Financial Inclusion of Refugees: Al Majmoua in Lebanon

Lebanon as a country is constantly striving to cater to the needs of more than 6 million citizens as the country supports a multicultural society. The open border policy that was initiated by the country was one of the main reasons why there was an influx of refugees who came from Syria. As the country is situated between Israel and Syria there have been a lot of refugees who have been allowed to stay temporarily. The entire country is providing financial assistance to these vulnerable populations as they have shown how to manage it to other countries.  

These groups of refugee populations are quite diverse as the majority of them came from Palestine. More than 50000 population came from Iraq after the American Military Operations in the year of 2003. Most of these Iraqi middle-class people have now settled down in Lebanon within the urban areas. On the other hand, Syrians were always considered migrant workers in Lebanon as they never have been counted as a foreign population. However, after the civil war, a lot of the Syrian population migrated to Lebanon.  

Even though Lebanon is a country that supported the open border policy for anyone to stay as a refugee there are some concerned areas for these people. Like the labor laws of Lebanon have become really strict as it does not allow Syrian refugees to get any kind of formal employment within the country. There are also new restrictions within these labor laws that give these refugees permits to only work in certain migrant sectors or other kinds of domestic and construction services. 

The added population has also resulted in an increase in job competition among the host communities and the refugee population. Now before we move ahead with the introduction of Al Majmoua the financial institution let’s have a look at the case study of these refugee populations in Lebanon.     

The Case Study of the Refugees in Lebanon

The open economic state of Lebanon has allowed a lot more accommodation for all the Syrian and Palestinian refugees. The open border policy of the country is one of the main reasons for its increase in the number of refugees as they are free to settle in the country. However, as soon as the influx rate was overblown after a point there were a lot of restrictions that were initiated in the session of 2014-15. The country has also provided a lot of financial services to these refugees who migrated from Syria, Palestine, and Iraq.  

• Palestine

This clearly shows the diversity of these refugees as the largest part of the population came from Palestine. More than half of the refugee population in Lebanon is from the 12 refugee camps in Palestine. 

• Iraq

In addition to this more than 50000 refugees evacuated from Iraq after America launched military operations in the year of 2003. All of these Iraqi refugees came from middle-class backgrounds as they were forced to settle in Lebanon.  

• Syria

Apart from the Iraqis and Palestinians, the most number of people came from Syria as they already have a pretty long background of working as migrant workers in Lebanon. In most of these cases, all these Syrians were never considered foreign people as they were already working in Lebanon even before the war started. 

However, after the ill effects of the Syrian war in 2011 there was a huge influx in the number of migrant people from that part of the country to Lebanon. So much so that by the year 2015 the number had crossed more than 1.1 million as this amount of the population is already registered with the United Nations High Commissioner for Refugees.

So the financial services provided to these people become crucial as Lebanon has created an example for the world on how to cater to the different needs of these diverse groups of people. However, that does not mean that there are no issues as the country is struggling with different sorts of socio-political, economic, and political complexities. 

So what is it like to be a digital immigrant in a developing country? The open border policy has resulted in an increase in the number of refugees especially after the Civil war in Syria in the year of 2011. Due to these kinds of increased numbers Lebanon has faced a lot of economic and job-related stress not only for the case of these refugees but also for its local communities of people.   

Economical Stress Due to the Increased Population of Refugees in Lebanon

Even though serving as a refugee in Lebanon can be easy for the open accessibility there are some socio-political issues that need to be addressed. This kind of socio-political complexity has created a lot of issues for not only the local Lebanese residents but also for the population who have migrated from other places. 

Restrictive Labour Laws 

The labor laws that are initiated in Lebanon were already really restrictive as this prohibits all Palestinian refugees from formal employment in Lebanon. However, there were newer restrictions that were initiated this focused on the Syrian refugees as they have work permits only in certain sectors like the migrant sectors or the agricultural and construction sectors. More than half of the Syrian migrant population works in the construction sector as they do not have access to any other job services. 

Increased Competition for Jobs

The increase of Syrian refugees after the Syrian war has resulted in more competition for low-skilled job positions as the local Lebanese workers face more trouble finding suitable jobs Allianz launches Sharia-compliant mobile loan service. With the excessive population, low-skilled workers are finding it more difficult to secure jobs as this has resulted in an increased state of competition between these groups of people. 

Lowered Wage Income

Due to the increased state of numbers in the low-skilled population, the wage incomes of these people have become lower in these sections of people. As a result, most people are not earning half of the amount they used to which has resulted in their depressed state of mind. With less amount of income, most people are not getting sufficient services for their day-to-day living. This negatively impacted the overall mindset of these low-income people in Lebanese society.  

Job Insecurity

Due to the increased numbers of refugees, there are more workforces that are readily available. As a result, most organizations can lay off a lot of workers if they can not work at certain price rates. They can find workers who can work at cheaper rates. This has resulted in job insecurity in the minds of all the local Lebanese people and community. 

With more workforce options available organizations do have the power to cut down certain employees as this results in the insecure element of the job positions which can have a negative effect on the minds of these low-income people.   

Fearful Mindset of Low-Income Workers

Due to the insecure job positions, the stress factor can increase in both the local host communities and the refugee sections of Lebanese society. The minimum wages combined with job insecurities can trigger a fearful mindset in Lebanon’s local and refugee communities. This can also negatively affect the financial services of a country like Al Majmoua.  

What is the Purpose of Al Majmoua?

Al Majmoua is the name of a microfinance institution it was initiated to provide assistance to different sorts of micro-entrepreneurs, developing business operations as well as local women within Lebanon. The service has reached out to different parts of the country and expanded with the help of the Triodos Microfinance Funds and Fair Share Fund loans. 

• One of the main objectives of Al Majmoua as a microfinance institution is to provide inclusiveness to all the women, the low-income population as well as rural people living in different Palestinian camps.  
• Giving financial securities like loans to all these rural people in Lebanon is also another main goal of Al Majmoua as there are already 54000 borrowers who have taken $49 dollars of loans. 
• Providing less risky loans to all the refugees from Palestine is one of the main purposes of Al Majmoua as compared to the other refugee loans the risk rate, in this case, is less than 1%. 
• The main goal of Al Majmoua is not only to provide loans to refugees but also to various SME enterprises as well as ICT start-up companies. In addition to these, it also offers home improvement loans as well as school fees, salary-guaranteed loans, and loans for all disabled people. 

With the proper understanding of Al Majmoua out of the way let’s have a look at how this microinsurance institution can help out the Syrian and Palestinian refugees in Lebanon.  

How Al Majmoua Can Help Out These Refugees in Lebanon

Al Majmoua as a microfinance institution was initiated in the year of 1994 and was funded by USAID. The main objective of Al Majmoua was to give group loans to all the low-income entrepreneurs in some underprivileged areas of Lebanon. The overall goal was to give financial assistance to the Palestinian camps that were filled with refugees like Angus Deaton urges reconsideration of the role of RCTS. 

Creating Inclusive Financial System

Due to the influx in the number of Syrian and Palestinian refugees, the overall population of Lebanon has increased a lot in the last decade or so as this has created a lot of socio-economic issues for both the local communities and the refugee section. This is where Al Majmoua as a financial institution can create an inclusive financial system for the whole country. 

In this way, the microfinance company can support the needs of the refugee population in Lebanon. It is not only for the need of the refugee population as well as there is already a lot of local community of people who are already suffering from the increase in the influx rate. By creating an inclusive financial system all of these groups’ needed services can be easily provided to them through this microfinance company. 

Access to Various Services

Most of the Lebanese local community who are low-income people already don’t have any access to affordable services as reflected in the Results from research in Pakistan: what do clients care about. After the joining of the refugees, this issue has multiplied even more as there are a lot more people to give services to. With an excessive population, the job security of these people also faces a tough challenge as buying sufficient products and services has become even more impossible. 

Thus getting access to all the affordable services for day-to-day living for all groups of people can get tougher. This is where the main goal of Al Majmoua as a microfinance company is to provide affordable services to the low-income population of Lebanon City. 

Promoting Sustainable Development

In the context of the Lebanese local community as well as the refugee people sustainable development is the main requirement. Without it, no country can grow after a point if it has gone through a major increase in influx. Al Majmoua as a microfinance company can help out these groups of people in the Lebanon community as it can help them to get sustainable development as a community which is required for their individual growth in the country. 

With the help of sustainable development, Lebanon as a country can advocate for the improvement of the current job situation of low-income workers. It is one of the major issues in the country where all the low-income people are getting more and more depressed about this whole situation. With sustainable development, the country can reform its industrial position as this can result in the betterment of both communities. 

Enhancing the Socio-Economic Conditions of Low-Income People

The socioeconomic condition of the local low-income people and refugee community in Lebanon is one of the main issues in the country. The country’s free border policy has allowed a lot of refugee populations from other countries like Syria and Palestine. These people can stay and style down in Lebanon as they have the freedom to do so. 

However, this has resulted in a decrease in the socio-economical conditions of the whole country. With more population, the country is suffering from the unequal distribution of affordable services as well as the job security of these low-income groups has become even more irregular. 

With more population, the country needs to enhance the socio-economic conditions so that both communities can get equal services for their day-to-day living. Al Majmoua as a microfinance company is primarily focusing on improving the socio-economical structure of these low-income populations in the country.     

Providing Financial Services to Micro entrepreneurs and Women 

The core target audience of Al Majmoua is women and all the micro-entrepreneurs as they do require financial assistance from time to time. Like helping women control their financial lives through digital financial services. Whether these refugees are coming from a rural area or a posh area it does not matter as this microfinance company is looking forward to providing all kinds of services. Al Majmoua chooses its clients without regarding any of their gender-related or social classes as it does provide all the services to everyone equally. 

Providing Business Loans, Salary Guaranteed Loans, and Home Improvement Loans

By the new millennium, Al Majmoua started providing individual loan services for business operations to both men and women. By the mid-2000s the company also started to give business development services for community building and development as well as for social activities for young people and women in society. 

The company in addition to these also can offer both individual and group loans to various ICT start-up companies and other SMEs. Apart from these services Al Majmoua also provides salary-guaranteed loans as well as home improvement, school fees, and loans for disabled people. 

It is clear from the history of Al Majmoua as a microfinance institution that it has tried to cater to both individual and group loan requirements, especially in the context of the low-income population in Lebanon. With more than 4485 active participants the company has already lent the amount of 49.3 million USD. 

As more than 15% of borrowers from these are non-Lebanese low-income refugees who have come from Palestine and Syria. So with this result, a lot of the other countries can take note of certain points that can help in their own issues. Let’s take a look at these points which can be initiated by either country for their own assistance.       

Points to Take From Al Majmoua on the Helping Process of These Refugees

With the proper understanding of the Al Majmoua microfinance operations, any country can learn about the importance of certain things which need to be focussed on for delivering equal financial services to a diverse population. These points should be noted for the equal distribution of financial and non-financial services especially in the case of a country that is dealing with a refugee population. 

Minatinaoing the socio-political and financial balance in the entire community can be a hard process for any organization especially if the country is overpopulated. This is where the case study of the refugee population and the initiation of a microfinance institution like Al Majmoua can give out a lot of help on how to address all the socio-political issues. 

Overcoming the Initial Resistance

In any country letting in the refugee population can be a challenge for their senior management as they might see them as outsiders. There can be a stereotyping mindset due to the inclusion of these refugee populations among the senior board and management. So this kind of initial resistance can be there which has to be overcome by the overall determination of the management. One of the first things that can be done on the part of the senior board of management in these countries is to initiate an open-ended board discussion. 

In this process, they can discuss the refugee population and why they are not provided services by their FSP. The discussion can also be enabled on why not them as external stakeholders can also be called upon to access more information about these groups of the population. Once this discussion is off the shelf then it is just a matter of time before the management can leap forward to the next step of action. 

Analyze the Viewpoints of Your Own Clients Before Providing Any Financial Service to Refugee Groups

In case any country wants to provide financial and non-financial services to the refugee population it is always better to let their own associations know. In this context, Al Majmoua had already done a lot of focus group discussions with their own associate partners before moving ahead with the plan of providing any kind of financial services to the refugee population of the country. 

In this case, a lot of the clients did show a fearful mindset as a lot of the local people will lose their jobs due to the Syrian refugees as they refused this kind of financial help given to their competitors. However, everything was handled well afterward as in the case of any other country their management should definitely cross-check the services that should be provided to their own clients for the easy handling of the situation.

Create a Business Case 

Creating a business case for any refugee population on the basis of hard data can be quite tough for any country. This is where any institution can compile all kinds of concerns of these people and questions which they can not answer easily for the building of their business case. In this way, any institution can overcome the communication and information gap about these refugee populations’ concerns. 

However, the part of the stakeholders is also an important thing that should be taken care of. In the context of Al Majmoua the microfinance institution, in this case, followed this process as only after this they were able to meet the concerns of their clients. They were finally relieved that their questions and concerns were heard by the management officials. 

Market Research 

Market research is also another crucial area that is needed to be looked at by any official management before letting the refugees in and providing financial assistance. The overall culture and tradition of these refugee populations can be drastically different from the host country. This is where proper market research is required for making any kind of adjustments for the services that are to be delivered to these refugee groups of people. 

Apart from this, market research can also make the refugee population stand out for the acknowledgment of the FSPs. In the context of Al Majmoua the FSPs already initiated the part of market research as this helped with the individual needs of these refugee groups. 

Accessibility to Non-Financial Services

The case of accepting the refugee population and providing them with sufficient financial services can be started off with non-financial services. However, all of these services should be based on the actual requirements of these people. All of these services can range from various kinds of curriculum activities. In the case of Al Majmoua, the institution has focused on giving 2-4 sessions to both youth and women as this was done for them to make them understand each other. 

Increasing the Inclusive Financial Services

In this context, most countries make the mistake of creating a separate refugee product as this can cause a lot of internal issues. A lot of the own clients can feel bad about this thing as this can increase the overall tension between the two groups. So if the financial services can be properly increased and spread out it can definitely help in this scenario.   

Regular Risk Management 

During any kind of serving test period for all the refugees, the institutions should focus on reviewing the risk management procedure so that any kind of issues like microfinance and the economic toll of Ebola can be easily mitigated. Without proper risk management, any kind of issue can create a roadblock to the provision of financial services to the refugee population of any country. 

Frequently Asked Questions (FAQs)

Q1. Where do the Lebanon refugees come from?

As Lebanon has a free border policy about half of its refugee population came from the country of Palestine. The other section of the refugee population came from Iraq as 50000 Iraqis evacuated after the American Military operation in 2003. In addition to these countries, Syria is the other country where most of the refugee population came to Lebanon. 

Q2. What was the main purpose of Al Majmoua?

Al Majmoua is a microfinance institution in Lebanon and its main goal is to provide financial and non-financial services to all the low-income population in Lebanon. The company provides services to both the refugee and local communities of Lebanon. As some of the borrowers are micro-entrepreneurs, developing businesses, refugee camps, and women in Lebanon society.   

Q3. How Al Majmoua is helping the Lebanon refugees? 

Here is how Al Majmoua is helping the Lebanon refugees: 

• Providing financial services such as credit, savings accounts, and insurance.
• Refugee-targeted loan products such as Refugee Start-Up loans and Refugee Education loans.
• Support for refugees with disabilities.
• Providing financial education and training.
• Collaborating with other organizations to provide comprehensive services.

Final Thought

Catering to the needs of a diverse refugee community can be a tough challenge for any country. However, in the case of Al Majmoua the financial and non-financial service delivery to a diverse group of the population has been extremely successful. Managing a diverse refugee community will require an appropriate and exact segmentation of duties. With the proper appraised condition these refugee groups of the population can be as local as any national client.