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Proparco and the European Union support Bank of Palestine in financing high impact SMEs
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After an equity investment in the bank in July 2021 and the provision of a 30 MUSD green loan (SUNREF) earlier that year, Proparco continues to support Bank of Palestine, the leading banking group in the West Bank and Gaza, by granting an ARIZ MENA portfolio guarantee funded by the European Union (EU) to the Bank of Palestine (BOP) of 9.2 MUSD, Proparco aims to foster financial inclusion and strengthen the Palestinian private sector, particularly high impact MSMEs.
Palestinian economy remains unique with Micro, small, and medium-sized enterprises (MSMEs) accounting for 95 percent of Palestinian businesses, with the vast majority still facing obstacles in accessing finance. This difficulty in obtaining loans has been exacerbated by the pandemic and as such it is incumbent upon development agencies and banks to work on providing financial solutions and products to help increase access to finance for this important sector.
This ARIZ MENA portfolio guarantee is the fifth portfolio guarantee provided by AFD Group to Bank of Palestine. Thanks to the EU support provided through the MENA Facility, the project includes a performance bonus triggered if the bank achieves high social and societal impact lending. The objective is to encourage the bank to target segments underserved by the banking sector: green MSMEs and start-ups under 3 years old, MSMEs owned by women or youth, and MSMEs operating in the agriculture, health, education, tourism and digital sectors.
Launched by AFD Group with funding from the European Union, the MENA Facility aims to support financial inclusion and SME financing in seven Mediterranean countries: Algeria, Egypt, Jordan, Lebanon, Morocco, Palestine and Tunisia. The Facility enables AFD Group to offer local currency financing solutions, performance incentives, and technical assistance to facilitate the provision of credit to businesses with high developmental impact.
"Proparco is pleased to continue its successful collaboration with Bank of Palestine. The project will further support the Palestinian private sector in key segments with high impact on local development" said Françoise Lombard, Proparco CEO.
"The European Union is pleased to help make this important investment happen together with our partners from Proparco and the Bank of Palestine. Through our guarantees we step-in to help SMEs in their business undertakings, absorb high risks where needed, unlock investment, create jobs and growth. Investments of this type, demonstrate our commitment to supporting Palestine’s sustainable economic development, establishment of a strong and independent economy that can serve as a backbone of a future Palestinian state" said Sven Kühn von Burgsdorff, the European Union Representative.
"We are very proud of our strategic partnership with Proparco as key development partners and investors in the Bank for many years. Together we have been able to impact our community and the economy in terms of SME lending and green financing, with a true focus on sustainability and financial inclusion. We thank the AFD Group and the EU for their continuous support to the Palestinian private sector given its leading role in supporting economic and social development”, said Hashim Shawa, Bank of Palestine Group Chairman. “We look forward to more cooperation with the EU, AFD, Proparco in providing financial intermediation to counter fragility and help sustainable development across key sectors with a special attention to projects that are green, gender sensitive, with a focus on agriculture, health, education and tourism sectors, “added Mahmoud Shawa, CEO., Bank of Palestine
Since the start of its operation in Palestine in 2017, Proparco has committed €100M in financing to support the private sector. By collaborating with Bank of Palestine, AFD Group's subsidiary contributes to supporting job creation and economic growth.