Researching Economic Development through Access to Finance

Published 11/06/2022 in Scholar Travel Stipend

Written by Namra Zulfiqar | 11/06/2022

Living in the U.S., I, as well as many of my peers, see other countries, especially those outside of North America and Europe as extremely foreign, cultures that are almost incompatible with our own. Spending two months not simply attending a study abroad program, but working and living as an adult in a country that seemed worlds away from my own made me realize how alike we all are to one another regardless of the thousands of miles and arbitrary borders that separate us from one another.

For over two months in the summer of 2019, I interned at the Middle East Investment Initiative’s office in Tunis. a nonprofit organization dedicated to facilitating and increasing access to finance in the Middle East and North Africa region. While interning and completing a research project there, I’ve also been developing a case study for the Yale School of Management through the class Social Enterprise in Developing Economies. It was through this class that this internship was initially organized, as our class from the Spring split up into five teams to travel to different countries in Africa, studying how different nonprofits and social enterprises were working to alleviate issues preventing people from living happy and healthy lives. While other locations focused on issues such as access to education or public health, I applied to work at the Middle East Investment Initiative because I’d like to work in international economic development in the future, and access to income and credit is a crucial element of stable development in many of these countries.

At the Middle East Investment Initiative (MEII), I, along with two other Yale interns and local Tunisian interns, worked on a research project ascertaining the need for different financial inclusion programs in Tunis and its surrounding regions. After field testing and optimizing a questionnaire, we interviewed small and medium enterprises (SMEs) in French (which I didn’t know, but picked up!) and Arabic. Before leaving, we used R to begin analyzing the collected data to see what specific elements of financial interactions were the most difficult and stressful for business owners and entrepreneurs to undergo when accessing credit. Analysis of these interactions will allow us to create a comprehensive report that will aid MEII to better curate its programs moving forward.

This research and following report are especially important for the development of the Sharaka Fund, the Middle East Investment Initiative’s newest pillar of activity. The Sharaka Fund will allow MEII to directly invest in businesses using a hybrid private equity and standard loan model instead of merely acting as a financial intermediary, which was its original role. This direct investment fund will allow MEII to lead by example, prompting other financial institutions and banks in the region to invest in these small and medium enterprises that it currently deems too risky. This direct investment fund also seeks to fill the Missing Middle funding gap, the gap observed in funding for business that are too small for traditional lending paths and too large for micro-finance institutions.

The interviews we conducted throughout this research study have been interesting opportunities for us to interact with local business owners and hear their individual stories and struggles of creating their own business. From pizza shops to tech startups to hairdressers, all the businesses we interviewed faced immense challenges through their life cycle. These interviews allowed us to truly understand both the micro and macro barriers to successful economic development in Tunisia, more than simply reading an organization’s report would have.

I learned how many pillars of successful economic activity we take for granted in the United States. While financial literacy and access to credit is assumed in the United States, it is a huge issue in developing countries such as Tunisia. That, coupled with an unstable and untrustworthy banking sector, makes stable economic development an almost impossible task.

Working with an organization that is taking on this impossible task helped me sharpen my future career goals as well. Listening to how difficult it was for so many businesses to access the capital needed to create a stable business and stable life for themselves and their families has helped me realize that in the future, I’d like to work in a field that targets global poverty alleviation and economic development. The ability to have a stable income that allows one to not only fulfill basic human needs like food and shelter but also to find happiness should be a universal human right. I’d like to work towards ensuring that it is one for everyone.

Much of our learning has also taken place outside of the workplace as one of our colleagues at MEII invited us to his home in Morneg, a small village outside of Tunis. Before traveling to the village, we explored the Medina, walking through The Souk, a marketplace where everything from fresh pastries to Adidas sneakers were being sold, and visiting the Zitouna Mosque, an important landmark in Tunisian and Islamic history. Upon arrival at our colleague’s home in Morneg, we were treated to a delicious homemade Tunisian meal, consisting of couscous, fish, and egg rolls, followed by fresh fruit and tea with almonds. His parents also taught us how to break open the almonds’ hard outside shell to access the fresh almond inside.

Over tea, our colleague also described the research he has been doing on the impact of the Dinar - Euro exchange rate on economic development, especially for businesses that are importing much of their stock. Sitting there sipping tea, simultaneously absorbing Tunisian culture and learning about the role of currency exchange rates on business development, I realized how lucky I was to have been given the opportunity to have this experience.

Through the internship, I was also able to meet many local Tunisians our age who adopted me into their social circles, and peek into the younger side of Tunisia. After a while, Tunisia didn’t feel like a foreign country I was just spending a summer in, it felt like home. Writing this reflection a few weeks after returning to the U.S., I miss Tunisia quite a bit, and the memories I made are memories I will cherish for a long time. I am extremely grateful for the funding that made this trip possible.