By Ibrahim Abu Kamesh
This story originally appeared in Al Haya Al-Iqtisadeya.
PHOTO: Beauty salon owner and Ryada loan client.
Ryada is currently celebrating its 17th year anniversary. Ryada started its operations in Gaza in 1995, and as a result of its accomplishments, won a grant from USAID, leading to its expansion in the West Bank. Ryada now covers the entirety of the Palestinian territories.
According to the General Manager of Ryada, Alaa Sisalem, the institution has disbursed 23,000 loans in the West Bank and Gaza since its inception, which equates to $84 million. Ryada has also succeeded in improving homes for 15,000 families in addition to developing businesses for 7,500 families. Loans from Ryada have also resulted in both direct and indirect job creation. They found that nearly 42% of every day dollar spent on the housing sector directly leads to both direct and indirect job creation from the financing operations. Currently there are 5,033 active loans and a portfolio of $14.3 million. Interest rates vary between 8-18%, while sometimes reaching as high as 24%.
Sisalem says that Ryada has been successful in maintaining solid capital because of its abilities to disburse and collect loans, but also important is Ryada’s focus on social development and helping the marginalized and poor segments of the population. Despite many obstacles Ryada has encountered, they have witnessed positive change for the marginalized segment through the provision of home improvement loans, businesses development loans, as well as personal loans.
Ryada offers three loan products: home improvement loans, with a max amount of $15,000 , business loans which range from $1000-$2000 and consumer loans with a max of $3,000 that covers things like tuition, health expenses or weddings.
Current portfolio value is divided 40% in Gaza and 60% in the West Bank. The current portfolio in Gaza is $4.8 million and $9.4 million in the West Bank. On an annual basis, Ryada has spent between $12-14 million on small and micro loans. As of three years ago, Ryada has succeeded in covering its expenses and no longer relies on grants, achieving operational sustainability.
Ryada’s current PAR>30 (portfolio in arrears less than 30 days) is at 1.5% and fluctuates between this number and 2% despite all the non traditional obstacles it faces; operational self-sufficiency ranges between 115-135%; rate of return on portfolio is about 20%. Ryada transitioned from a program guided by donor countries to a program that is driven by the demands of the market. Its internal changes in both structure and activities are part of its professional development.
Future plans for Ryada:
In the next three years Ryada would like to register as a for-profit company and also wishes to increase its portfolio to $24 million and number of active loans to 12,000. It also seeks to open new branches to cover the entirety of the West Bank and Gaza, and to increase its focus on its target groups in its role of providing financial services. Sisalem stressed the point that it has succeeded in its lending activities in the face of obstacles by continuously selecting good customers. This is done through a monitoring process until the loan has been paid off, and by focusing on the ability of the borrower to repay the loan, and less on their collateral. Ryada’s plans also including launching new products which are based on professional studies on the market and its needs; diversifying collateral and focusing less on salaries; raising its bad debt reserve ratio and trying to establish a reserve for obstacles.