By some estimates, the conflict in Lebanon destroyed infrastructure worth $3.6 billion in 2006. The real cost is hard to determine, given the lives lost, displaced people, destruction of homes and businesses, and the loss of revenue as foreign investors hesitate to invest in the country. IFC, an active investor in Lebanon since 1956, is committed to helping the country recover and maintain its position as one the region’s most important business and banking centers.
In January 2007, when the international community met in Paris to garner donor support to help rebuild Lebanon, IFC pledged up to $275 million in financing and agreed to lead the World Bank Group’s efforts in the country’s private sector. In addition to IFC's pledges, the World Bank pledged $700 million in financing from its International Bank for Reconstruction and Development.
IFC’s help in the reconstruction effort focuses on private banking institutions. Since the end of the conflict, IFC has signed projects worth $135 million, including the first four transactions in a package of support to banks, which will increase access to finance for private sector companies and individuals who were adversely affected by the conflict.
As part of his trip to Lebanon in March 2007, Lars Thunell, IFC’s Executive Vice President and CEO, signed agreements to provide financing to Blom Bank, the country’s largest bank; Fransabank, another of the country's top ten banks; and Kafalat, a Lebanese company that helps small and medium enterprises access commercial bank funding through a guarantee program. The signings marked one of the first arrivals of funds honoring the pledges made at the Paris donor conference. Similar financing facilities in favor of two more banks and a retail group were later signed in June 2007.
IFC’s investment will help Blom Bank reach a large percentage of the population through corporate, retail, and private banking. The investment in Fransabank will help it serve new and existing clients’ postconflict needs. Together, Blom Bank and Fransabank have nearly 150 branches and thousands of employees throughout Lebanon. The impact of IFC’s investments will be far-reaching across the country, playing a major role in increasing businesses’ access to financing.
In addition, IFC is working with the Lebanese government and business community to improve the country’s investment climate. IFC and the Ministry of Economy and Trade have agreed to overhaul and simplify the business registration process. IFC Advisory Services in the Middle East and North Africa — PEP-MENA is also working on a corporate governance program and examining other areas where the Corporation can support government reform efforts.
Through its advisory services, IFC will help Kafalat increase its capacity to process applications for financing. IFC will also assist in developing a medium-range business plan for the company, which is drawing on trust fund support from the World Bank.
