London, August 27, 2024 — IFC, a member of the World Bank Group, along with other partners, is providing a financing package of up to $100 million to the Bank of Palestine, the largest financial institution in the territories, to support Small and Medium-sized Enterprises (SMEs), a vital pillar of the fragile Palestinian economy, and to help the bank expand its services across the region.
The package includes $65 million in loans, consisting of $25 million from IFC’s own account; $20 million from PROPARCO, a subsidiary of Agence Française de Développement Group; and $10 million from SANAD Fund for Micro, Small and Medium Enterprises (MSMEs). In addition, the package includes an equity investment from IFC and the European Bank for Reconstruction and Development (EBRD). IFC will invest up to 5% stake in the shares of the Bank of Palestine and EBRD will invest around 3.7% through the issuance of new shares. This investment is expected to help the Bank of Palestine increase its capital base and expand in the Middle East and North Africa, while leveraging financial inclusion by lending to local SMEs with a focus on women’s empowerment.
SMEs are the backbone of the Palestinian economy and a key driver for job creation. They constitute about 85% of total businesses in the West Bank and Gaza. Over the last few months, more than half a million jobs were lost because of the conflict in the Middle East, according to the latest World Bank Economic Monitoring Report. The economy, according to the same report, is further projected to shrink between 6.5 and 9.4 percent during 2024, with a 22 percent decline in economic activity across the West Bank. In addition, the economic challenges are putting added pressure on businesses requiring the restructuring of loans, making the role of banks even more critical for economic recovery.
In addition to IFC’s $25 million financing from its own account, the financing package from IFC also includes two blended finance loans totaling $10 million. The first is an up to $6.5 million loan from IFC’s Global Small and Medium Enterprises Finance Facility, which is funded by the governments of the UK and Netherlands and aims to close the financing gap faced by SMEs in emerging markets. The second is an up to $3.5 million loan from IFC’s MENA Private Sector Development Program, a multi-sector initiative funded by the government of the Netherlands which aims to catalyze private sector investments in high impact projects across the region.
The project is called Amal, which means ‘hope’ in Arabic. It marks IFC’s first investment since the beginning of the recent conflict in the region and aims to help preserve jobs by helping small businesses access the financing they need. It aligns with the World Bank Group’s wider strategy for situations that are affected by fragility, conflict and violence as well as the Group’s Country Assistance Strategy which aims to strengthen financial institutions, drive inclusive private sector development, and connect the Palestinian economy to regional and global markets.
About the World Bank Group in the West Bank and Gaza:
The World Bank Group has long provided support to help build better lives and opportunities for the people of the West Bank and Gaza. Against the backdrop of the current humanitarian emergency in Gaza, the World Bank Group is working in close collaboration with development partners to provide lifesaving interventions such as food, water and medical supplies. World Bank Group programs are also supporting the continuity of basic public services such as education, healthcare and municipal delivery for people in the West Bank. IFC, the Group’s private sector arm, is further supporting small businesses to maintain jobs and financial services to bolster the economy. The World Bank Group’s programs are designed to respond to the immediate needs of people in the West Bank and Gaza and help build a path towards recovery for the Palestinian territories.
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