Proparco and the European Union Renew Agreement with Bank of Palestine to Finance Small and Medium Enterprises, Worth $9.2 Million
February 13, 2023, Bank of Palestine and Proparco, the investment arm of the French Development Agency (AFD), with funding from the European Union, signed a renewed agreement to support and finance small and medium enterprises through the ARIZ MENA portfolio, valued at $9.2 million.
Attending the signing of the agreement on Monday, January 30, 2023, at the headquarters of the Bank of Palestine in Ramallah, were the Governor of the Palestinian Monetary Authority Dr. Firas Milhem, Mr. Hashim Shawa, Chairman of the Board of Bank of Palestine, Ms. Francoise Lombard, CEO of Proparco, Ms. Sara Mursi, Regional Director for the Middle East at Proparco, Mr. Sven Kon von Burgsdorf, EU Representative in Palestine, Mr. Mahmoud Shawa, General Manager of Bank of Palestine, several officials and managers from both parties.
This is the fifth facility extended by Proparco in favor of the Bank of Palestine, in line with the agreement between the EU and AFD Group to expand financial facilities into the MENA region. Thus, this project has a direct contribution to economic and community development through the empowerment of private sector institutions in Palestine by targeting those underserved sectors in microlending to micro, small, and medium enterprises, green projects, startups under 3 years, women-led businesses, and businesses led by youth. It is focused on agriculture, health, education, tourism, and digital industries for financial inclusion, especially because after the COVID-19 pandemic, it was quite tricky for many of these kinds of businesses to secure funding and loans.
Francoise Lombard, Chief Executive Officer of Proparco, expressed: "I am particularly pleased to continue through this project Proparco's successful collaboration with Bank of Palestine by supporting the Palestinian private sector in key sectors with crucial impact on local development.".
Sven Kuhn von Burgsdorff, the EU Representative to Palestine added: "We are pleased to contribute to this important investment with our partners Proparco and Bank of Palestine through our guarantees, helping small and medium enterprises manage their business commitments, absorb high risks where needed, and unleash investment which contributes to development and job creation.". Such investments reflect our commitment to fostering sustainable economic development in Palestine by building a strong, independent economy that the future state of Palestine will desperately need.
Mr. Hashim Shawa, Chairman of the Board of Bank of Palestine, said he is proud of the strategic partnership between Proparco and the European Union, key partners and investors in the bank for more than a decade, contributing to the development of the sustainable economic cycle. With you, together, we were able to bring some positivity in the community and to the economy by lending to SMEs, and green financing; it also placed huge emphases on sustainability and financial inclusions," he said.
Mr. Mahmoud Shawa, General Manager, Bank of Palestine, "Complimented the continuous efforts exerted by AFD Group and the European Union in supporting the Palestinian private sector for their pioneering role in the support of economic and social development and added that they look forward to future cooperation with the European Union, AFD, and Proparco in the field of financial intermediation.".
The AFD Group is funding this project to target countries in the MENA region in support of financial inclusion and to finance small and medium enterprises in seven Mediterranean countries: Algeria, Egypt, Jordan, Lebanon, Morocco, Palestine, and Tunisia. The objective is to offer financing solutions in local currency, performance incentives, and technical assistance to facilitate credit access and grants to enterprises that have a high developmental impact.
In January 2022, Proparco and the EU signed a $30 million agreement with Bank of Palestine to provide green loans under the second green financing program SUNREF II.
Bank of Palestine:
Bank of Palestine is the largest financial institution in Palestine and seeks to raise the bar on the level of banking services in Palestine, and live up to the developments in the global banking sector. It was established to meet the financial needs of various Palestinian sectors. The bank is one of the leading players in supporting the Palestinian economy, including small and medium enterprises, as part of its strategy. It contributes to the promotion of green financing, investment in technology and digitalization, and programs and services for micro, small, and medium enterprises, as well as people with low incomes, workers, beneficiaries of aid programs, and other segments that are part of its comprehensive sustainability strategy.
Proparco:
Proparco is the private sector financing arm of the AFD Group, working for over 40 years to enhance sustainable economic, social, and environmental development. It grants financing and support to companies and financial institutions in Africa, Asia, Latin America, and the Middle East to empower priority development sectors that include infrastructure-essentially renewable energy-agri-food businesses, financial institutions, and health and education.
EU External Investment Plan in the MENA Region:
The External Investment Plan of the European Union is quite an ambitious investment plan for partner countries. A special European-Palestinian Investment Platform was then created, aimed at strengthening mutual policy dialogue and better identifying and coordinating the investment opportunities arising for Palestine from this Plan.
The plan incentivizes a group of selected financial institutions to push their lending activities to SMEs to minimize their risk exposure. The risk-sharing facility in the MENA region includes financial instruments such as credit lines and technical assistance in expanding the portfolio of financial institutions for SMEs.