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Thought Leadership

An in-depth look at the development challenges facing 

the region and how they can be tackled.



Islamic Banking Oppourtunities in the Middle East and North Africa 


There is a huge demand for Islamic products by small and medium enterprises in the Middle East and North Africa region and, according to this study, approximately 32 percent of such businesses remain excluded from the formal banking sector because of a lack of Shariah-compliant products.  The study reveals that, there is a potential gap of $8.63 billion to $13.20 billion for Islamic SME financing within un-served and underserved SMEs categories, with a corresponding deposit potential of $9.71 billion to $15.05 billion across these countries. This is due to the fact these un-served and underserved SMEs do not borrow from conventional banks, only owing to religious reasons. This potential is a “new to bank” funding opportunity, which is still untapped, as banks and other financial institutions lack adequate strategic focus on this segment to offer Shariah-compliant products.


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The Potential of Renewable Energy in MENA


Many governments in the region have recently set ambitious targets to revise their energy strategy and are increasingly turning to renewable energy. They have also started implementing the regulatory reforms required to achieve these targets. According to the World Energy Outlook 2012, published by the Paris-based 

International Energy Agency, the share of renewable energy in total power generation in the Middle East is set to increase from the 2 percent seen in 2010, to 12 percent by 2035.


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Smaller Business Vital for Growth


The role of the micro, small and medium enterprise (MSME) sector cannot be over emphasized in terms of its contribution to GDP and employment generation, particularly in emerging economies. Studies indicate that formal SMEs contribute up to 45 percent of employment and up to 33 percent of GDP in developing economies (IFC: Scaling-Up SME Access to Financial Services in the Developing World 2010). These numbers are significantly higher when taking into account the estimated contributions of SMEs operating in the informal sector. In high income countries, SMEs contribute nearly 64 percent to the GDP and 62 percent to employment.


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Private Sector Key to Developing Regional Infrastructure


A lack of employment opportunities is considered to be one of the major driving factors behind public disaffection in 

many countries across the region. In responding to these issues, and in order to address recent unrest, regional 

governments recognize the need to invest in infrastructure to improve the quality and availability of public services. 

In addition, infrastructure investments are considered to have a multiplier effect on economic activity by supporting job creation and promoting spill-over foreign direct investments.


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Creating Jobs in Pakistan


By looking at IFC and HBL’s contribution to job creation in Pakistan between 2009 and 2012, this study attempts 

to identify sectors that show potential for strong SME growth as well as to gain insights on how SMEs 

use loans to grow. The findings of this study may prove useful to inform the design and programming of future 

IFC operations, particularly at a time when a country faces slow growth, high unemployment, and declining SME 

financing as in the case of Pakistan in recent years. 


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Lebanon Depends on SMEs


The key objectives of this study are (i) to measure the job impact on SMEs from increased access to finance;

and (ii) to understand the broader development outcomes facilitated by engagements in the financial sector. 

The results are based on a survey implemented in March 2013 which sampled 73 companies that received loans from

FRANSABANK during 2008 and 2011. The enterprises ranged from very small to medium firms including in the services, 

agribusiness, and manufacturing sectors across the five regions of Lebanon. 

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