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French Version

EU grants Lebanon's CDR $1.7 million loan to help small firms

BLC Bank to distribute fund directly to small and medium-sized-business entrepreneurs

The EU's Economic and Social Fund for Development loaned the Lebanese Council for Development and Reconstruction (CDR) $1.7 million Friday to help small-enterprise entrepreneurs in Lebanon expand or start new businesses.

The EU made the loan through the Economic and Social Fund for Development (ESFD) in Lebanon, a $40 million organization charged with combating poverty in Lebanon by developing programs that contribute to job creation and community development. The Lebanese government gave $7 million to the ESFD, with the EU providing the rest. "The philosophical framework of the EU is to essentially allow what they consider the root of economic growth, which is small and very small enterprise to have access to credit. This is a typical scenario in emerging markets. Micro credit is fast becoming a very fashionable endeavor. For instance, French President Jacques Chirac lately labeled micro-credit as essential for emerging markets," said Shadi Karam, the chairman of BLC bank. Some 65 percent of the money is designated for companies hiring between five and nine workers. Twenty percent of the loans, which last for five years, is to encourage youths and women to start up businesses. "The (low interest) loans vary between 15 million lira and 30 million lira," Karam said, and have a grace period of up to 12 months. BLC Bank will distribute the loans directly to the small and medium-size-business entrepreneurs. BLC is the second bank in Lebanon to provide such loans, joining Societe Generale de Banque Liban (SGBL), which has been acting as an intermediary for over a year in the framework of the ESFD. "We pride ourselves as the first institution to talk about this and devise a fully fledged department to market and monitor them," Karam said. "The supporting mechanisms of BLC helped the bank to be chosen through our having a definite edge. We have a mobile banking unit which provides fully fledged services to areas with no financial services. This is an important way of transferring funds. We also have a unit to train entrepreneurs to explain and understand a balance sheet, cash flow and so forth. Training is now the number one in development to make the money go further," Karam added. The ESFD is run in Lebanon by the CDR until legislation is passed to allow the fund to operate independently.

Earlier this week, a service contract was signed between the ESFD and the Young Urban Professionals (YUP), which will act as a liaison in support of the end borrowers. The YUP will help people reach financial services by assisting them in applying for loans in participating banks and by supporting them in drawing up their business plans. The ESFD hopes to create jobs in disadvantaged areas through the provision of micro-credits and the expansion of small businesses. ESFD's "community development" component seeks to improve living conditions of low-income groups through financial and technical support to projects proposed by local communities. ESFD statistics show only 10 percent of women are employed in Lebanon's poorest districts, Akkar, Hermel, and Bint Jbeil. 50 percent of all unemployed in Lebanon, the group said, are between the ages of 16 and 25. ESFD has signed individual agreements to provide credit with 11 villages in Akkar and Bint Jbeil in 2003.

Beirut 24-01-2005
Will Rasmussen & Paul Cochrane
The Daily Star

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