Sustainable Finance in the MENA Region: State of Development, Challenges and Opportunities for Microfinance Institutions

Luxembourg, 22 November 2022 – The SANAD Fund for MSME’s Technical Assistance Facility (SANAD TAF) partnered with HEDERA Sustainable Solution to better understand how microfinance institutions (MFIs) are positioned to support small businesses and the most vulnerable parts of the population to mitigate and adapt to the effects of climate change in the MENA region. They set out to answer this, among other questions, through a survey, stakeholder interviews and broader context analysis. The findings, focusing on the status and future of sustainable microfinance across the MENA region, are presented in a report titled 'Sustainable Finance in the MENA Region: State of Development, Challenges and Opportunities for Microfinance Institutions'. 

The report looks into sustainable finance through the lens of  green inclusive finance, defined as the actions that microfinance institutions can take to support economic resilience and opportunities for MSMEs by considering environmental strategy, climate vulnerability, environmental impact, and sustainable products and services. The findings shed some light on how MFIs in the MENA region are already engaged with green inclusive finance as a means to support their end-clients. It addresses MFIs’ strategy, risk management and financial product offerings, alongside the local enabling environments in which institutions operate. What is clear is that there is a demand from MFIs to bolster their capabilities and integrate a green inclusive approach - 100% of MFIs approached, more than 40 key MFIs in the region, expressed interest in developing green inclusive finance. The MFIs interviewed were ready to partner with external stakeholders and saw consultants, investors and regulators as important partners to boost green inclusive finance. 

To fully integrate and leverage sustainable finance and in particular, green inclusive finance in the future, the findings suggest that MFIs and their greater ecosystems should develop capacity building programs, disseminate digital tools and data management, develop internal capacity for environmental risk management, and provide support to grow green portfolios. 

Find the full report in English here.
Find the full report in French here.
Find the full report in Arabic here.