World Bank sets up $400 facility to help SMEs in MENA
International Finance Corp, a unit of the World Bank, is launching with several partners an investment facility worth up to $400 million (Dh1.47 billion) for the Middle East and North Africa (Mena) as it tries to spur lending to the region’s large pool of small-and-medium-sized enterprises (SMEs), its chief executive said on Saturday.
IFC will provide $150 million and the European Investment Bank is providing a similar amount, while Agence Francaise de Developpement and the European Commission are also contributing.
“The biggest challenge in this region is economic growth, only with economic growth will we create jobs,” said Jin-Yong Cai at the World Economic Forum. Aside from a difficult business environment and a lack of a skilled labour force, companies in the region were mostly restrained by a lack of access to finance, added Cai, a former Goldman Sachs executive in China.
“Without access to finance, basically people can not reach out, particularly in this region,” Cai said. The focus of the financing facility is on Morocco, Tunisia, Egypt, Lebanon and Jordan. Overall, the Middle East needs to create around 75 million jobs to keep up with the growing populations, the IFC said, while SMEs in the region represent around 80% of all business, making them a crucial employment engine.
The SME facility will help provide risk sharing guarantees to other banks in the hope to boost financing to these type of businesses.
The IFC in 2012 invested more than $20 billion worldwide. In the Middle East, it committed around $2.21 billion, an amount it sees steadily rising in the years to come.
Earlier this year, IFC invested around $195 million in Bank Muscat, Oman’s largest lender. Cai said the IFC is planning similar investments in the region, possibly in Gulf banks that are for example looking to expand in places such as Iraq, but also in small-scale payments systems in Egypt.
- Giving up on the EU? Greece, Cyprus look to GCC investors
- Turkish whistleblower: government can hand over any bank to state fund
- Why Israelis are rushing to empty out their Swiss bank accounts
- Wealth in the land of Arab Spring: Egypt's top ten richest men in 2014
- Will the US dollar peg protect GCC currencies?