(Source: European Investment Bank)
- USD 20 million to help strengthen resilience of the Palestinian economy amidst the Covid-19 crisis
- Part of Team Europe Initiative to provide rapid response to coronavirus outbreak
The European Investment Bank (EIB) and Palestine Investment Bank join forces to enhance access to finance to Palestinian private sector with a USD 20 million line of credit to be on-lent primarily to local small and medium-sized enterprises (SMEs).
The operation is a part of Team Europe’s overall response to the Covid-19 crisis, which aims to support sustainable social and economic recovery of the region. It also falls under the EU-EIB Economic Resilience Initiative (ERI), which amongst its primary objectives, intends to promote of private sector development through the support to SMEs as key players for generating economic growth and employment opportunities in Palestine.
Commenting on the signature, Flavia Palanza, Director of Neighbouring Countries Department, said: “We are happy to partner with Palestine Investment Bank. A partnership through which we aim to make available vital and much-needed financing for businesses and, ultimately, sustain jobs and strengthen the resilience of the economy in the midst of the current crisis. ”
The EIB funding is made available as part of a package, including a comprehensive technical assistance programme and a risk sharing instrument on a later stage supporting an equivalent portfolio of loans to SMEs, to be provided under the EU’s European Fund for Sustainable Development (EFSD). These instruments aim to promote access to finance for SMEs in general and financial inclusion of underserved and vulnerable groups of the economy, including SMEs impacted by Covid-19 crisis, start-ups, women- and youth-owned businesses.
Prime Minister Dr. Muhammad Shtayyeh said during the signing ceremony: “This is a significant, timely agreement that intersects with the Palestinian government’s goals and priorities to support and strengthen the private sector, especially SMEs that have been affected by the Covid-19 pandemic. We thank the EU and the European investment bank, for this strategic partnership. Europe has always been on the side of Palestine politically while providing economic support and building the institutions, in order to establish an independent and sovereign Palestinian state along the 1967 borders with East Jerusalem as its capital.”
The European Union Representative, Sven Kühn von Burgsdorff said: “Six months after the first meeting of the EU-Palestine Investment Platform, I am very pleased to witness today a historic signature ceremony dedicating support to the Palestinian private sector with an unprecedented amount of finance and through innovative instruments. This support comes in a period when Palestine is going through a difficult time and it demonstrates that in spite of the many challenges Palestine does offer viable business opportunities worth investing in. This package of financing will contribute to strengthening the Palestinian economy, contributing to economic independence, prosperity and welfare“.
Mr. Samih Sbaih, the General Manager of Palestine Investment Bank, stated that “the signing of this agreement comes in line with the bank’s strategic vision in enhancing access to finance for SMEs in the local market, this comes in light of the suffering of such sector from the results of Covid-19 crisis, it is important at this stage to work with partners in order to offer the necessary funding for SMEs to cover their emerging needs resulted from the pandemic, especially those SMEs that lack resilience and needs relevant interventions. I would like to extend my thanks and appreciation to EIB team for their efforts and constructive cooperation with us during the past months, we worked continuously together to finalize this agreement, we believe this will constitute an essential step toward building further fruitful relations in the near future for the benefit of both parties, this will help positively in enhancing our contribution to sustainable economic development. I would also like to thank Palestinian Monetary Authority (PMA) for its efforts and productive work in guiding and supporting the banking sector to provide the necessary tools in order to enhance access to finance during the pandemic, especially its efforts in launching sustainability programs which targeted financing for SMEs that have been negatively affected by Covid-19 crisis, PMA and banks fruitful cooperation has made the success of such program. Palestine Investment Bank focuses on developing SME line of business, the bank directed its effort toward this sector since it constitutes the backbone of the national economy, promising for more banking opportunities, and suggesting emerging different financing needs, the bank believes that any real economic development efforts should be based on empowering this sector and enhancing its access to finance relevantly. The bank managed to develop its business models in order to serve this sector competitively and managed to expand its SME customer base. “
The EIB operations are part of a comprehensive package of economic assistance that the EU allocated to support the Palestinian economy in its recovery form the virus crisis. The overall package amounts to around EUR 85 million of EU funds, which is expected to mobilise over EUR 400 million in soft loans and investment for the Palestinian private sector. The bulk of this assistance is to be channelled to the Palestinian economy through European Financial Institutions and reach the private sector through local banks and micro-finance institutions.
SMEs are the backbone of the Palestinian economy as they account for over 95% of local businesses, contribute more than 55% to the GDP, and employ 85% of the active working population. As a consequence of the Covid-19 outbreak, many companies have experienced a decrease in turnover and profitability, leading to payment delays and an increased demand for liquidity. It is now crucial to step up support to private sector businesses, thus helping to protect jobs and keep the economy going.
Established in 1994, Palestine Investment Bank (PIB) is the fourth largest bank having the network of 22 branches in Palestine and one in Bahrain. The bank is engaged in retail, corporate, micro, SME, and diaspora banking operations.