There is no longer a need nowadays to introduce microfinance after this effective developmental economic mechanism has become a part of many economies and proved itself as one of the successful means of minimizing poverty. The world today is in more need to apply this mechanism on a wider scale so that the poor may harvest the fruits of microfinancing. Microfinancing targets the poorest segments of people who live on less than one dollar a day. It is these poor segments of people who are targeted by the Millennium Development Goals (MDGs), which call for reducing the poverty rate by 50% by 2015. Those poor people have extremely limited or even no opportunities to borrow from normal banks, because of the guarantees these banks require. Whether individuals or groups, they need somebody to provide them with the necessary skills and funds to start an incomegenerating and productive project in order to develop and improve their local community. Hence, there is need for institutions which lend this segment and finance their projects. No doubt that non-financial services are of prime importance for small and micro enterprises which target the poor, but the issue of financing remains the cornerstone which supports these enterprises. Hence the reasons and motives behind the establishment of (Banks for the Poor) in the Arab World stem from a number of reasons and motives which could be summed up as follows: * Small and microfinancing have become a pressing need and a necessity imposed by socio-economic conditions in the Arab world. * There is a big need for small credit in the developing world in general, and in the Arab World in particular, as dictated by the prevailing socio-economic conditions. * Microfinance has become an effective developmental tool, acknowledged all over the world as a means to alleviate poverty, that is capable of reaching out to the poorest of the poor and improve their living standards, create work opportunities for them, and stimulate economic growth.

* The formal financial sector has neglected one half of the population of the developing countries and offered them much less than what is required.

* International donor agencies are paying more attention to microfinance, along with the growing need to acknowledging its advantages and great potential benefits.

* Microfinance has become an integral part of any general development strategy, as this type of financing responds to the requirements of shifting towards developing the private sector, activating the role played by civil society, and minimizing the interference of governments in economic activities

  Prince Talal bin Abdulaziz, President of AGFUND called the first bank for the poor in the Arab world  (National Bank for small projects financing in Jordan)

AGFUND Banks

AGFUND has adopted its own pioneering initiative of setting up banks for the poor in the Arab World out of its solid and invariable belief in the efficiency of small and microfinance in fighting poverty and alleviating its adverse effects on poor communities in the Arab countries, in addition to raising the standard of living of the poor people, so as to become a productive force, capable of self-dependence and able to contribute to the support of their communities. The initiative, led by His Royal Highness, Prince Talal bin Abdul Aziz, President of AGFUND, to set up banks for the poor is the outcome of an extensive development experience that exceeds for 25 years, during which AGFUND has dealt with various segments of the society and spotted their suffering. On the other hand, the initiative reflects the fact that AGFUND is keeping abreast with developments in the concepts pertinent to the sustainability of the development process. After crystallization of the efforts of AGFUND in the field of combating poverty in the form of the Banks for the Poor Project in the Arab world, and establishment of 5 banks and establishments for microfinance In Jordan (National Bank for Small Projects Financing), Yemen (Al-Amal Microfinance Bank), Syria (Ibda Microfinance Bank), Egypt (Ibda Microfinance establishment) and Bahrain (Ibda Microfinance Bank), the project led to a multi-faceted initiative including the following: 

  - Seeking constantly to link microfinance to small and medium-size financing to lift small and micro enterprises and encourage their growth and development.

- Activating the role of governments in providing an enabling environment for small and micro enterprises, and providing nonfinancial services (preparation, technical support, linking financial institutions together).

- Establishing a technical support unit to the

Banks of the Poor - Working towards fostering the culture of microfinance, and preparing institutions to adopt it and apply the best practices in this area.

 - Exploring pioneering projects through AGFUND World Prize for Development - AGFUND credit facilities

  Best practices

Banks established by AGFUND are working at a very high level of efficiency and are achieving records in accessing best practices. A prominent example is the National Bank for Financing Small Projects in Jordan. It is ranked as the third lending firm in Jordan in terms of the volume of the credit portfolio and the number of clients, although the bank has been in the market for only three years compared to the lending firms operating in Jordan (10 - 12 years).