Microfinance is clearly emerging as a new asset class for Arab investors who are seeking low-risk investments with a stable return, according to experts who gathered in Dubai for a symposium co-hosted by Grameen-Jameel.

Grameen-Jameel is the first social business in the Arab World, which was established as a joint venture between Grameen Foundation and Abdul Latif Jameel Group of Saudi Arabia, and Blue Orchard, a Geneva-based microfinance investment manager and is sponsored by Aramex, a logistics and transportation company in the Middle East and South Asia and the International Finance Corporation (IFC) which has a program to develop micro and small business banking investments in the Middle East, North Africa and South Asia.

More than 150 high-profile delegates from the UAE, Egypt, Lebanon, Jordan, Palestine, Morocco, Tunisia and Pakistan discussed the potential of this industry in the Arab region. These included representatives from the UAE Ministry of Economy, the UAE Central Bank, Arab family offices and institutional investors.

The top investment-ready microfinance institutions (MFIs) from Egypt, Lebanon, Jordan, Palestine, Morocco, Tunisia and Pakistan were showcased at the event.  In addition, investors held one-on-one meetings with the MFIs to discuss financing opportunities.

“2009 could be a banner year for microfinance in the region. The regulatory environment in Egypt, Jordan, Yemen, Morocco and the Sudan is opening and there is a clear move towards commercialisation in the Arab World," stated Heather Henyon, general manager of Grameen-Jameel.

"Syria has been the first in the region to license a non-banking financial institution and Egypt is in the process of adopting a microfinance law that will shift oversight to the Ministry of Investment from the Ministry of Social Solidarity," she added.

Product offering is also broadening to include deposits, where allowed, and insurance in addition to credit. “This will significantly increase access to financial services for people living in poverty in the Arab countries, where 60 million people live on less than $2 per day,” she noted.

This emerging regulatory environment will improve the efficacy of innovative initiatives and allow more MFIs to reach a higher number of Arab micro-entrepreneurs to help them generate income, begin to build wealth and exit poverty. This, in turn, will lead to economic development and growth in the poorer communities in the Arab World.

Despite there being about 100 active MFIs across the Arab World, only 3.5 million people are currently reached, resulting in an outstanding loan portfolio of $1.3 billion. Microfinance can dramatically improve the lives of borrowers who use the profits from their business to improve the living conditions for their entire households and their communities, said a statement.

"At present, IFC has about $65 million outstanding to 11 MFIs in the Middle East and North Africa (Mena) region in the form of loans, guarantees and equity.  In turn these MFIs have on-lent nearly $600 million to over 1.3 million micro-entrepreneurs, two-thirds of whom are women,” said Deepak Khanna, senior program manager of the IFC.

Grameen-Jameel and BlueOrchard are committed to expand the reach of investment-ready, high-performing Arab microfinance institutions (MFIs) which are providing financial and social services to more people in poverty, including women and the rural poor.

By 2011, Grameen-Jameel aims to reach one million new microfinance clients through its partner MFIs in the Arab World. BlueOrchard is committed to develop products and services aimed at building bridges between the interests of regional investors and the needs of MFIs in the Middle East and North Africa.

“We are ready and willing to tailor our offer to the demands of the region. BlueOrchard is an experienced and established leader in commercial microfinanc