SOLIDARITY GROUP LENDING PRODUCT

In May 1994, UNRWA launched its first microenterprise product based on group-guaranteed loans -- the Solidarity Group Lending (SGL) product. The SGL is specifically designed to enable Palestinian women to participate in the local economy.

Since 1991, there has been significant growth in the informal sector of the Gaza Strip's economy, as formal employment opportunities, especially in Israel, have been lost. Increasing numbers of home-workers, street vendors, itinerant peddlers, unlicensed taxis and open-air markets are proof that thousands of Palestinians are compelled to eke out an existence in the margins of the economy. They earn only meagre incomes, often less than three to five dollars a day; yet for the majority of them, these amounts represent the sole means of support for their families.

The SGL product makes credit available to women working in microenterprises. These microenterprises are street, home and market based and most often in the informal sector. Because their activities are small and unlicensed, these women have no access to formal credit facilities. Through the product, UNRWA is extending assistance to a growing number of these enterprising women, enabling them to develop their small businesses and increase their incomes.

The credit offered through this product represents a scarce and vital resource for the women currently participating in it, who would otherwise have limited financial or other resources at their disposal. These women number among the neediest of the population, so that the product serves as an initial point of contact with the urban poor. The product helps ensure that they gain a fairer share in the value they create. It benefits their communities as well, insofar as it creates employment opportunities for many of the beneficiaries.

By 31 May 2002, a total of 20,489 loans had been awarded to women organised in solidarity groups of three to 10 persons. Loans to these women equalled US$15.10 million. Currently, there are 2,183 active loans with an outstanding balance of US$0.62 million.

The maximum amount of an initial loan is limited to US$400, and the repayment period is set at four or six months. Provided a group remains up-to-date in its repayments, or once the total loan has been repaid, its members can borrow up to twice the amount on each subsequent loan. After repaying a third loan, women can continue to participate in the product individually. At present the product extends 250-300 loans each month and the recovery rate is 94.45 percent.

Refugees represent 72 percent of the women participants in the product; 48 percent of the active loans are in the commercial sector, 27 percent in agriculture, 21 percent in small industry and four percent in services. Ranging from 18-70 years of age, 16.1 percent of the women have had no formal education; only 31.8 percent of them have attended secondary school.