ImpactAlpha, May 1 – Calvert Impact Capital’s three-year loan is going to Vitas Palestine, a 24-year-old microfinance institution that offers loans for small businesses and housing improvements for low-income Palestinians in the West Bank and Gaza.
Vitas Palestine is part of Vitas Group, a for-profit microfinance enterprise launched and owned by humanitarian organization Global Communities, which has been part of Calvert’s portfolio for a decade, and was set to repay its original $1 million loan.
The new investment comes amid intensifying violence in Gaza. Global Communities’ Richard Shumann acknowledges the challenges of running a microfinance business in a conflict zone. “Gaza is an extremely difficult environment. Even when it’s not violent, there’s economic disruption,” he tells ImpactAlpha.
Sixty percent of Vitas Palestine’s lending activity is housing-related, to address “major repairs after violent conflict” as well as more typical projects like general repairs or home expansion.
Investing beyond the headlines
Shumann says conflict doesn’t entirely define Vitas Palestine’s business. “There have been times where there’s been violent conflict and loans have been delayed,” he says. “But you have to get beyond the headlines. There are people getting on, trying to run their businesses and look after their families. We still have the day-to-day business that needs to get done.”
In addition to Palestine, Vitas has operations in Jordan, Lebanon, Iraq and Romania. It has disbursed $2.2 billion to 600,000 customers in the last 10 years and says it has an annual default rate of less than 2%.
Most of Calvert’s housing-related lending is focused in the U.S. Re-upping its support for Global Communities provided an opportunity to expand its housing portfolio to other geographies in need.
“These are underserved communities and underserved populations that need access to credit,” Calvert’s Songbae Lee and Jeffrey Dekro told ImpactAlpha. “This is what Calvert does—get capital into these communities.”