Near East Foundation (NEF) today announced the establishment of Siraj Financial Services (SFS), a new social enterprise operating in Northern Syria.
SFS, operating as a non-banking financial institution (NBFI), will upscale and commercialize NEF’s successful micro and small enterprise (MSE) financing program, which has been operating in the region since 2021. With a mission to reach a portfolio of 23,300 active clients and a gross loan portfolio of $18 million by 2027, SFS aims to raise $15 million in grant funding and more than $10 million in debt and equity through a blended finance structure.
An independent SFS Board has been formed comprising representatives of NEF and its partners. Ziad Al Refai, the former CEO of Tamweelcom, one of Jordan’s leading microfinance institutions, has assumed the role of managing director.
To date, Siraj Financial Services has dispersed 3,500 loans totaling $4 million to Syrian MSEs. It has a current active portfolio of $2.2 million, serving 2,750 active clients across ten branches in Deir ez-Zor, Al-Hasakah, Aleppo, and Raqqa governorates throughout North East and North West Syria. The loan default rate stands at less than 1%.
The financial and non-financial services offered by Siraj are financed by cornerstone funders, the Syria Recovery Trust Fund (SRTF), the United States Agency for International Development (USAID), and Vitol Foundation.
SFS’s loan products, including micro, development, and growth loan products ranging from $500 to $8,000 with up to 24-month repayment terms, aim to catalyze MSEs in diverse economic sectors. For the agriculture sector, SFS offers “agriculture” and “innovation” loans with a maximum value of $60,000. SFS’s non-financial services include tailored and sequenced trainings and demand-driven coaching, mentoring and facilitation – support by NEF’s digital platforms, Siraj Digital and Siraj Market. SFS is currently piloting de-risking products in the agricultural sector.
Incorporated into the operating model of SFS is a uniquely blended finance structure where $2 million of the existing loan capital is structured as a “first loss,” serving as credit enhancement for senior lenders. Additionally, SFS is exploring first-loss capital and additional risk mitigation through guaranteed coverage from international development finance providers.
John Ashby, president at NEF, said, “The incorporation of SFS signifies a major milestone in supplying unmet demand for micro and small enterprise financing in Northern Syria and provides a huge opportunity for attracting non-traditional partners and funders.”
Eng. Hani Khabbaz, SRTF director general, said: “We are very proud of the SFS (previously the Revolving Credit Fund or RCF) and its resounding success in North of Syria. This visionary, one-of-a-kind initiative that the SRTF and NEF started in 2020 is not only securing growth and sustainability for enterprising individuals and their families, elevating their livelihoods to new heights, but also bestows a ripple effect of prosperity upon the entire local economy. By focusing on supporting women and youth, the SFS has become a beacon of hope, fostering inclusive development that uplifts communities and fosters lasting positive change.”
Gayle Schwartz, Senior Economic Policy Advisor at USAID, said, “USAID is a proud supporter of SFS, which has demonstrated the ultimate “progress beyond programs,” that is leveraging our assistance to bring others to the table not only to tackle immediate needs such as food security but larger imperatives like climate change. We are not naïve about the security, political and economic challenges in Syria, but we also see a great deal of opportunity. Fragility, or having very little of your own, often breeds innovation. What we have seen from the entrepreneurs is incredible resilience and innovation.”
John Collenette, CEO of the Vitol Foundation, said, “We are delighted to have played a part in the development of NEF’s MSE financing program from the outset and congratulate all concerned on successfully launching the next stage with the establishment of SFS. We are proud to have contributed to this initiative as it continues to provide critical support to MSEs in the region”.
Rabih Yazbeck, senior vice president for programs and impact at NEF, said, “SFS seeks to scale to provide finance for 25,000 MSEs in Northern Syria over the next few years. If you apply this to all of North East and North West Syria, we estimate the base to be more than 50,000 credit-worthy clients, excluding those operating in the agriculture sector, who already have a dedicated portfolio.”
