EIB backs Palestinian startups with a $50 million grant to Bank of Palestine
- The European Investment Bank (EIB) announced a $50 million grant to the Bank of Palestine to support the Palestinian private sector, startups and SMEs impacted by the Covid-19 crisis.
- The deal is part of the Team Europe Initiative and the EU-EIB Economic Resilience Initiative (ERI), which intends to promote private sector development.
- This package of financing will contribute to strengthening the Palestinian economy, in particular the underserved and vulnerable groups of the economy including SMEs, startups, women and youth-owned businesses, through loans provided by the Bank of Palestine to SMEs.
The European Investment Bank (EIB) and Bank of Palestine join forces to support the resilience of the Palestinian private sector with a $50 million line of credit made available to Bank of Palestine to be on-lent to local private businesses with a focus on 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 private sector development through the support to SMEs as key players for generating economic growth and employment opportunities in Palestine.
Flavia Palanza, Director of the Neighbouring Countries Department, commented on the signature of the new financing agreement, “Our new line of credit comes at a time when SMEs need strong support to overcome the challenges and the shortfall of liquidity created by the Covid-19 pandemic. SMEs are most vulnerable to the impact of this global crisis. We are proud of our partnership with the Bank of Palestine and the tangible impact that our project will have on people’s lives in the country. ”
The EIB funding is made available as part of a package, including a comprehensive technical assistance programme and a risk-sharing instrument supporting a portfolio of € 85 million 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 the Covid-19 crisis, startups, women and youth-owned businesses.
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“.
Mahmoud Shawa, CEO of Bank of Palestine, said: “As leaders in SME lending, Bank of Palestine is proud to be working with Team Europe and the EIB in providing additional liquidity to the SME sector in Palestine. This additional liquidity coupled with technical assistance and risk-sharing components comes at an important time to help this important sector recover and regain economic resilience. We are appreciative of the efforts of the European Union and the partnership with EIB during this particular time. With this loan, we shall service all our SME sectors focusing on the most impacted due to the Covid-19 pandemic.”