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DAMAN is a credit guarantee fund offered by SIDI and created jointly with two Palestinian MFIs, ACAD Finance and ASALA, to cover the inherent risks of the political situation in the Palestinian territories due to the military occupation. Its purpose is to enable the beneficiary microfinance institutions (ACAD F, ASALA, and REEF) to develop their lending activities for disadvantaged populations, particularly in areas under military administration (Zone C) and in the Gaza Strip. DAMAN benefits from co-financing from the Luxembourg Ministry of Foreign Affairs through the NGO Paix Juste.
Palestine is a territory divided and fragmented by the presence and growth of illegal Israeli settlements (according to international law), where the Palestinian State controls only 18% of the surface area, with the remainder administered by Israeli authorities. The simmering conflict flares up regularly (intifadas) but experienced a brutal explosion in Gaza following the deadly Hamas attack in October 2023 and the Israeli government’s response of annihilation of the territory and its population. DAMAN mobilized to cover part of the Gaza portfolio for the three beneficiary MFIs, given the impossibility of recovering the loans made.
The existence of a guarantee fund allows Microfinance Institutions to continue taking risks and lending to clients, knowing that in the event of political conflicts that regularly disrupt the lives of the Palestinian population (wars, frequent daily military operations, and land confiscations that affect people’s ability to manage small businesses and repay their obligations), the guarantee fund can be tapped to reimburse the MFI. Furthermore, DAMAN, which brings together the three “social” MFIs in Palestine, promotes a common social and environmental performance approach within its members.
