January 2005
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Table of Contents

- Meet Salim, Shurush’s newest client
- Shurush goes to Cairo: Insights from the Sanabel microfinance conference
- Ear to the ground: Current stats affecting our clients
- An interview with the East Jerusalem YMCA’s Haytham Hammouri
- In the next issue of The Roots Report

Welcome to the second issue of The Roots Report. Thanks to the support of our generous donors, our year-end donation campaign was a tremendous success. The Shurush Initiative welcomes our new donors and thanks our continuing supporters for helping us to meet our fundraising goals. Together, we will carry out Shurush’s mission of improving the grave economic situation in the West Bank and Gaza through transparent microfinance and proactive employment. We wish Shurush donors, allies, partners, clients, and friends a happy, healthy, and peaceful 2005. Thank you for reading this issue of The Roots Report.

Meet Salim, Shurush's newest client
The Shurush Initiative is proud to announce the successful addition of a fourth client in our partner Rural Entrepreneurship Loan Program with the East Jerusalem YMCA. Salim received his $2,000 loan, funded by Shurush, in November 2004.
 
Salim is an automobile technician; three years ago, Salim, who is 25 years old and not married, participated in an advanced car-repair training course at the East Jerusalem YMCA. The course provided him with the skills required for testing and repairing new fuel-injection cars. Salim has already established his own workshop, yet he needed some capital in order to add a spare-parts section to his workshop.
 
Opening this section will support his repair work and, at the same time, directly increase his income through the sales of spare parts in his village. We would like to say Ahlan wa sahlan to Salim and wish him luck with the expansion of his business.
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Shurush goes to Cairo: Insights from the Sanabel microfinance conference
In December 2004, COO Amanda Fazzone represented The Shurush Initiative in Cairo, Egypt, at the second-annual conference of Sanabel, the microfinance network of Arab countries.
 
Co-sponsored by The Rockdale Foundation, Inc.; the United States Agency for International Development (USAID)/Egypt; Environmental Quality International; Abdul Latif Jameel Co. Ltd.; and Grameen Foundation USA, the conference was attended by approximately 300 microfinance practioners, industry experts, nonprofit humanitarian organizations, academics, donor agencies, investors, and government officials from 26 countries. The attendees hailed from nearly every Arab country, the United States, various European countries, and a few Muslim countries including Bangladesh and Indonesia.
 
Over three days, participants selected which plenaries, workshops, short courses, and discussion rooms to attend, from “Preparing Your Institution for Product Diversification” to “Islamic lending” to “National Networks,” the last of which was a case study of the Palestinian Microfinance Network.
 
The primary benefit of Shurush’s attendance was meeting several leading Palestinian microfinance professionals. Due to the political situation, microfinance institutions in the West Bank and Gaza face challenges unique to the Arab world. Through formal meetings and informal conversations with Palestinian microfinance practioners, they shared insights about their challenges in providing microfinance services to clients in the West Bank and Gaza.
 
The theme of the second-annual Sanabel conference was: “Continuing to Shape the Industry’s Future: Client-Driven Microfinance.” The goal of the conference was for Arab practitioners and international experts to examine how Arab microfinance programs can better meet the needs of poor micro-entrepreneurs. One of the conference’s liveliest debates was sparked when one participant asked the audience and the panelists to remember why most people in the room entered into a career in microfinance: to help the poor.
 
The next issue of The Roots Report will include Web links to the Sanabel presentations most relevant to Shurush’s goals of transparent microfinance and proactive employment.
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Ear to the ground: current stats affecting our clients
Each month in this section, we will highlight recent statistics that illustrate the grave economic situation in the West Bank and Gaza.

Food security: “Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.” - World Food Summit, 1996
 
Food insecurity: Approximately 1.3 million Palestinians (38 percent) are food insecure. - UN World Food Programme (WFP), 2004
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An interview with the East Jerusalem YMCA's Haytham Hammouri
In August 2004, Shurush partnered with the East Jerusalem YMCA to initiate a pilot Rural Entrepreneurship Loan Program. The program supports small, rural enterprise development and creates job opportunities in the Palestinian small business sector through a commercial loan program for entrepreneurs under the age of 35 in rural areas surrounding Bethlehem and Ramallah.
 
This program would not be possible without the hard work and dedication of EJYMCA’s field workers/loan officers. In the last issue of The Roots Report, Shurush thanked these field workers, who place themselves in great peril when conducting site visits and meeting with potential clients, due to the checkpoints, military activity, and other dangers characteristic of the rural areas of the West Bank. In order to provide The Roots Report’s readers with some insight into the daily challenges faced by a loan officer, following is an interview with Haytham Hammouri, the head of the EJYMCA’s Small Enterprises Development Department.
 
Name: Haytham Hammouri
Title: Head of the Small Enterprises Development Department at the EJYMCA
Education: Bir Zeit University; received microfinance training in the Netherlands
Years working for EJYMCA: 12

The following interview was conducted on January 13, 2005; some portions were edited for clarity.

Background
More than 70 or 80 percent of the Palestinian economy is generated by small enterprises, with fewer than five employees. The East Jerusalem YMCA is committed to supporting these small enterprises. I am convinced that real development is started by supporting these kinds of enterprises. And with it, the EJYMCA is able to support the most needy and the most affected by the current conditions. Through microfinance, the EJYMCA is able to reach this segment.

Difficulty of motion for EJYMCA field officers
There is no typical day, given the current conditions. Things constantly change -- could change anytime. The field officer should visit each client at least twice per month (once every two weeks), depending on conditions. There are permanent checkpoints across the West Bank and road blockades. Loan officers must stay on the roads, even if they are blocked off, because they may be subject to shooting by the Israeli solders if they leave the road and take a bypass or an informal road. Moving around is terrible. For the EJYMCA loan officer monthly meeting, it took three hours for field workers to reach the meeting, rather than one hour; sometimes, it takes two and a half hours rather than a half-hour -- if they were able to reach it at all. There are two field workers in the north West Bank; two in the south West Bank; one in the middle of the West Bank; and three in Gaza. The meeting is held in the middle of the West Bank only for West Bank staff, since Gaza staff is not allowed at all to come to the West Bank. The only way to meet Gaza staff is out of Palestine: in Jordan or Egypt.

Current economic conditions for microcredit clients
For the clients, they have been most affected, due to closure. New clients have managed to understand the changing economy. New money means a lot, depending on the economy of their locality. Rather than having to go through checkpoints to go to work, starting a business locally totally changes their lives. Many microbusinesses that were started before the second intifada (which began on September 28, 2000) were forced to close due to changing conditions. Now they are turning back to the market, after understanding the current conditions so that they can resume operations. Due to current conditions, some areas were affected more than others. For example, Nablus, Jenin, Tulkarem, and Qalqilyia were totally economically dependent on Israel, so they have been totally affected by new conditions. Currently, the worst conditions are in Gaza, especially the border refugee camps, such as Rafah.

Due to the declining per capita income in general, people don’t have the money to buy and sell. Recently, loan repayment has increased because the owners restructured their approach to respond to the changing conditions; the new loan program clients know what they are doing and, accordingly, their repayment rate is high. Due to current conditions -- closure and movement restrictions and the high rate of unemployment -- youth tend to stay more in their villages, rather than moving to the large cities. There is a very high request rate for commercial, agricultural, vocational, and industrial sector loans; they need capital to support these new ideas. Providing financial support for these clients will change their atmosphere and support the efforts for changing political conditions. If the Israeli closure and all movement restrictions were lifted, and the West Bank returned to be as one unit, it would be a good situation for microloan clients and the economic situation.

Due to closure, the economy slowed; people don’t have the cash to buy and sell. New clients’ businesses adapted themselves for the current conditions (created on the ground after the second Palestinian intifada); for example, EJYMCA/Shurush’s client Majed -- who opened his new restaurant last month -- expects that his restaurant’s customers will be Bir Zeit University students and Bir Zeit village residents; he is not expecting people to come from far away.

Microfinance is the future
The EJYMCA grants loans to approximately 5 percent of total applications submitted. The need is enormous. The EJYMCA is a pioneer in this market; it was the first organization to grant microloans in the industrial and vocational sector. There is no change on the ground. People hope that something is going to be changed in the nearby future. Of course we have hope that things could change; with this hope we are living, and we are working. Microfinance is the future. We cannot differentiate between the economy and microfinance; we support the economy through our support of microfinance. We don’t want to stay all of our life looking for external international support; we want to support our own economy: The way is through microfinance.
 
Words of hope
[Speaking of Izz-Addin, EJYMCA/Shurush’s client, a veterinarian] Izz-Addin received a loan from Shurush. That $3,000 changed his life. He purchased equipment and veterinary medicine. It gave him the strength to market himself and visit the nearby villages. Before he received the loan, he was not able to work. More loans change the lives of people.

Visit the East Jerusalem YMCA’s website: http://www.ej-ymca.org
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In the next issue of The Roots Report
- Get involved: Join Shurush’s yearlong campaign for Palestinian entrepreneurs
- Growing roots: Shurush to issue a request for proposals this spring
- Shurush goes to Harvard: Meet our team of Harvard Business School volunteer consultants
 
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