Good luck collecting

You might just have an "accident" once the amounts pile up. Wouldn't recommend it.

Yes, there are a lot of under-the-table loans here that exploit people without bank access

As a foreigner, I think it's a very bad idea, for many reasons. Say I asked you this: I live outside the UAE and someone told me making small loans to people in the UAE is a good business. What would you advise me?

High risk. In the Philippines this is called 5-6, and it's very illegal.

I'd go with one of the more traditional business models. Milk tea shop Sari-sari store Water refilling station Late-night rice porridge stand Coffee shop I'm sure your area needs at least one of these. Loan-sharking is not, and shouldn't be, your cup of milk tea.