indicated that they were satisfied with the scheme which helped them in getting loans with much lower interest rate, their plans for expanding their business has been achieved because of the scheme. It was also noticed that the advisory elements of the scheme proved to be very vital, it helped in equipping women with the necessary market knowledge. However, more Marketing support was demanded especially by women working from home, and hence, providing them with a platform and channel to showcase and market their products is crucial to their business maturity. Additionally, advocating university and training institutions in Bahrain to provide monitoring and advisory business courses may add a great deal of impact in improving women entrepreneurship skills where such courses can also be subsidized by Tamkeen. Moreover, Tamkeen, Ebdaa Bank and the Supreme Council for Women can further collaborate and create in house non-financial advisory units to cater for the training and mentoring needs of the beneficiaries, where the mentors should encompass: • Continuous mentorship provided to the beneficiaries, regarding best utilization of their funds. • Ensuring product diversification to help beneficiaries succeed, as opposed to the current competitive environment. • Advocating financial recording of their revenue and expenses in order to track their profitability. • Support and help the beneficiaries maintain a sustainable business. • Create an on-going meeting and follow up system under the counseling services. • Guiding them with their business growth strategies, ultimately moving to CR based business. • As for the Commercial Registration (CR) holders, they can help them make use of available Tamkeen schemes such as the Enterprise Development Schemes. • Beneficiaries who successfully undergo the counseling could receive a discount on marketing and or stand at exhibitions.

Contact Information

Institution Name:   Labour Fund (Tamkeen)
Institution Type:   Other  
Contact Person:   Reem Jasim
Title:   Manager Quality Assurance  
Telephone/ Fax:   +973-17383383- +973-17383301
Institution's / Project's Website:  
E-mail:   rjasim@tamkeen.bh  
Address:   P.O. Box 18131, Manama
Postal Code:  
City:  
State/Province:  
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