The learning event sponsored by IFAD and the International Center for Agricultural Research in the Dry Areas (ICARDA) provided an invaluable opportunity to exchange knowledge among staff of the Near East and North Africa Division of IFAD (NENA), project directors, project beneficiaries and ICARDA scientists, particularly on the challenges and opportunities facing the target groups in the region.

This report discusses two aspects of this learning event: the field visit to the IFAD-supported Idleb Rural Development Project (IRDP); and capturing knowledge on rural finance, particularly by drawing lessons from implementation experience.  

Visit to IRDP

About 25 participants visited IRDP headquarters and, after a brief introduction to a summary of project activities by the project director, the participants undertook field visits to gain some exposure to project achievements. The first stop was the pioneering small mushroom enterprises of the 40-year-old Abdelaziz Hag Ismael, who had received two vocational training programmes on “mahari mushroom” production, mushroom seeds (mythlom liquid) and technical support from the project. With an initial investment of US$2,000, Abdelaziz has been able to initiate a small mushroom farm of about 100 square metres in his underground garage. He harvests about 300 kg of mushrooms every month and regularly sells his product (at SYP 150/kg) through the project-established Mushroom Marketing Association. Abdelaziz said that this business now constitutes a reliable source of income and significantly contributed to the well-being of his medium-sized family.

Project achievements are visible and greatly appreciated by the participants. The project claims to have covered about 139 villages out of the planned 183. For instance, the project’s de-rocking activities have already reclaimed about 8,200 ha of rocky mountainous land plots, turning them into productive small agricultural holdings, thereby increasing the arable land for field crops, vegetables and fruit trees. These activities are coupled with impressive water-harvesting techniques that included eye brow, crescents and contour walls systems, as well as extensive agricultural extension activities. The earth dams and ramat (earth tanks), which provide water for livestock and supplemental irrigation for fruit trees, are also overwhelming and constitute a significant contribution to the life of the rural poor. All these achievements are the result of the efficient collaboration and participation of rural communities through their prioritized needs, reflected on their Community Action Plans.

The Idleb governorate is the third-largest producer of olives in Syria; it has about 14 million olive trees, 12 million of which are productive. There also are 170 modern olive oil refineries, representing about 60 per cent of all refineries in Syria. The participants also visited the inauguration ceremony of an olive refinery in Maar Belleet village (a private sector initiative providing refinery services to olive farmers in the project area at SYP 100 for each 100 kg of olive beans). This ceremony was organized by the Olive Office which is strengthened by the project to address the issue of marketing through working with individual farmers and farmers’ associations.

IRDP has also been particularly successful and innovative in reaching out to landless and poor rural women and men with microfinance by establishing, on a voluntary basis, the community-based local financial institutions commonly known as “Village Sanadiq”. The strong sense of beneficiary ownership of these “Villages Sanadiq” and their high performance are particularly impressive. Finally, the participants visited Ehrazeen village where they were actively involved in discussions with rural women and men who had benefited from micro loans through the Village Sanduq. More details on Village Sanadiq are covered under the second part of this BTO.

Learning event theme: rural finance

The explicit and immediate objective of the microfinance activities under IFAD-supported projects in Syria is to create a fully sustainable network of self-managed community-based microfinance institutions to finance income-generating activities. These community-based institutions, which are well known as Sanadiq (Village Funds), are based on the successful Jabel Al-Hoss Sanadiq model of the former Jabel Al-Hoss Project, which was supported by the United Nations Development Programme (UNDP). Under the IFAD-supported IRDP, this model was further enhanced and adopted by more stringent lending terms and procedures and by including a minimum number of female shareholders to validate the Sanduq creation. At the village level, once a Sanduq is created, shareholders elect from among them a male and a female loan officer and an accountant to constitute the Sanduq Management Unit.

• Under IRDP experience, where technical assistance, training and equity seed money are paid from the loan proceeds, the microfinance activities are implemented by the Sanduq Committee in collaboration with the project’s microfinance unit. Idleb’s Sanadiq, however, are closed cooperatives where loans are extended mainly to the Sanduq’s members in accordance with Islamic Shariah principles through Murabaha lending.
• The performance of the functioning 18 Sanadiq is satisfactory, with about 3,000 shareholders (41 per cent women) mobilizing SYP 4.1 million (US$85,431) as indigenous resources. The number of active borrowers exceeded 454 with an outstanding loan portfolio of SYP 19.3 million (US$406,000). These loans covered animal husbandry, trade (for example grocery stores, clothing stores, mobile phone stores), micro enterprises (for example sewing, shoe repair and embroidery) and agriculture. Average loan size is SYP 42,000 (US$885) with an average loan maturity of 11 months and a 100 per cent repayment rate.

Amazingly, the infant Sanadiq experience reported a net annual consolidated profit of SYP 203,291 (US$4,280) in 2008. Part of this profit is distributed to shareholders as dividends while the rest is allocated to members of the Sanduq Management Unit as compensation for their excellent administrative work. In some villages, the distribution of dividends clearly attracted additional savings, either in number of shareholders or amount of share contribution.

• Discussion with the Sanadiq’s beneficiaries during the one-day field visit revealed wonderful experiences that are worth replicating or up-scaling. One Sanduq financed an initiative to establish and manage an embroidery enterprise through group lending to seven members of the Sanduq. This initiative created jobs not only for these seven members, but also for 26 other women. This is a good initiative that should be encouraged but the Sanduq committee must intensely follow up to reduce the Sanduq’s exposure to risk. Another Sanduq in Ehrazeen village managed to mobilize SYP 175,000 from 100 shareholders. The Village Sanduq, which was supported by SYP 1 million from the project, has managed to disburse loans to 35 borrowers; eleven of these borrowers have fully repaid their loans, while the rest are making timely payments. About 70 per cent of these loans went to women to finance dairy products, sheep fattening, utensil stores, spare parts stores, car mechanic workshops and agricultural activities.
• The lessons learned from the IRDP implementation experience include: (i) establishing a network of Sanadiq; (ii) sharing knowledge, bylaws and implementation experiences; and (iii) focusing on the sustainability of the Sanadiq by creating an umbrella fund – Sanduq Markazi – as an exit strategy to gradually assume the responsibilities at project closure and facilitate linkages of Sanadiq to the banking system.