satisfaction and new product development IKM Methodology (Impact,Knowledge and Market Research) PlaNet Finance Belgium January 2007
Palestinian Business Womens Association 2
Palestinian Business Womens Association Al-Bireh, Irsal Area, Saber Taweel Bldg. Tel: 02 2400532 Fax: 20 2402433 P.O.Box: 2316 Ramallah-Palestine E-mail: asala@palnet.com Web page: www.asala-pal.org rd Design & Printing: 3 1 1. INTRODUCTION 1.1 METHODOLOGY 1.1.1 Sampling method 1.1.2 Data collection method 1.1.3 Limitations of the research 2. SURVEY RESULTS ON CLIENT SATISFACTION IN GAZA STRIP AND THE WEST BANK 2.1 CHARACTERISTICS OF HOUSEHOLDS AND THEIR ACTIVITIES 2.1.1 Demographics 2.1.2 Household characteristics 2.1.3 Economic activities of clients 2.1.4 Financial services use and access 2.2 CLIENT SATISFACTION 2.2.1 Relationship with ASALA 2.2.2 Social Impact of participation in ASALAs program 3. ANALYSIS OF FOCUS GROUPS RESULTS ON THE NEEDS OF NEW FINANCIAL AND NON FINANCIAL SERVICES FOR ASALAS CLIENTS 3.1 FINDINGS 3.1.1 Supply of microfnance services 3.1.2 Summary on demand for new microfnance services 3.1.3 Summary on demand for non fnancial services 3.1.4 Key programming considerations from analysis of FGDs fndings 3.2 SUPPLY OF CURRENT FINANCIAL SERVICES BY ASALA 3.2.1 Interest rates 3.2.2 Guarantors procedure 3.2.3 Grace period 3.3 DEMAND FOR CAPITAL AND PURPOSES FOR NEW LOANS 3.3.1 Use of future loans 3.3.2 Purposes for a new loan 3.3.2.1 Business improvement loans 3.3.2.2 Marriage loans 3.3.2.3 Housing loans 3.3.2.4 Car loans 30 3.3.2.5 Education loans 3.3.2.6 Family loans 3.3.2.7 Health treatment loans 3.3.2.8 Loans to repay debts 3.3.2.9 Loans for investment in land 3.4 DEMAND FOR NON FINANCIAL SERVICES 3.4.1 Training 3.4.2 Networking 4. RECOMMENDATIONS ON FINANCIAL PRODUCT DEVELOPMENT AND NON FINANCIAL SERVICES 4.1 CURRENT LOAN PRODUCTS 4.2 NEW LOAN PRODUCTS 4.3 NON FINANCIAL SERVICES 4.3.1 Client coaching 4.3.2 Networking: 4.4 PROGRAMMING RECOMMENDATIONS Table of Contents 5 6 6 9 10 13 13 13 14 15 16 18 18 21 25 25 25 26 26 27 27 27 28 28 28 29 30 30 31 32 32 33 33 34 34 34 35 35 36 39 39 39 41 41 43 42 4 5 S ince 2000, a number of studies have been carried out on the informal sector and on microentreprises in Palestine. They have provided information on the estimated number of them, their characteristics and those of their owners. More specifcally, this research focuses on the analysis of the fnancial and non-fnancial needs of Palestinian microentrepreneurs, in particular current active women borrowers at ASALA. With the recent fnancial and economical crisis afecting the Palestinian Territories, the fnancial needs of these microentrepreneurs have also been changing rapidly, therefore the pertinence of this study to enable ASALA to better serve its members. The study was conducted between October and December 2006 by ASALAs team in coordination with a PlaNet Finance consultant. It must be noted that during this period, the situation in the Palestinian Territories has aggravated substantially in the Gaza strip. Collecting data in Gaza during a period of military intervention by the Israeli Defence Forces shows the determination of ASALAs staf in Gaza. Tragically, one of the clients that were interviewed during this research in Beit Hanoun was killed short after during clashes. The results of this study also refect this environment of political and security crisis in Gaza. The aspirations of clients may be sometimes very limited and show signs of their lack of economic perspectives in the current context. While in the West Bank, ASALAs borrowers think on how to improve or expand their existing projects, in Gaza, clients focus on the needs of their families on mitigating the crisis or investing in the family rather than their small businesses. The methodology used to conduct this study is closely related to its objectives: to assess client satisfaction among ASALAs active women borrowers and to better understand their needs for fnancial and non-fnancial services. ASALA opted in this research for a participatory approach involving 1. Introduction 6 its staf in the research exercise and using both quantitative and qualitative tools. For this research 381 active women borrowers at ASALA were interviewed in a client satisfaction survey and 39 focus groups discussions (FGDs) were conducted with these clients to understand their needs in terms of new fnancial and non- fnancial services. This report is divided into 4 chapters including this general introductory summary. The frst introduction chapter includes the description of the methodology used and the context in which the study has been conducted. The second chapter contains an executive summary of the quantitative analysis on client satisfaction and the views of ASALAs active clients on new product development in the West Bank and in Gaza Strip. It provides frst an overview of microentrepreneurs and microentreprises divided in three sections: who are the microentrepreneurs and what kind of microentreprises do they have and an analysis of their credit needs and needs for other fnancial services; The third chapters includes detailed information on the kind of fnancial and non fnancial services requested by ASALAs active clients in terms of type of loans, purposes for a new loan and others relatives to the improvement of ASALAs current products and services, in order to better adapt them to its clients needs. It also provides an analysis of credit behavior which allows for and identifcation of new potential products for ASALA and improvement of existing ones. Chapter four provides recommendations on product development for loans and other fnancial services, including non fnancial services. 1.1 Methodology This research has been carried out on the request of ASALA in order to understand what are the needs of its active client base, in the current Palestinian context, and how could ASALA react to this evolving reality in terms of reviewing its current product ofer of fnancial products to better adapt it to the needs of its clients. The participatory approach used means clients have been directly addressed by the institution, in order to express freely their opinions on ASALAs products, staf, service and conditions. They have been able to do so through a survey distributed among them and in focus group discussions moderated by ASALAs staf. Arrangements were made so that no staf member dealt directly with her direct clients to avoid clients feeling uncomfortable, or having to judge the organization before the person that will decide on their next loan Both the quantitative data obtained from this survey and the qualitative data gathered in the focus group discussions are analyzed in this document. 1.1.1 Sampling method A sample of ASALAs clients was selected randomly among its current active women borrowers. This sample was used to conduct a survey among 381 clients in both West Bank and Gaza Strip 63% in Gaza and 27 % West Bank. The fgure below details the areas of the study. Signifcant amounts of information were collected from these clients focusing mainly on product development and client satisfaction. Data entry has been done by ASALAs team using MS Excel and data analysis has been performed by the PlaNet Finance Belgium 7 team using mainly the SPSS statistical package. All questionnaires were frst controlled by a supervisor at ASALA before data coding. At this stage, the data was verifed in order to avoid incoherence in the fnal analysis, due to human error during data entry and coding or false or exceptional information provided by clients. The researchers tested the working hypotheses developed for the study during feld visits with ASALAs team. These hypotheses were intended to assess the status of demand for microfnance from ASALAs clients and identify gaps between supply and demand for the microfnance services of ASALA. This research has also allowed collecting qualitative information from focus group discussions conducted by ASALAs staf. In total, 364 active women borrowers participated in 39 focus group discussions conducted during feldwork. The focus groups were distributed geographically as follows: 25 in Gaza Strip and 14 in the West Bank. The distribution of the 25 focus groups conducted in Gaza is as follows: 1 in Gaza City, 7 in Deir El Balah, 4 in El Nusirat, 9 in Jabalia and 4 in Beit Hanon. 240 active women borrowers participated in Focus Group Discussions in Gaza. Summary tables for FGDs distribution and composition are provided below according to the number of loan cycles and the four types of loans provided by ASALA for their clients: Micro Individual Loan (MIL), Small Individual Loan (SIL), Islamic Loan (IL), Group Loan (GL): j (%) 8 Gaza Strip FGDs distribution Type of loans # of Loan Cycles
No. of clients Islamic Loan Group Loan First cycle Second cycle Third cycle Fourth and more Gaza city 9 0 9 9 0 0 0 Jabalia 8 1 7 3 1 1 3 Jabalia 10 4 6 2 0 1 7 Jabalia 8 0 8 2 0 1 5 Jabalia 6 0 6 2 4 0 0 Jabalia 10 1 9 4 4 1 1 Jabalia 11 1 10 5 4 1 1 Jabalia 12 1 11 3 5 1 3 Jabalia 11 5 6 2 0 2 7 Jabalia 10 0 10 6 4 0 0 Beit Hanon 8 0 8 2 4 0 2 Beit Hanon 9 0 9 5 1 2 1 Beit Hanon 8 0 8 4 4 0 0 Beit Hanon 9 0 9 2 0 6 1 Deir el Balah 10 1 9 5 4 0 1 Deir el Balah 9 1 8 2 1 1 5 Deir el Balah 9 0 9 1 1 4 3 Deir el Balah 9 0 9 5 0 1 3 Deir el Balah 13 0 13 2 3 2 6 Deir el Balah 9 1 8 0 6 1 2 Deir el Balah 9 0 9 4 4 0 1 El Nusirat 11 1 10 3 6 0 2 El Nusirat 10 1 9 1 5 1 3 El Nusirat 11 4 7 1 7 0 3 El Nusirat 11 4 7 1 5 0 5 Total 240 26 214 76 73 26 65 In the West Bank 14 focus group discussions were conducted with a total of 124 clients participating. The distribution is as follows: 3 focus groups were conducted in Bethlehem, 2 in Ramallah, 8 in Jenin and 1 in Nablus. Table 1 The sampling of the clients selected for the focus group is diferently composed between Gaza and the West Bank clients. In Gaza, the majority of active ASALA clients have group loans whereas in West Bank the majority has individual loans. This diference of type of loan may explain the reason why the idea of a project for a new loan is expressed diferently in Gaza and in the West Bank. The second diference between the two types of focus group in Gaza and in the West Bank concerns the number of loan cycles. Indeed, in West bank, most of the clients are engaged in their frst loan cycle whereas the in Gaza are engaged in second or third or more loan cycles. 9 West Bank FGDs distribution Type of Loans # of Loan cycles Local No. of clients MIL SIL IL GL First cycle Second cycle Third cycle Fourth and more Bethlehem 1 8 4 2 2 0 5 3 0 0 Bethlehem 2 11 7 2 2 0 7 4 0 0 Bethlehem 3 10 7 1 2 0 9 1 0 0 Ramallah 1 6 3 3 0 0 5 1 0 0 Ramallah 2 7 3 4 0 0 5 2 0 0 Nablus 11 11 0 0 0 11 0 0 0 Jenin 1 8 4 0 1 3 6 0 2 0 Jenin 2 9 3 0 1 5 5 2 2 0 Jenin 3 8 4 0 1 3 2 4 1 1 Jenin 4 13 6 0 1 6 7 2 2 2 Jenin 5 5 1 0 2 2 2 1 1 1 Jenin 6 7 1 1 2 3 3 2 1 1 Jenin 7 10 1 0 0 9 3 5 2 0 Jenin 8 11 8 0 1 2 3 8 0 0 Total 124 63 13 15 33 73 35 11 5 Table 2 1.1.2 Data collection method Quantitative Tools: In order to conduct a client satisfaction survey among ASALAs active clients the IKM (Impact- Knowledge-Market) standard questionnaire developed by PlaNet Finance, has been adapted according to ASALAs specifcities and to the target group of women active microentrepreneurs. The survey process was composed of four main steps: Initial adaptation by ASALAs team during project preparation. Second adaptation following the organization of 4 focus groups with 6-10 clients in both West Bank and Gaza Strip. During the focus groups, the questionnaire was thoroughly tested for cultural and socioeconomic relevancy. Final adaptation with ASALA employees during feld testing. After training, interviewers delivered the questionnaire to approximately 20 people in order test the validity of the questionnaire. This stage of test of questionnaire development led to the fnal version which was then used. Data collection survey on 381 active clients performed by ASALAs team Since the purpose of this research initiative is to collect information on client satisfaction and the demand and needs expressed by clients in terms of current access to loans and new types of loan products and non fnancial services. The results of this initiative are intended to provide guidance to donors and ASALAs practitioners for making sound decisions to improve their current microfnance programs. Qualitative tools: To gather qualitative data on the needs and requirements of ASALAs active clients in terms of existing and potential new fnancial and non- 10 What do you think about the current procedures for having a loan with ASALA? What types of training and apprenticeship programs would be appropriate for you? What kind of non-fnancial services would you expect from ASALA? 1.1.3 Limitations of the research Social research usually has a certain number of inherent problems. For example, the difculty in Between the two diferent approaches of the study carried out in parallel, a quantitative survey on client satisfaction and qualitative Focus Group Discussions, the type of information collected through each method may somewhat difer for a number of reasons. The frst one is a technical reason: due to the fact that in the questionnaire, most questions are closed the answer is limited to the diferent possibilities proposed in the questionnaire. In contrast during focus group discussions fnancial services, the research team in charge of data collection conducted 39 focus groups discussions with active women borrowers. Some of the primary research questions the teams sought to address are the following: What would you ant to do if you received a new loan from ASALA? What would be your investment with this new loan? What is the amount that you would expect for this new investment? gaining the trust of respondents, within a short period of time, may impact the objectivity of the research. The main concern experienced during the data collection in this research, is that some respondents may have regarded this exercise as an inquiry on their behavior, their revenues or their privacy and therefore may have not cooperated fully with the interviewers or provided biased answers. This inevitably brings the perfect accuracy of the data collected from such respondents into question. 11 the speech is rather free for the interviewees. Which allows them also to emphasize certain views (such as the issue of interest rates), given the fact that they perceive the focus group framework as a chance to complain and motivate changes in ASALAs policies to their immediate best interests. For this reason, the information gathered in focus groups often focuses more on what clients dislike/want rather than what they would objectively need to improve their business or situation through access to new services that ASALA could provide them with, even if these needs are obviously also expressed. Thus it is important to bear this issue in mind, when reading some of the study fndings from Focus Group discussions. The second reason is a sociological one: in a group people are infuenced by others views and therefore dominant persons tend to infuence others views. In certain cases the outcome of group discussions is certainly more homogeneous due to the fact that the moment an issue was raised by one of the participants (such as the current guarantee procedures or the current cost of a loan, etc), they issue needed to be debated by the whole group, even if a number of participants were not necessary as concerned by those issues as some others. 12 13 2.1 Characteristics of households and their activities 2.1.1 Demographics Age T he youngest client interviewed is 18 years old and the oldest 63 years old, however most respondents are between 28 and 45 years old (fgure 2). The majority of women surveyed are married (85%), while 10% are single, 3% are widowers and 2% are divorced (fgure 3). Figure 2 Figure 3 2. Survey results on client satisfaction in Gaza Strip and the West bank 85 10 14 Figure 4 Education Concerning the level of formal education reached by the clients interviewed, 19% have completed university or college education, 33% have received secondary school education; 31% preparatory education; 14% only primary schooling; and 3% received no formal schooling (fgure 3). But it is important to notice as shown in the next page (Table 3) that the lack of education afects mainly the older clients and is signifcantly lower among respondents between 18 and 30 years old. Table 3 : Level of Education by Age category % within Age category Age category 17 to 30 31 to 40 41 to 50 51 to 60 61 and more Education No education 0% 3% 6% 7% 33% Primary school 5% 12% 18% 33% 67% Preparatory school 31% 32% 39% 16% Secondary school 37% 36% 22% 35% Polytechnic / College 6% 6% 10% 9% University graduate 20% 11% 6% Total 100% 100% 100% 100% 100% 2.1.2 Household characteristics The average household profle (household members living in the same house other than the respondent or people who depend on the clients interviewed; such as children, family members, etc) is composed on average of 7 dependants (fgure 5) per client. As shown in Figure 6, average clients contribution per month to the households budget by the women clients surveyed ranges between 0 and 250 NIS for 17% of clients (under 50 USD), 250 and 500 NIS for 33% of them (50-100 USD), between 500 and 1000 NIS for 28% (100-200 USD), 1000 and 2000 NIS for 13% (200-400 USD), and more than 2000 NIS for 9% (over 400 USD). 14 15 Figure 5 Figure 6 2.1.3 Economic activities of clients Within this sample 40% of the respondents live in cities, 35% in villages, and 25% in camps. In terms of education, we can not notice major diference between clients living in cities, camps or villages as well as between people living in West Bank and Gaza. Figure 7 As shown on fgure 8, trade is the most important economic activity of ASALAs clients surveyed in this study (43%), although the degree to which it is exercised varies by location. The second principal activity of those surveyed is raising animals (28%), followed by production (e.g. pottery) (15%), service (e.g. beauty salon) (7%), agriculture (6%) and professionals (1%).(e. g.: Pharmacist or Physiotherapists) Number of dependents 33 28 13 9 17 43 28 15 7 6 16 2.1.4 Financial services use and access Figure 9 Considering loan type (fgure 8), 64% of clients interviewed use group lending, 30% micro and small individual lending and 6% Islamic lending. A table presenting loan type per location is presented below. The diference of distribution between the three types of loans ofered by ASALA 1 (individual, group and Islamic) is not substantial. Nevertheless we fnd more group lending in villages than in cities or camps and nearly no Islamic lending in villages. Comparing loan type by region shows that most clients in Gaza have access to group lending (88% versus 12% for individual). In West On average, the last loan received by ASALA microentrepreneurs participating in this survey amounts to 1,933 USD, while the average client has taken 2.2 loans. However average loans in Gaza, where the majority of clients receive group loans, amounts to 781 USD while in West Bank where most clients surveyed received micro and small individual loans the average loan amount is of 3901 USD. Other signifcant diferences in loan amount can be seen when analyzing data by loan cycle, type of activity, and location. Figure 10 Bank, the majority of loans are individual (61%) compared to group lending (22%) and Islamic lending (16%). % City Camp village Individual lending (MIL & SL) 34 32 24 Group lending 57 62 75 Islamic Loan 9 6 1 Total 100 100 100
1 ASALAs current product ofer includes: MIL = Micro Individual Lending from 1000$ up to 5000$ SL = Small lending from 5500$ up to 20000$ IL = Islamic lending from 5500$ up to 15000$ GL = Group lending from 200$ up to 1500$ Group Individual Islamic Loan 17 Regarding segmentation by loan cycle, we can observe diferences in the average loan size received. Location City Camp Village Average Loan amount (US$) 2187 2196 1178 Average Loan Gaza (US$) 709 652 964 Average Loan West Bank (US$) 3316 5216 3278 # of cycle 1 2 3 4 5 6 Average Loan amount (US$) 2123 1825 1560 1565 2405 2300 Average Loan Gaza (US$) 387 551 715 1241 1771 2236 Average Loan West Bank (US$) 3859 4071 3356 5233 6000 3000 Type of activity Services Production Agriculture Livestock Professionals Trade Average Loan amount (US$) 2554 1721 1143 1451 7417 1927 Average Loan Gaza (US$) 638 861 591 648 1300 893 Average Loan West Bank (US$) 4213 3794 1750 3767 10675 3886 Regarding segmentation by type of activity, agriculture receives the lowest average loan size while professionals receive the highest. Regarding segmentation by location, average loan size is similar in cities and camps (around 2100US$) but the average loan size in villages is nearly half (around 1100US$). 18 As these fgures show, the fact that the sample includes more Gaza clients to refect the distribution of ASALAs clients between Gaza and West Bank (240 vs. 141), and that most of ASALAs clients in Gaza have only received group loans (Group lending as per ASALAs procedures allows loans from 200$ up to 1500$ maximum); explains why average loan amounts in Gaza are lower compared to West Bank. In West Bank the majority of clients receive individual loans which can be Micro loans, Small loans and Islamic loans (with amounts ranging from 1000$ up to 5000$ or Micro Individual loans; 5500$ up to 20000$ for Small Loans and from 5500$ up to 15000$ for Islamic loans). This explains the more important loan volumes in West Bank, even if the number of clients represented in the sample is signifcantly lower. 2.2 Client satisfaction In the current context in the Palestinian Territories, where the continuing occupation, together with the salary crisis and political tension has seriously damaged the economic opportunities of many microentrepreneurs, ASALAs clients are no exception. The purpose of this exercise is to focus on those clients of ASALA that are still active in their businesses and continue to lend and reimburse their loans. For ASALA it is critical to understand deeply not only the needs of this client base but also to focus its eforts on listening to these clients to be able to adapt its current products and procedures and develop new services to deepen its position with this critical group of clients, improve its relationship with them and assist them in this difcult period. This survey on clients satisfaction is part of ASALA strategy to listen to its clients and ensure their currents and future needs will be met by the organization. 2.2.1 Relationship with ASALA Figure 11 Figure 12 When asked which are the three things they value most in their relationship with ASALA, the frst aspect that clients value is the good treatment they receive from the organization (55% frst answer and 21% second answer). Other means clients highlight a variety of personal reasons why they choose ASALA such as: honesty of employees, help received when needed, good reputation, etc> They appreciate as well the fact that it is easy y y (%) 19 and fast to get a loan (10% frst answer and 16% second answer) and the fact that ASALA is fexible for the repayment (6% frst answer and 12% second answer). Other elements that clients value in their relationship with ASALA are: support to the clients business, access to credit, good products, its understanding of the client situation, and fnally the relation of trust between the organization and the client. In terms of what clients dislike of ASALA (fgure 13), 30% (20% as second answer) of respondents, as may be expected do not like paying service charges or interest rates; while 29% (5% as second answer) claim that they dislike the group lending methodology. The third negative issue is the obligation to provide guarantors (9% as frst answer 13% as second answer). The issue of service charges and interest is a classic response worldwide, when asking clients what they do not like about the institution, they would obviously prefer not to have to pay service charges or interest rates on their loans. As we experienced in Focus Group Discussions, group lending clients would want to be able to access individual loans since they want higher loan amounts than those provided in group lending, however lack of guarantors or ASALAs current policy in Gaza, leaves them with no option but to accept group lending with smaller loan amounts available . Providing guarantors is an obligation which applies only to new clients who request individual loans > US$1,500, and may be difcult to provide in the current context, or it means people may be indebted to someone else in the future for having guaranteed them. Other minor reasons of dissatisfaction are loan amount (group lending clients would want larger loans) the location of the ofces (4 main cities in West Bank), the legal procedures needed to have a loan (court, notary deed for individual loans) the repayment period, the installment period, and the installment amount. Figure 13 Figure 14 When clients consider the three things that infuence the most their decision to apply for a loan at ASALA, they value the following issues from the most to the least important (fgure 13). 20 31% it because ASALA helps them to improve their business, 23% as a way to increase their income, 10% because they needed money and in order to face the current bad political and economic situation, 8% in order to launch a new project and fnally, 4% in order to improve their living conditions. Figure 15 The category other includes client statements on why they chose ASALA such as: it helped me to feel more independent, the fact that ASALA cares about women or to complement my husbands income. The majority of clients state that it is very easy (72%) or easy (20%) to become a client of ASALA (fgure 14). A few clients state it is neither easy not difcult to take a loan and only a very small percentage estimates that its difcult to become a member (under 2%). Both clients from Gaza and West Bank have similar views on this issue. 21 Respondents were also asked to rank the importance of various aspects of their relationship with ASALA using the following scale: 1: Excellent; 2: Good; 3: Average; 4: Bad; 5 Very bad. An average score has been calculated accordingly The ranking is nearly excellent in all aspects with respondents valuing most the easy access to loan ofcers, and the fact that ASALA wants to ofer better services, they way ASALA handles the relationship with clients, following up on their projects and understanding their problems when necessary. Figure 16 What clients fnd more difcult is accessing ASALAs ofces, although difculty in movement may have to do with this too. Figure 17 The ranking of attributes of the services proposed by ASALA is between good and average on nearly all aspects: loan amount, repayment, grace period guarantee, etc. Rapidity of loan is considered as excellent together with monthly repayments and access conditions to loans. Loan amounts and repayment amounts rank as good and only guarantees and interest rates are ranked by clients between good and average by the majority of respondents. The issue of guarantees, in particular will be further explored in the analysis of Focus Group Discussion results. 2.2.2 Social Impact of participation in ASALAs program Clients surveyed perceive diferent impacts from their participation in ASALAs microfnance program. In this exercise clients were asked about impacts at diferent levels: family level, business level and income level. Figure 18 ranking) ranking) Very easy Easy Neither Diffcult 22 In this exercise the positive impact perceived by clients is crucial to be able to evaluate how access to loans impacts their lives beyond being able to start or invest in their businesses. In the case of microfnance, where loan amounts are small, often the increase in income may not be the only or major impact of having a loan. In the case of ASALA, whose clients are exclusively women issues such as increased autonomy, respect from husband or family, increase ability to make decisions within the family, etc; are also of outmost important not only for ASALA, but specially for the clients themselves. Figure 19 Figure 20 The perception of respondents regarding impact on the family due to their participation in ASALAs loan program is that they have experienced positive changes for a majority of clients concerning all indicators except for savings (fgure 15). Nearly all of the respondents see a positive change in family conditions (91%), in womens autonomy (91%), and family income (89%). A large majority of clients perceive a positive change in their ability to make decisions on fnancial issues (84%), in respect from their husband, children and family (80%), decision making on family issues (80%) and reimbursement of previous debts (75%). 69% have notice a positive change concerning respect from their neighbors and 61% a decrease in stress. 42% have noticed a change in their savings. Regarding the perception of respondents to changes in their business in relation to their participation in ASALAs program (fgure 16), the change has been positive for a majority of clients concerning all indicators. Participation has a positive contribution to expand business (88%) and brought income for the project (86%). y p 23 About half have see a positive contribution to improve quality of the products (58%), to facilitate the sale of new products, to pay debts of the business (55%), to allow cost reduction during input purchase (55%) and to go on new markets (50%). Only 35% have noticed a positive impact of the program to open a new business. However, this is due to ASALAs policy of targeting minimum up to 25% start up projects within its portfolio and to the fact that the group lending methodology is also a limit for start ups. Few clients will want to guarantee a new start up within group lending due to the increased s- risk of default it represents for them. Additionally 35% of respondents have noticed a positive change in using new suppliers. Yet in terms of new employees, participation in ASALAs program has had very little impact on the number of new employees hired. This is due to the fact that most micro businesses are based on self-employment and that any peak in activity is usually absorbed within the family. As shown in the previous graph, 85% of the clients have responded that a positive change Figure 21 that happened in their business since their participation to ASALA is the increase of their income. The fgures 17 shows for which purpose clients have used this extra income. 27% of clients have purchased food with this income, 22% have reinvested in their project, 18% have helped their family or friends, 13% have spent in education of their children, and 13% in the improvement of their house. 6% have used it in health care. The revenues generated through the micro business for most respondents are either reinvested in the business itself or used to cover basic family needs such as food, health, education or housing. 24 25 3.1 Findings A t the household level, Palestinian women are important contributors to the economic survival of their families pursuing a number of livelihood strategies. Most of these strategies involve short-term informal sector work, including trading, small-scale agricultural production, handicrafts and light manufacturing. For clients, self-employment provides small earnings and has the advantages of low barriers to entry, fexibility in terms of time commitments, and is available even during crises periods. Despite this, women are more and more engaged in formal activities such as managing a boutique, a grocery, a beauty centre, etc.... This access to a formal sector work highlights the major role that women play inside their family. The Focus Group Discussions held by ASALAs team highlighted a number of issues that require further attention by ASALAs management of how to adapt its current products to the current context and which new products and services (both fnancial and non-fnancial) could be explored. Key fndings from this exercise have been organized in terms of supply of current services and demand for new services. Both issues are analyzed in detail in the following section. 3.1.1 Supply of microfnance services The key fndings on the supply of microfnance services include: Clients have difculties in complying with ASALAs guarantors procedure; In particular new clients who request Individual Loans for amounts over 1500$ 3. Analysis of Focus Groups results on the needs of new nancial and non nancial services for ASALAs clients 26 ASALA ought to adapt more to the current difcult economic situation and confict by extending the grace period to more of its clients; In particular group lending clients, who have currently only one month grace periods. Clients would always want lower interest rates Clients would be interested in savings products as well as loans. 3.1.2 Summary on demand for new microfnance services The key fndings on the demand side involve a number of interrelated factors that infuence existing economic activities or potential new projects, including: The need of loans to improve current businesses. The need of loans for housing improvements. The need of loans for purchasing vehicles. The need of loans for marriage expenses or other social activities. The need of loans to purchase land. The need of loans to pay back previous debts. The need of loans to help familys men in their business. (Family Loans that includes men). This case study presents these fndings with respect to clients demand for capital and sources of capital: ASALAs clients need and want capital. However, their capital needs are as much for family needs (i.e. marriage or education) as for their business; Microfnance is perceived as a source of capital not only for them but also for other members of their family; For clients the priority of the investment for a new loan difers between the Gaza and the West Bank; (see chapter fndings) 3.1.3 Summary on demand for non fnancial services In terms of the demand for non-fnancial services among clients, the key fndings are: Clients need a package of practice-based experiential learning opportunities (versus stand-alone training; on-site coaching may be particularly useful for clients living in rural areas or camps which are unable to attend classroom training in cities, as well as training in small groups to allow practical learning Access to mentoring and support structures; e.g.: More experienced clients could become trainers for younger or simply new clients at ASALA. Experienced clients if remunerated or compensated alternatively could become a pool of experienced trainers and/or counseling providers. Access to fnance including savings and credit (although not necessarily via MF providers) When looking at the holistic needs of clients concerning small business development, it is essential to consider non-fnancial themes, such as: Building personal skills. Training ranked as the most important issue to build a successful business for clients Networking ranked slightly at the same position Marketing their products Clients recognize also the need for social help 27 3.1.4 Key programming considera- - tions from analysis of FGDs fndings This research refects the fact that signifcant economic development is not likely to occur in the West Bank and Gaza under the current conditions of occupation, lack of access to the Israeli labor market, and extensive barriers to trade and commerce. In this context microfnance becomes important as it allows ASALAs women clients to create self employment opportunities for themselves and earn additional income to support their families. The main objective of this research is to develop programming recommendations for ASALA as well as broader recommendations on how to adapt ASALAs microfnance service to better respond to the needs of its clients. ASALA has conducted this research with its clients to analyze the demand for microfnance services, using focus group discussions (FGDs), a qualitative tool adapted to this case study. Based on these results, ASALA can propose, adapt or develop products according to the demand expressed by the clients. Non fnancial activities can be also promoted to engage clients to improve their business in term of skills, marketing, etc 3.2 Supply of current fnancial services by ASALA The frst step in analyzing the demand is to understand how women consider the current procedures to obtain a loan from ASALA. The research team analyzed the information gathered on current loans to understand how clients appreciate the procedures of receiving a loan. Diferent issues appeared and perceptions difer between Gaza and the West Bank. Generally, participants in FGDs argued that current conditions of loan access and reimbursement (grace period, guarantee procedures, etc.) are a constraint to them. They expressed the need to review some of ASALAs procedures such as: lowering interest rates, adapting the grace period procedure to the economic problems that clients have to face, allowing the renewal of loans for good clients regardless of arrears in the group (an issue raised mainly group lending clients in Gaza), etc. Some of these issues are analyzed here in more detail. 3.2.1 Interest rates The interest rates rank third as a negative point in ASALAs current procedures. For participants of focus groups held in Gaza, it is the most important issue in the micro credit procedures whereas in the West Bank it is only the third preoccupation of clients after grace period and guarantee procedures. Those who mentioned the problem of interest rate would like ASALA to reduce interest rates. 28 This issue is linked to the fact that ASALA ofers diferent product in both regions ( Group lending and Islamic loans in GAZA, versus Individual lending in West Bank and higher loan amount), therefore the diferent importance of this aspect for each group. 3.2.2 Guarantors procedure One common fnding which appeared consistently in both Gaza and West Bank FGDs, it is the guarantors procedure at ASALA. In the 14 focus group in West bank and in 8 Focus group in Gaza, clients mentioned diferent solutions or alternative procedures to change the current guarantors procedure. Even if 6 focus groups mentioned the possibility of having a loan without guarantor, the majority of clients who contest the current guarantors procedure propose other ways to provide guarantees. The most important one is to accept checks instead of guarantors (an important issue for individual loan clients). Other clients mentioned the fact that other MFIs in the region do so and that they consider this procedure better than the ASALA one. Another alternative procedure mentioned by 30% of the clients, was accepting mortgage of land and buildings instead of guarantors. 3.2.3 Grace period According to the majority of the participants in FGDs, the second main negative point in ASALAs procedures is the grace period. In the 14 focus group in the West Bank and 3 in Gaza strip, clients expressed the fact that it would be better for them having more fexible repayment procedures. Among these clients, more than half of them expressed the idea to have a larger grace period,) without interest, to alleviate the current confict situation. Some clients also explain that late repayment is due to the confict context in the region and that ASALA ought to adapt its procedures to this situation 2 3.3 Demand for capital and purposes for new loans The second step to analyzing the demand for microfnance among clients is to understand the economic activities in which ASALAs clients are currently engaged and the uses of the revenues they earn. The results collected across the FGDs show that clients are engaged in a broad range of economic activities. There is a consistent clustering around a number of income generating activities (IGAs) or types of employment/self employment (shown in Figure 1 for clients in the West Bank and Figure 2 for clients from Gaza) Figure 18: Main activities of FGD participants Gaza (# of clients) It is important to bear in mind that ASALA has adapted to the current crisis situation. ASALA difered all payments from 1st April to Dec 31st were difered & up to now in Gaza with no additional charges While in the West Bank, payments have been difered on a case by case basis, when justifed. ASALA has not stopped disbursing new loans in this period. 29 Figure 19 : Main activities of FGD participants West Bank (# of clients) These categories group in fact a very diverse range of businesses, below some examples provide an insight on what kind of businesses ASALAs clients manage: Trade : shops , grocery stores, supermarkets and trading in household goods Raising animals: sheep, poultry or rabbits. Small production: embroidery, crafts, pottery, etc Services: restaurants, beauty salon, etc Professionals: pharmacist, physiotherapists, photographers, etc. Agriculture: land cultivation or greenhouses The majority of activities are short-cycle businesses in the informal or semi-formal sector, including petty trading, small-scale agricultural and livestock production, handicrafts and light manufacturing, such as bakery, embroidery. In general Palestinian women engage also in temporary work on government employment schemes or intensive day labor in agriculture. Their reliance on informal, short-term sources of income is consistent with the overall survival strategies of poor families in the West Bank. A World Bank report entitled Deep Palestinian Poverty In the Midst of Economic Crisis reports that most of the poor in the West Bank are working poor who have less stable jobs and earn less due to their lower education. The report states that nearly half (48%) of the working poor work only sporadically, compared to one-third (30%) of other workers. Another area of broad concurrence across all FGDs is that many women are pursuing self-employment, rather than wage labor, to meet their economic needs. For women, self- employment provides small earnings and has the advantages of low barriers to entry, fexibility in terms of time commitments, and is continuously available even during crises. Some women explained how they increase their income by running more than one business, or by trading up to a larger business. Participants in 10 of 14 focus groups emphasized that they were looking to earn relatively small amounts of income while trying to fnish school, take a technical training course, look for a job, or save money to start a real business. 3.3.1 Use of future loans One of the questions that were analyzed in FGDs with ASALAs clients is, what they would want to use their next loan for and what sort of loan would they need. The research found that ASALAs clients would use loans for more than one purpose. Capital needs or working capital for their businesses being as important as facing family needs. The priorities vary between Gaza and West Bank clients. However the needs are the same 30 in term of housing loans, education loans, marriage loans, purchasing car or improving their business. What varies is how these needs are ranked between the two regions. Marriage ranking as a frst priority in Gaza; while improving the business ranks as the frst priority for clients in West Bank. Before analyzing these diferences we have to defne a new type of loan that clients would want from ASALA and was consistently expressed in FGDs, this refers to family loans. Clients from ASALA who are exclusively women expressed the need of family loans as: loans to open a shop for sons or brothers loans to buy tools for their husbands loans to buy a new store for their husbands loans to buy a taxi for theirs husbands loans to repair the land for agriculture for theirs fathers loans to build a house for their sons What resulted from these discussions was that women members of ASALA would want a mechanism so that their male family members could also have access to ASALAs microfnance services, either directly or through their membership. Currently ASALA focuses only on female microentrepreneurs. 3.3.2 Purposes for a new loan In the FGDs held in West Bank and Gaza, the purposes for a new loan were ranked as shown in the below graph. In West Bank, new loan capital would be invested in both family and business needs. Housing loans and loans to open a new store were the primary purposes for a new loan for clients from the West Bank, followed by educational loans, family loans, purchasing cars, marriage loans, or health treatment loans. In Gaza however, the capital need would be frst invested in marriage rather than in improving existing businesses. Indeed, the frst purpose expressed for a new loan by the clients in Gaza would be to cover the cost of marriage and the last purpose would be to improve their business. These opposite views refect the very diferent situations in which people live in Gaza versus the West Bank and the diferent attitudes towards religious beliefs, which make marriage and forming a family a priority for women in Gaza. However, in spite of this, many of the purposes for a new loan suggested by clients are the same in both West Bank and Gaza, what changes is the priority. The need for education loans, housing loans, family loans and loans for purchasing a car, have been expressed by both groups. 3.3.2.1 Business improvement loans In Gaza the need for improving the business is not precisely identifed. We can only provide the following fndings on the average amount expected by the clients for those who consider a loan to improve their business in the future, and would want to invest up to: 2500$. In West Bank the information collected gives us important fndings on the need for improving businesses. First of all in terms of type of improvement and in terms of amount expected for each type. Clients who have expressed the need to improve their business considered diferent possibilities. For example: improving a grocery store, 31 Figure 3: Purposes for new loans in West Bank (#) Figure 4: Purposes for new loans in Gaza (#) opening a new store (requiring key money), building a new store, opening a bakery, a boutique or establishing a supermarket. In the FGDs held in the West bank, 10 groups expressed the need for a loan in order to improve their grocery or business, followed by opening a consumption institution and building a new store. For this, the average amount expected would be of 9,485$ for improving the grocery and their business, even if the amounts expected range from 500$ to 10,000$. The average amount expected to open a consumption institution is more important: 16,187$. The amounts desired ranging from 2,000$ to 50,000$. The average capital deemed necessary to start a supermarket would be 30,000$. 3.3.2.2 Marriage loans In Gaza, in 20 FGDs, the need for marriage loans was expressed as a purpose for using a new loan from ASALA. The average amount expected was 4,987.5$. The highest amount Number of time requested per 25 Focus Groubs k 32 requested was 8,000$ and the lowest one 2,500$. The most requested amount was 4,000$, expressed seven times. While the need marriage loans is the most important purpose for a new loan in Gaza, it is in the West bank where the amount for a marriage loan is the most important. Indeed, in the 14 focus groups held in the West Bank, the amount expected for a marriage loan starts from 5,000$ to 20,000$. Thus the average amount for a marriage loan would be of 11,400$, refecting the higher standards of living in the West Bank versus Gaza. 3.3.2.3 Housing loans In FGDs held in both Gaza and West Bank, the possibility of having a housing loan is one of the key issues for clients. Of the 25 FGDs in Gaza, 25 focus groups had mentioned this need and in the 14 focus groups in the West Bank, 13 focus groups suggested it too. In terms of proportionality we can consider that the needs in terms of housing loans are equal for clients from Gaza and from the West Bank. According to the clients, a housing loan can mean diferent things however: home improvement loans, building a new home, buying an apartment, purchasing a house. In West Bank the average loan expected for housing would be 12,414$. However responses were very diferent, certain clients would need 1,500$ for improving the house, while others request up to 10,000$ for the same purpose, it is important to understand what kind of house improvement they refer to. The loan expected for housing by West Bank clients starts from 1,500$ up to 70,000$. In spite of the heterogeneity of the answers, most of the responses were around 10,000$. In Gaza, the average amount would be 5,200$, while responses would be expressed in a more homogeneous way. The loan amount required for housing starts at 2,500$ up to 10,000$. The need expressed in terms of housing loan is most of the times 5,000$. 3.3.2.4 Car loans A loan for purchasing a car is also one of the key issues for clients in both Gaza and in the West Bank. Of the 25 FGDs held in of Gaza, in 21 FGDs the need for a loan to purchase a car was suggested. In the 14 FGDs in the West bank, 13 groups expressed it too. However of these 13 groups, 6 expected a loan in order to purchase a car and the other 7 expected a loan to buy a taxi. In Gaza, no particular mention was made regarding loans for taxis. This may require further clarifcation. It could simply have to do with the fact that a normal car might be able to operate as a taxi in Gaza without need for further investment. 33 The average loan expected difers also by region. The average loan expected to buy a car in Gaza would be of 4,333$ whereas it amounts to 9,833$ for clients from the West Bank. Clients who would want a loan in order to buy a taxi in the West Bank expected on average loans up to 21,714$. 3.3.2.5 Education loans In both Gaza and West Bank, having a loan for the education of the children seems to be of the major preoccupations of ASALAs clients. For West Bank clients, an education loan is their third priority, just after loans to improve the business and housing loans. Indeed, in the 14 focus groups held in this region, 9 focus groups expressed the need for capital to invest in the education of their children. The average amount expected is 2,323$. In Gaza, the need for an education loan is also an important issue but it is ranked lower in the frequency of answers. Thus, the education loan is the fourth purpose for a new loan after marriage loans, housing loans and car loans. However it is still one of the major issues according to the fact that in the 21 focus group in Gaza, 11 focus groups, more than 50% of the clients had expressed their need for an education loan. The estimation considered necessary for an education loan in Gaza is on average 809$. 3.3.2.6 Family loans The research found that women are important economic contributors within their families. 9 focus groups in West Bank and 13 in Gaza had expressed the need for a loan for their husband, their son or their father. This family loan is one of the highest loans expected. It is ranked 4th in terms of priority in both Gaza and West Bank. In other words, the family loan is as important as the education loan for clients in Gaza and nearly equal to education loans in West Bank. Clients had expressed many ways of using a family loan. Especially to buy a taxi for their husband or their son, also the use of the loan in order to built a house for their son, to buy tools and furniture for their husband, and to help their husband to start a new business. If the purpose for a loan is to help the diferent type of clients male relatives, the average amount expected is diferent between the two regions. In Gaza, the average loan expected is lower than the average one of the West Bank. Indeed, in the West Bank the clients want on average 11,825$ whereas for clients in Gaza, the amount is 2,958$. The gap between these two amounts can be linked to the existence of two very diferent economic contexts. In Gaza, the idea of helping their son and husband for ASALAs clients is limited to open a grocery for their husband or son, whereas in West Bank, the ideas for helping their mens family are more ambitious. Indeed, 34 some clients expected from the loan for men to buy a taxi, to open a computer shop for their son or to buy a truck, etc. 3.3.2.7 Health treatment loans Health treatment is another common need for clients in Gaza and in West Bank. Even if it is less expressed than the other needs, health treatment is a major preoccupation for clients. Some of them have even expressed that the purpose of such a loan would be to invest in pregnancy treatment. Even if health treatment is not the main priority for clients in terms of loan products it still concerns 45% of the focus groups participants. In Gaza, 10 focus groups had expressed the need health treatment loans and 6 in West Bank. The average loan considered necessary for clients in the West Bank is fve time more important than the average amount for clients in Gaza. Indeed, in Gaza the average amount for a health treatment loan is of 2,093$ whereas in the West Bank the average loan is 10, 166 $. However the West Bank average is somewhat biased, by one clients request for 43,000$, which may be considered exceptional, increasing the average fgure. Excluding this amount, the average loan wanted for health treatment in the West Bank amounts to 3,600$. 3.3.2.8. Loans to repay debts For clients in Gaza, another major purpose for a new loan is to pay back previous debts. 10 focus groups expressed the need to use a new loan to reimburse debts. In terms of priority it is as important as a health treatment loan. Clients for West Bank expressed also the need to reimburse debts with a new loan but only 3 focus groups mentioned this need. 3.3.2.9 Loans for investment in land For clients in West Bank, agriculture and the livestock constitute one of the main occupations of ASALAs clients, purchasing of land is also considered a priority investment for ASALA clients. 7 focus groups expressed the idea to invest in purchasing land with a new loan estimated on average at 21,500$. In Gaza only 3 focus groups expressed the need for a new loan to purchase land requesting an average a loan of15,000$ Figure 5 shows the main priorities for clients in terms of non fnancial services that ASALA could provide them with. Figure 5: Number of time suggested per 35 focus group held in Gaza and the West Bank 35 3.4.1 Training Training was ranked as the most important variable for running a successful business, closely followed by networking with other clients from ASALA. The needs for training expressed by FGDs participants, concerned issues closely related to their business such as: Management Computer skills Vocational training On-site counseling on how to improve their business, Their main focus was on acquiring skills and to have access to advice in order to succeed in their businesses. Capital by itself is considered insufcient. 3.4 Demand for non fnancial services This section presents fndings and analysis on the need for non fnancial or support services among ASALAs clients. During FGDs, clients were asked for their needs in terms services that they would expect from ASALA, beyond loans. The purpose of this was to determine where access to capital lies in terms of priorities for clients and how it fts with other development needs. This will provide a more holistic view of the needs of clients. The results from the focus group discussion highlighted the importance that clients give to several variables that afect the success of a business as training and coaching in management, marketing, vocational training, information and access to new commercial channels, etc. 36 Most clients imagine would want ASALA to provide them with services such as a vocational or entrepreneurship training (due to their lack of basic skills) such as sewing skills, handicraft skills, computer skills, language courses in English or Hebrew. This illustrates that clients demand a holistic approach to enterprise development. Terms such as develop, improve, manage were used regularly to convey the challenge behind this training. There was considerable discussion on the relative importance of formal training versus gaining practical experience through learning by doing. Indeed, several focus groups participants would want ASALA to have client advisors who would come to them in their businesses and advice them to improve their skills and the way they manage their business. Additionally ASALAs clients would want to work outside the home and demand support from ASALA to do so, for example: Establishing a special training centre at ASALA Establishing a beauty care centre at ASALA Establishing a computer training centre at ASALA. Some West Bank clients suggested also the possibility to travel outside the country for training courses in business management and marketing 3.4.2 Networking The ranking results show that the creation of 37 a network between ASALAs clients is one of the main inputs women feel they need to be successful. Networking was defned by clients as a way to rely on each other in order to improve their business and to fnd solutions to their problems through this channel According to the discussion, the need of such networking among ASALAs clients would allow a range of relationships between clients in order to exchange or to enrich their experiences. Clients recognized the key role of exchanging experiences between them as more than just providing training support. FGD participants also spoke about their need to feel supported by other ASALA clients through a community of clients, while conserving the option to ask for help and coaching from ASALA when needed. This indicates a need for enhanced dialogue between them on key issues for the success of their projects. Clients expressed several ideas to promote institutional networking and exchange. Some concrete ideas were suggested such as: Organizing regular client meetings A general assembly meeting for all ASALA clients Establishing an exhibition hall for ASALA clients products Developing ASALAs member services Developing card membership (allowing discounts and other advantages) Networking was also perceived as a way for increasing sales and marketing opportunities or even creating new job opportunities at a later stage for members. Ideas were suggested to create mechanisms that would allow ASALA members to sell to each other. Some participants argued that membership to ASALA could be linked to access to discounts in other companies (or even from each other). Additionally ASALA could also provide its clients with the list of good wholesalers and retailers addresses. According to clients, consistent support and coaching seems to be the aspect they want mainly from ASALA. However, clients clearly express as well that business skills are better acquired through practical exposure to running a business or a series of small businesses along with other clients considered as colleagues than by learning via training courses. The enormous challenge for ASALA is to fnd ways to truly address the needs and aspirations of its clients, through exercises such as this study and to fnd ways to turn all this valuable information into realities that address its clients needs. 38 39 t he research shows that ASALAs clients needs are multiple. Clients want new loans to improve their businesses, to start new ones, housing loans, loans to support their families, to pay for the education for their children, loans for consumption needs or to fnance their marriage. 4.1 Current loan products The adaptation of current loan procedures is an issue that was very present during FGDs. ASALAs clients have expressed their views on how current loan procedures procedures could be reviewed concerning a number of issues, the most important are: Loan amount: Group lending clients, particularly in Gaza, would want to have access larger loan amounts and individual loans. Guarantors: the guarantors issue has been highlighted by Individual loan clients in both Gaza and West Bank, suggesting an alternative methods could be applied such as accepting land or property as or checks (as other MFIs currently do) instead of guarantors. Group lending clients would want a more fexible procedure that would allow good clients to renew loans regardless or arrears in the group. Grace period: Group lending clients consider that the current grace period is not long enough. Particularly in Gaza, clients argue that the economic and the political situation need to be taken into account in order to adjust ASALAs policies in terms of grace period. 4.2 New loan products ASALAs clients have suggested in FGDs new ways of investing their loans in issues that afect their families such as housing, education, marriage or the support for male family members. This applies to clients in Both Gaza and West Bank. Besides this a number of 4. Recommendations on nancial product development and non nancial services 40 ideas have been proposed to improve current businesses. New Business loans: West Bank clients mainly request capital for opening or improving stores, boutiques or supermarkets. The average amount expected for this would be 16,187$. ASALA would require a strong analysis on the viability of such businesses before considering this sort of large long term loans as well as on the creditworthiness of clients and eventual guarantees. Marriage loans: Gaza clients expressed marriage as the main purpose for using a new loan from ASALA. The average amount expected was 4,987$. This sort of consumption loan could be considered for clients for the stabilizing factor it may have on the family, which maybe consider a social impact of such loans. However, detailed analysis on the repayment capacity of these clients would be required. Existing good clients might be the targets of such a loan product on a case by case basis. Housing loans: housing is a key issue for clients in both Gaza and West Bank. Loans for home improvement or home building or acquisition loans would average 12,414$in West Bank versus 5,200$ in Gaza. Unless ASALA could modify its current procedures in terms of guarantees (to accept the new property as a guarantee) this sort of lending ought to be out of its scope, particularly considering that other MFIs provide already housing loans in Palestine. 41 Health treatment loans: a common need for clients in Gaza and in West Bank. The average loan expected for clients in the West Bank is 3,600 $ versus 2,093$ in Gaza. This sort of product could be developed to target existing good clients, where repayment capacity allows as a new or parallel loan to their existing one, increasing the social impact of ASALA on its clients. Loans to repay debts: an issue mentioned by clients in Gaza. Such a loan could be developed in two ways. As a debt consolidation product for clients with access to individual lending that could beneft from lower interest costs in this way. Alternatively where amounts may be small it could be included as an additional amount to a normal business loan, where repayment capacity allows. Existing good clients might be the targets of such a loan product on a case by case basis. Loans for investment in land: Agriculture and the livestock constitute one of the main occupations of ASALAs clients in West Bank and access to land is an important issue for clients. The average loan expected for such purpose would be 21,500$ in west bank versus 15,000$ in Gaza. Such a loan product, unless ASALA could modify its current procedures in terms of guarantees (accepting land as a guarantee) ought to be out of ASALAs scope or considered only on a case by case basis. 4.3 Non fnancial services ASALAs clients have expressed in FGDs the need to receive training and increase networking and marketing opportunities in order to succeed in their businesses. 4.3.1 Client coaching An important issue highlighted by clients is that Car loans: car loans are also key issues for clients in both Gaza and in the West Bank, in terms of purchasing both cars and taxis. The average loan expected would be of 4,333$ in Gaza and 9,833$ in the West Bank. The average expected loan for purchasing a taxi in West Bank would be of 21,714$. Loans for car purchase if it means a business enhancement or an income generating activity as well as improving family mobility, may be a potential new product for ASALA, in particular if arrangements could be made with car dealers or leasing companies in Palestine. Existing good clients might be the targets of such a loan product on a case by case basis. Education loans: In both Gaza and West Bank, having a loan for the education of the children is a major worry for ASALAs clients. The average amount needed would be 2,323$ in west Bank versus 809$ in Gaza. This sort of product could be developed to target existing good clients, where repayment capacity allows as a new or parallel loan to their existing one. Family loans: women are important economic contributors as this research shows and their concern for their families is more than understandable and considered as important as access to education loans. The average loan expected for such purpose would be of 11,825$ in West Bank versus 2,958$ in Gaza. Family loans could be considered on a case by case basis by ASALA for a number of new businesses as a way to empower women within their families and support their dependents. This may require an important change in the policies of ASALA and a major shift in the orientation of the organization; however in the current context in Palestine this could mean an opportunity for ASALA to expand its outreach while benefting from the knowledge of its existing client base and increasing its impact on the households of its existing clients. 42 on-site training or coaching is preferable for clients to formal classroom training courses. The development of training materials and use of external trainers may be a cost that ASALA would not be able to absorb within its current cost structures. However coaching and networking may be activities that could be further developed by ASALA in a structured manner by reviewing its client monitoring processes. Coaching of clients may be an opportunity for ASALA to strengthen the role of its loan ofcers without incurring in additional costs. In addition ASALA could develop linkages with other programs existing in Palestine that provide vocational, business training or language courses for entrepreneurs. In addition a network of voluntary business coaches could be developed by ASALA by involving successful clients in these activities. When asked during FGDs, clients were prepared to cover part of the cost of such training. This contribution could be used to compensate voluntary coaches for their eforts. 4.3.2 Networking: The idea of networking has also been expressed by ASALAs clients in FGDs as a way to rely on each other in order to improve their business and to fnd solutions to their problems. Beyond coaching clients recognize the need to learn from each others experiences. A number of ideas were suggested to improve links among clients such as regular meetings or a client assembly. The organization of such meetings ought to 43 be explored by ASALA. Such activity may be channeled through existing group lending meetings for a number of clients. The experience from FGDs showed that clients were willing to attend meetings to improve the organization. Loan ofcers could organize periodically meetings in ASALAs ofces among its clients to facilitate such exchanges. Such meetings may allow ASALAs members to sell to each other or develop business relationships. In terms of marketing opportunities, ASALA could partner with other organizations to organize exhibitions of ASALA clients products, enabling clients to sell their products and promote them to new customers. Through the recruitment of a dedicated staf, ASALA could also develop new ways of increasing the beneft of being an ASALA member to attract new clients. The ideas proposed by clients such as negotiating discounts at wholesalers or retailers for ASALA members are another example of partnership with other organizations (the private sector in particular) that ASALA could develop. Such schemes are currently developed by MFIs worldwide. Involving ASALAs board members in such activities, where possible, may facilitate the creation of such linkages. In addition information could be provided by loan ofcers to clients on which wholesalers or retailers exist in the area. According to clients, support and coaching seems to be the aspect they miss nowadays from ASALA. The challenge for ASALA is to fnd new ways to address the needs of its clients. Exercises such as this research ought to be the starting point for the development of such activities. 4.4 Programming recommendations The success of the activities proposed in this research in terms of development of new products and services for ASALA depends on two key factors, the commitment of the organization and the external support it may receive. In terms of the internal eforts that ASALA may do, a number of issues are critical: Involving board members in the revision and adaptation of current products Developing new loan products and services to better serve its existing client base Monitor client needs regularly through loan ofcers and branch managers Developing the capacities of its staf to provide coaching to clients and non fnancial services or raise fund for a specialized separate unit for Business Development & Networking for the women entrepreneurs. Involving successful clients in the coaching process in diferent areas New microfnance products could include small, short-term consumption loans, educational loans, and emergency loans with fexible repayment periods. As mentioned previously in this research, clients demand is diverse and it difers between clients from Gaza and West Bank. What is appropriate to one group of clients will not be appropriate for another. Donors can support demand studies and product development and innovation initiatives. Such support could allow ASALA to launch and test training and counseling activities directed to its clients to prepare the launch of new non- fnancial microfnance services at a later stage. 44 Training activities may involve fnancial literacy training, training on marketing products, business development services, networking and personal skills development. ASALA should develop non fnancial services in order to help its clients develop sustainable businesses. The design of such programs however should be carefully monitored to ensure that the fnancial sustainability of ASALA is not compromised. In order for ASALA to develop non-fnancial services in a large scale, a separate unit should be created with its own staf and fnancial resources for the development and management of such services. The development of non- fnancial services should not compromise the sustainability of ASALAs loan program so it needs to be funded separately from revolving fund operations. In terms of the external factors that afect ASALAs a number of issues may be critical in ASALAs future development. Access to long term funding to support the development of new products Donor support to develop internal capacity Donor support to develop formal non- fnancial services such as formal training Changes in current legislation Donor support Donor support will be critical in the future for ASALA to reach its goals of outreach, product diversifcation and increase impact. Donors may use a number of instruments to support developments in a number of areas. Supporting ASALA with technical assistance and access to long term capital would be an efective way to increase the outreach and quality of its microfnance products in current underserved areas of Palestine. Funding programs: a donor funded a special loan fund for new products (such as education loans or emergency loans with longer repayment terms for women in difcult situations, etc) could be the mechanism to support outreach and product diversifcation for ASALA as well as other Palestinian Microfnance organizations. Alternatively a loan guarantee scheme for such new product could also be used. Technical assistance: capacity building in the development of new programs, training for women entrepreneurs & loan ofcers in coaching and counseling of clients as well as vocational trainings for microentrepreneurs are areas in which donors can have an immediate impact in improving the quality and diversity of non-fnancial services for Palestinian microentrepreneurs Advocacy: involvement of donors in the improvement of regulation of MFIs may be another of direct impact for donors in their support to ASALA as well as other Palestinian MFIs. Changes in regulation allowing collection of savings may have a dramatic impact in improving the fnancial sustainability of MFIs as well as on product diversifcation and outreach to clients. Finally supporting ASALAs in the growth and diversifcation of its portfolio will allow not only increase the number of women benefting from microfnance services in Palestine but also ensuring its fnancial sustainability. ASALAs clients and its families need access to new fnancial and non-fnancial services from ASALA to improve their businesses their skills and living condition of their families and to face the difcult context in which they work and live in Palestine. 45 ASALAs responsibility is to listen to their needs and grow as an organization to meet their demands. ASALAs challenge in the next years will be to undertake the necessary eforts to turn its clients needs into realities. Donor support will be critical in order for ASALA to increase its loan capital and succeed in its eforts. 46 Region Address Phone Fax E-mail Ramallah and El Bireh Al Irsal Area , Saber Tawil Building, next to the Ministry of Tourism, Mail Address Ramallah P.O Box 2316 02/2400532 02/2409460 02/2402433 asala@palnet.com shireen@asala-pal.org mary@asala-pal.org Gaza EL Rimal, Al Jala and Wihda streets Intersection , Bseiso Building, P.O Box 5099 08/2843778 08/2843778 asala-g@palnet.com samy@asala-pal.org Deir El Balah By Abou Saleem Mosque, Maher Al Masri Building 08-2538240 08-2538240 asala-g@palnet.com samy@asala-pal.org Beit Hanoun Main Street, Across the UN school, Sultan Al Masri Building 08-2456370 08-2456370 asala-g@palnet.com samy@asala-pal.orm El Nuseirat Main Street, Maher Al Tabba Building 08-2551240 08-2551240 asala-g@palnet.com samy@asala-pal.org Jabalia Main Street, Atallah Abou Jalala Building 08-2450650 08-2450650 asala-g@palnet.com samy@asala-pal.or Nablus Aloul and Abu Salha Build-- ing, 3rd foor 09-2398175 09-2398117 Beruit_2@hotmail.com Bethlehem Jerusalem Hebron St, Aabda building, Above Al Mashriq insurance company 02-2753919 02-2753919 ihassasneh@yahoo.com Jenin Yahya Ayash circle, Al Basateen Building, near the Magistrates Court 04-2505480 04-2505480 Majd-majdoline@yahoo.com Asala Offces and Braches 47 48