| 4. In which ways is the initiative creative and innovative?
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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
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| 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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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.
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| 6. How was the strategy implemented and what resources were mobilized?
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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.
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| 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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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.
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| 8. What were the most successful outputs and why was the initiative effective?
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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.
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| 9. What were the main obstacles encountered and how were they overcome?
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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.
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