The initiative comes as a joint effort of Team Europe partners, the Palestinian Authority and private sector institutions to foster European investment in Palestine contributing to job creation, sustainable growth and welfare.
The signing ceremony was held in the framework of the 3rd high-level meeting of the European Union (EU) – Palestine Investment Platform and was attended by the Prime Minister of Palestine, the European Union Representative, the Consul General of France and the Representative of the Federal Republic of Germany.
Together six agreements were signed between the EU, Governments of France and Germany, their financial institutions PROPARCO – AFD Group and KfW Development Bank as well as several Palestinian banks. The occasion marks the start of two flagship investment programmes:
The second phase of ‘SUNREF Palestine’, a joint green finance programme of PROPARCO – AFD Group and the EU, rolled out in partnership with the Bank of Palestine and Cairo Amman Bank.
A new ‘EU Mandate for the European-Palestinian Credit Guarantee Fund’ was realised with the KfW Development Bank to expand access to finance for underserved SMEs and COVID19 affected businesses.
The financing mobilised will allow new investments by thousands of Palestinian companies across sectors of the economy. It will enable investment in renewable energy, energy efficiency and environmental projects, supporting Palestine’s green economic transition and improving its energy independence. It will help with the recovery of businesses hard-hit by the COVID19 pandemic, broadening access to liquidity for companies working in areas such as tourism and hospitality.
Specific amounts of financing will be made available to support underserved geographical regions, including the Gaza Strip, East Jerusalem and the Area C of the West Bank. The financing package will be channelled to the private sector through a number of Palestinian banks and for the first time also through Islamic finance institutions.
The Prime Minister of Palestine, Dr. Mohammad Shtayyeh, said: “The EU–Palestine Investment Platform has quickly become one of our main initiatives in support of the Palestinian SMEs, especially those affected by Covid19 in the West Bank, including Jerusalem and Gaza Strip. Today’s agreements demonstrate once again the EU solidarity with the Palestinian people which aim to empower the Palestinian economy and promote economic opportunities for business and young entrepreneurs.“
The European Union Representative, Sven Kühn von Burgsdorff, said: “Only one year ago we launched a new policy forum to better attract European investment in Palestine, the EU – Palestine Investment Platform. Today I am delighted to announce another package of Team Europe investments in support of the Palestinian private sector.
This is a sign of trust in the viability of the Palestinian economy, demonstrating its resilience and ability to recover from the manifold recent crises, including the economic fallout of the COVID19 pandemic and the hostilities in Gaza. I trust that this package of financing will empower Palestine to build back better its economy, make it greener and more inclusive, paving the way to prosperity, welfare and a better quality of life for the Palestinian people.“
The Consul General of France, René Troccaz, said: “To enable more innovative projects like SUNREF, French institutions like Proparco and the AFD Group are committed to forging collaborative partnerships with Palestinian private and public institutions and EU partners, in order to deliver real impact.”
The Representative of the Federal Republic of Germany, Oliver Owcza, said: “I am delighted to witness the signing of the additional EU contribution to the “European Palestine Credit Guarantee Foundation”. This support – that is complementing the previous financing from Germany – is a showcase for the very successful cooperation between Germany, EU and the Palestinian side. It will further have a substantial impact on the ground: Since EPCGF was established, more than 15,000 loans were guaranteed with a volume of around 395M USD sustaining and creating around 46,000 jobs.”
The unparalleled amount of almost EUR 200 million mobilised by Team Europe, includes EUR 22.5 million provided by the EU in form of guarantees, investment grants and technical assistance, USD 55 million in loans delivered by PROPARCO – AFD Group and further EUR 2 million unlocked through risk-sharing instruments, up to EUR 120 million in loans leveraged through credit guarantees by the European Palestine Credit Guarantee Fund jointly established by the EU and German Financial Cooperation and USD 1 million loans offered by the Sanad Fund, an investment fund initiated by KfW Development Bank.
The EU – Palestine Investment Platform was established by the European Union (EU) and Prime Minister’s Office (PMO) in an effort to foster policy dialogue on investment and to help better identify, prioritise, coordinate and promote investment opportunities that the EU External Investment Plan offers through its many instruments in Palestine. This high-level forum serves to discuss policy priorities and investment pipelines in order to ensure alignment of publicly sponsored investments with political, policy and reform priorities of Palestine.
The EU’s ambitious External Investment Plan (EIP) has been set up to encourage investment in its partner countries. It is promoting inclusive growth, job creation and sustainable development. The Plan is crowding in private and institutional investors, where viable business proposals meet social needs, and where limited public funds can attract private money.
The agreements signed by Team Europe partners during the ceremony include the following investment programmes:
‘SUNREF II Palestine: Sustainable Use of Natural Resources and Energy’
The programme includes credit lines by PROPARCO – AFD Group worth USD 55 million provided to the Bank of Palestine (USD 30 million) and the Cairo Amman Bank (USD 25 million) in addition to funding by the EU of EUR 11.5 million to finance investment incentives and technical assistance. Launched in 2018, the first SUNREF program in Palestine was set up to support local banks in stimulating a then-nascent market by increasing their lending to green energy projects.
Its second phase SUNREF II comprises two new features: an increased focus on energy efficiency and the inclusion of an Islamic-lending offer for businesses through the partner banks’ subsidiaries, the Arab Islamic Bank and Safa Bank.
‘EU Mandate for the European-Palestinian Credit Guarantee Fund (EPCGF)’
The programme includes funding by the EU worth EUR 10 million to finance incentive payments and technical assistance channelled through KfW Development Bank to EPCGF in order to guarantee new a loan portfolio amounting to EUR 120 million. The aim of the programme is to enlarge the sustainable offer and the use of demand-oriented financial services for Palestinian SMEs by providing incentives to local financial institutions to make increased use of the guarantees issued by EPCGF. The programme will focus on expanding access to finance to SMEs who are currently considered too risky and are not sufficiently served or remain completely unserved by the formal financial sector.
‘Risk-Sharing for Al Quds Bank – EU MENA SME Guarantee Facility
The MENA SME Guarantee Facility is a regional programme funded by the EU and run by the AFD Group, that is aimed at supporting financial inclusion and SME financing in seven Southern Mediterranean countries. Al Quds Bank and PROPARCO – AFD Group dedicated the first-ever risk-sharing agreement under the EU MENA SME Facility in Palestine. The operation includes a guarantee funded by the EU with an amount of EUR 1 million, provided by PROPARCO – AFD Group to Al Quds Bank in order to support lending of an equivalent amount of EUR 2 million. The operation will focus on delivering finance to SMEs with a particular emphasis on high impact companies including green SMEs, women-owned businesses and start-ups.
‘Senior Loan to Palestine Islamic Bank – SANAD Fund for MSME’
The SANAD Fund for MSME (SANAD) has partnered with Palestine Islamic Bank (PIB) to improve access to financing for local micro, small and medium enterprises. The operation includes USD 1 million loans by SANAD. Business owners need access to financial resources to grow, support jobs, and stimulate the local economy, while PIB has strong experience in reaching out to SANAD’s target group of entrepreneurs.
Additionally, the fund’s investment will enable PIB to expand liquidity to its MSME clients who have been especially hard hit by the economic challenges presented by the ongoing COVID19 crisis. The SANAD Fund is an impact investment fund initiated by KfW Development Bank that provides debt and equity finance to partner institutions in the Middle East, North and Sub-Saharan Africa.