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Thank-you note: To Craig Newmark, for significant financial support
Since its founding in 2003, Shurush has received support and encouragement from many truly generous donors who themselves reflect Shurush’s vision of peace in the Middle East. A few key supporters have continued to provide significant financial assistance at the most critical periods in our organizational development. Thanks to the generous support of Craig Newmark, the “Craig” behind “Craigslist”, Shurush has been able to conduct an inaugural field assessment; meet with Shurush’s inaugural microloan program partner, the East Jerusalem YMCA; and evaluate new loan partnerships for the future.

As every dollar donated to Shurush is matched dollar for dollar by Shurush’s anonymous angel donor, Craig’s donation has had twice the impact, allowing Shurush to embark on a landmark partnership with Kiva, a nonprofit organization that lets individuals like you connect with and loan to unique small businesses in the developing world. We were able to kick off the Kiva loan program and support related administrative costs. As a result of support from donors like Craig, we are thrilled to report that, as of August 2006, a total of 17 entrepreneurs have received microloans through Shurush’s partnership loan programs with the East Jerusalem YMCA. And because of the revolving nature of our loan fund, this number continues to grow with each successful repayment.

Craig: These successes would not be possible without your belief in Shurush’s small efforts to Mideast peace by helping to restore the economy and your unflagging support and encouragement. From the bottom of our hearts, thank you.
Craigslist: www.craigslist.org
Craig Newmark’s blog: www.cnewmark.com
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Branching out: Co-founder Bryan Berkett dedicates summer to
forwarding The Shurush Initiative

Shurush co-founder Bryan Berkett, who is currently pursuing his MBA at UCLA Anderson School of Management, has embarked on a summer project to craft a business plan and begin building the foundation for a new potential Shurush program. This program will likely promote economic development in the Jerusalem area while fostering cooperation between Arabs and Jews. More details will be available following the completion of Bryan’s project in September.
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Media spotlight: Shurush entrepreneur featured in BusinessWeek article about Kiva
In February 2006, The Shurush Initiative proudly announced our partnership with Kiva, a new nonprofit organization that lets individuals connect with and loan money to unique small businesses in the developing world. What makes Kiva unique is its concept of the charitable loan. Co-founded by Matthew Flannery and Jessica Jackley Flannery, Kiva is the first and only existing option to make a loan to a unique microenterprise. Through a direct, real-time, one-to-one connection, Kiva lenders can sponsor a business, receive monthly email updates, and, as loans are repaid, get their original loan money back.

Thanks to the generous support of Kiva lenders, eight Gaza entrepreneurs received microloans from the Gaza office of Shurush’s inaugural microloan partner, the East Jerusalem YMCA. Congratulations – “Mabruk” in Arabic – to Ziyad, one of those eight Gaza entrepreneurs, who was featured in a BusinessWeek online slide show that accompanied an August 15 article about Kiva, titled “Making Microfinance Easier”: “Entrepreneurs in the developing world are starting or expanding businesses using small loans from individuals they're paired with online.” In March, Ziyad received an $800 loan, funded by Kiva lenders, to purchase goods to sell in his grocery shop.
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Ask the expert: An interview with ANERA president Dr. Peter Gubser
In the previous issue of The Roots Report, we interviewed microfinance expert Samir Barghouthi, general manager of the Arab Center for Agricultural Development (ACAD) and former chairman of the Palestinian Microfinance Network. For this issue, we are honored and grateful that Dr. Peter Gubser, president of American Near East Refugee Aid (ANERA), took time out ofhis busy schedule to update Roots Report readers on the current state of Palestinian microfinance. ANERA is a Washington, DC-based 501(c)(3) nonprofit charity organization that creates opportunity and hope for people in the Middle East by improving health care and education and stimulating job creation. For more information, visit http://anera.org.

QUESTION 1: How has the situation in the West Bank and Gaza changed over the last several months?
PETER GUBSER: It was already bad because of the intifada and that economic situation, given the relatively high unemployment. And on top of that, the election of Hamas [the majority party of the Palestinian National Authority] and the boycott of the Hamas government by the United States and the Europeans. The Hamas government doesn't have any cash to inject into economy through salaries and other administrative funds. This has taken a tremendous amount of cash flow out of economy, and now people are very, very poor. The World Bank issued a report predicting that GDP could decline by nearly 30 percent by the end of this year. [For more information, see "The Impending Palestinian Fiscal
Crisis, Potential Remedies," by The World Bank.] The fighting between Hamas and the Israeli Defense
Forces that intensified about two months ago -- including the kidnapped Israeli soldiers, rockets, all sorts of bad things -- made the economic situation deteriorate even more. It is very difficult to get goods in and out of Gaza; the West Bank is easier. There has been a big curtailment of the economy. For a period, store shelves were starting to empty out. Now it¹s better; people do have the basics. But merchants are unable to export anything, especially vegetables. There has been a severe economic deterioration, and a safety and security deterioration, with bombs and tanks [in the West Bank and Gaza].

QUESTION 2: What major economic changes can we expect to see over the next one to three years?
PETER GUBSER: It depends on what happens politically. If things improve from standpoint of Hamas, then the economic situation could improve. Not greatly, but it will improve. If that does not happen, the economic situation will not improve. As long as there¹s a military occupation in the West Bank and Gaza Strip (even after the Israeli disengagement from Gaza, Israel still controlled Gaza's borders), the economy will not improve. You cannot have economic development when another government is totally dictating the situation.

QUESTION 3: How has the current situation in the West Bank and Gaza affected the microfinance lending environment?
PETER GUBSER: A lack of cash flow means people can¹t pay off loans, so repayment of loans has declined. ANERA still has a few microcredit programs, but people are paying back but at a slower rate.

QUESTION 4: What sectors are experiencing the biggest growth at this time and what areas do you believe will be most appealing in the near future?
PETER GUBSER: None. Unless the political situation changes, there shouldn¹t be any expectation of economic growth.

QUESTION 5: What are some of the biggest changes with regard to donations from the United States and Europe to microfinance institutions (MFIs) that lend in the West Bank and Gaza?
PETER GUBSER: I don't know of any [donations made to Palestinian MFIs by the U.S. or European governments]. [At the governmental level,] there have been donations for health care, food, sanitation, water -- but I don¹t know of anything that¹s going to microlending, and I wouldn¹t expect it. Not very many charities are donating either; if the microlending environment is very difficult, people will back off for a little while.

QUESTION 6: With microloans in short supply, how are small business owners faring in the current economy?
PETER GUBSER: Small business owners are just like everyone else. They're being asked to sell on credit; some will, and some won¹t. After a while, little merchants run out of money too.

QUESTION 7: What is the status of ANERA's "Gaza Women's Loan Fund"?
PETER GUBSER: It is is still active, but repayment rates have been reduced. It is fairly difficult.

QUESTION 8: Once the political situation improves, can we expect to see a return by foreign donors and investors to the same levels of excitement and interest in Palestinian microfinance as before?
PETER GUBSER: [The Palestinian microfinance community] had picked up a lot and was getting good and steady early this year, but now you have a whole other economic realtiy. I would see it coming back, when people are a little bit more confident; they will want to expand the small business sector and go forward.

Submit your questions about microfinance to info@shurush.org
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Ear to the ground: current stats
- The annual rate of population change in the West Bank and Gaza is 2.58, compared with 0.55 in the United States.
- The infant mortality rate is 19.9 in the West Bank, compared with 6.6 in the United States and 6.9 in Israel.
- The number of reported mental-health disorders has doubled between 2000 and 2004.

Source: "The Public Health Status of Palestine", a transcript of remarks by Dr. Rasmi Abu-Helu, The Palestine Center, June 19, 2006, Washington DC.

 

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