Support the development of microfinance in Israel in order to fight poverty and financial exclusion.
CONTACT USEconomic development in Israel is rooted in dynamic high-tech and biotech sectors, a high skilled workforce and an expanding population, three major assets that have allowed Israel to become very competitive in niche markets and high value products. In 2010, Israel joined the OECD, thereby achieving international recognition of its economic capabilities.However, despite this glowing outlook, Israel was ranked the second poorest member with the widest social gaps.
About 1,9 million or 25% of Israelis live below the poverty line (defined as USD 1,300/month for a family of 4 by the National Insurance Institute) and are twice as poor as the average person in OECD member states. While two thirds of them are employed, their low-income, combined with other difficulties, prevent them from providing for themselves and their children, clearly revealing that employment alone is not a way out of poverty. These disturbing facts are magnified in the case of low-income women in the periphery, new immigrants, young adults and Arabs, their attempts to provide for themselves and their children being further limited by little or no education, difficulty commuting and the extremely centralized nature of the Israeli banking system that practically eliminates the possibility of these target groups receiving reasonably termed credit. PlaNet Finance Israel's mandate is to contribute to the fight against poverty in the country by increasing access to adapted financial services for disadvantaged populations, and improving existing solutions to tackle poverty in Israel.
One of the first actions undertaken by PlaNet Finance before the establishment in 2007 of its affiliate office, was the carrying out of the first Feasibility Study about the potential of microfinance in Israel. The comprehensive study, including an analysis of the offer by the financial and banking sector and the demand from potential and existing micro-entrepreneurs, showed the great potential for a microfinance sector in Israel. Indeed, two leading commercial banks share 60% of the banking market. And while 97% of all businesses in Israel are micro- and small businesses, banks offer few or no products and services to those businesses. In fact even small businesses defined with an annual turnover up to US$ 2 million, account for only 1% of 79% of all credits allocated to the private sector, micro businesses being entirely unserved. As such, the present situation prevents underprivileged populations from receiving loans which could help them start an income-generating activity or expand existing microbusinesses. With an estimated 280,000 micro-entrepreneurs today, a majority of which operate self-financed microentreprises, there is a significant need for adequate financial services. PlaNet Finance Israel is fully committed to raise awareness on these issues and to promote adapted solutions for the creation and sustainability of Israeli microentrepreneurship.
In this context, microfinance clearly stands as an adequate and sustainable solution for providing adapted financial products, services and education to the large pool of micro-entrepreneurs excluded from the banking sector, thus helping to advance economic growth and sustainability.