A thriving private sector is key to the development of the Palestinian economy but sadly, too few international financial institutions have been willing to participate in helping build the foundations for a successful investments to develop and grow.
However, at the EBRD’s 2017 Annual Meeting in Cyprus in May, the Bank’s Board of Governors approved the engagement of the EBRD in the West Bank and Gaza to support the development of the economy with investments through a trust fund.
Strengthening the Palestinian banking sector by transferring skills and exchanging know-how, the Palestine Monetary Authority (PMA) and the EBRD have since held their first joint workshop in Ramallah in the West Bank.
The workshop focused on the banking products needed to support the development of small and medium-sized enterprises (SMEs) in the West Bank and Gaza and achieve the objectives and requirements of financial inclusion.
The event was opened by PMA Governor Azzam Shawwa and EBRD First Vice President Phil Bennett, who both expressed the importance of the workshop to discuss ways of enhancing the Palestinian banking sector and offering new products to SMEs that will enable them to grow faster and further. Micro, small and medium-sized enterprises play a crucial role in the domestic economy, representing about 95 per cent of economic output.
The workshop was an important first result of the EBRD’s newly established activities in the West Bank and Gaza. PMA Governor Shawwa, thanking the EBRD’s Board of Governors for their decision on EBRD investment, said: “The Bank’s investment in the Palestinian economy will be reflected positively in an increase in SME financing and will encourage the private sector.” The Governor confirmed that the PMA was working to overcome obstacles that limit access to funding sources, by granting incentives to banks and other lenders to increase the scale of lending.
The credit portfolio in this sector rose by 160 per cent between 2013 and the first quarter of 2017 to around US$ 1.3 billion.
The Governor said that growth in the SME sector would contribute to an increase in the penetration rate for bank accounts. This currently stands at 36 per cent. The PMA and partner institutions aim to raise it to at least 50 per cent by 2025.
EBRD First Vice President Bennett said: “We are very pleased to host this first event with the Palestinian authorities to exchange views and knowledge with the business community. We look forward to developing our activities in the West Bank and Gaza and we aim to accelerate access to finance for SMEs, which are the backbone of the local economy and a source of much-needed employment.”
The workshop included a panel discussion that highlighted the EBRD’s financial products such as credit lines, the trade finance programme, equity, and business advisory services for SMEs. The event also included some of the EBRD’s clients in Jordan, who shared their experience of working with the EBRD in the banking and SME sectors.
In addition, Heike Harmgart, EBRD Head of Jordan, West Bank and Gaza, highlighted the Bank’s successful experience of working in Jordan during the past five years and the importance of providing improved access to finance for SMEs.
The West Bank and Gaza are in the EBRD’s southern and eastern Mediterranean (SEMED) region, which also includes Egypt, Jordan, Morocco and Tunisia, where the EBRD has been investing since 2012 and engaged in policy dialogue. To date, the Bank has provided some €5.2 billion to these four countries alone in the form of loans and equity. Of these investments, 71 per cent are in the private sector.