IFC uses its financial strength and global expertise to provide investment and advisory services where they are needed most, with an emphasis on countries affected by conflict and those eligible for public sector loans from the World Bank's International Development Association. In the Middle East and North Africa, this focus includes Afghanistan, Lebanon, Pakistan, the West Bank and Gaza, and Yemen.
To help the private sector play a greater role in improving people’s lives, our strategy in these markets is to:
- Support local entrepreneurs who can become role models of development
- Increase the private sector's role as a key engine for growth and job creation
- Finance precedent-setting transactions that can serve as a model for others
The West Bank and Gaza: A Special Case
During his first official visit to the West Bank this week, IFC Executive Vice President and CEO Lars Thunell will underscore IFC's commitment to the West Bank and Gaza.
IFC has been active in the West Bank and Gaza since 1996, investing in companies and providing advisory services to the private sector to support entrepreneurs and small companies.
Results |
We recently supported olive oil growers to build their technical abilities for tapping export markets and improving their supply chains.
- Through IFC's support, the Near East Industries and Trade, which is part of the Anabtawi Group, became the first olive oil company in the West Bank and the Middle East to acquire the ISO 22000 certification.
- This standard ensures food safety along the value chain, up to final consumption. It is also used as a marketing tool and a seal of commitment to excellence while penetrating new export markets.
- Two other firms are in the process of acquiring this certification.
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Despite constraints on investment climate, IFC is evaluating investment opportunities and advisory services in support of such sectors as leasing, trade, and housing finance.
Supporting Local Entrepreneurs through Microfinance
Neama Elwan is a 55-year old widow living in Sinjil, a village north of Jerusalem. Since May 2007, she has been a customer of the Al Rafah Microfinance Bank, an existing IFC partner. Its loans have enabled her and nine other women to earn regular incomes and start an embroidery business that markets its products in local markets to friends and relatives in the United States.
With additional financing from the bank, Elwan and others have formed the first women entrepreneurs group in their village, operating smaller businesses that cater to the community. In addition to an embroidery business, they have a grocery business and sell soap made from olive oil. Elwan is also considering another loan to buy her son a taxi that would further increase their family income.
Thunell remarked, "Access to finance is one of the biggest hurdles facing entrepreneurs. Because of the small size of the loans they need and the associated risks, these groups also present a challenge to the banking industry—and IFC can help bridge this gap."
Increasing Private Sector Participation
A recent survey funded by IFC Advisory Services in the Middle East and North Africa – PEP-MENA – estimates the demand for microlending in the West Bank and Gaza at 190,000 clients, with a market size of $157 million. The Al-Rafah Bank started its microfinance lending activities in May 2006, and IFC has helped the bank expand and strengthen its operational strategy and business plan. In spite of the challenging political situation, the bank has reached more than 2,900 active borrowers, with an average loan size of about $3,700. A third of the loans went to women.
IFC's partnership with Al Rafah Microfinance Bank demonstrates the viability of commercial microfinance in reducing poverty and improving lives.
Supporting Model Transactions
Al Rafah Microfinace Bank has signed an agreement during Thunell's visit that makes it the first bank in the West Bank and Gaza to join the IFC Global Trade Finance Program as an issuing bank. The program promotes trade with emerging markets worldwide by supporting flows of goods and services to and from developing countries. IFC provides guarantee coverage of bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks.
Thunell also signed a cooperation agreement to partner with the Capital Markets Authority on developing a leasing market. IFC PEP-MENA will work with the private sector to promote financial leasing in the West Bank and Gaza through a combination of legislative reform, awareness-raising events, capacity-building activities, and investments in the sector.
 IFC's assistance in the West Bank and Gaza will be implemented through its existing leasing program, which has similar activities underway in Afghanistan, Jordan, and Yemen. Financial leasing is an alternative to traditional bank credit, which is often more suitable for SMEs seeking to finance fixed assets. Leasing is particularly advantageous in countries where enforcement of collateral rights is weak. An active leasing market will increase access to finance for SMEs, helping stimulate economic growth and job creation. |
"The strong entrepreneurial spirit of the Palestinian people is a tremendous asset. Small businesses are the backbone of any economy. They create opportunities and employ more people than any other sector. Supporting them is particularly important given the high unemployment rates in the West Bank and Gaza," Thunell said.
Despite constraints on the investment climate in the West Bank and Gaza, IFC will continue to seek opportunities for viable investments and advisory services in such sectors as leasing, trade, and housing finance.
IFC's Track Record |
Recent examples of IFC's involvement in IDA countries and conflict-affected markets:
- Afghanistan: About $60 million in investments in banking, tourism, and telecommunications. We are also supporting management training activities and the nascent leasing and housing finance industries.
- Lebanon: Up to $280 million to be invested in Lebanon following the 2006 war. We have provided advice on investment climate reform, greater private sector participation in the power sector, and other priority areas.
- Pakistan: $286 million in investments in fiscal year 2007 to increase the private sector’s role in infrastructure, housing finance, and oil and gas, among other sectors.
- Yemen: Since 2005, IFC has increased its portfolio in Yemen from around $9 million to $132 million at end of 2007. Investments are in such sectors as general manufacturing, financial markets and health care. We are advising on the growth of private investment in mining, microfinance, leasing, and other key industries.
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For more information contact:
Riham Mustafa
IFC Communications Analyst
Phone: +202 2 461 9150 ext. 306
E-mail:
rmustafa@ifc.org
Published on February 12, 2008
