France’s development finance institution joins a consortium trying to help the economic recovery of the Palestinian territories.
Proparco, France’s development finance institution (DFI), has given Bank of Palestine a loan of up to $20m, as part of a $65m financing agreement with a consortium including the International Finance Corporation (IFC) and the SANAD Fund for MSME, which is backed by the German government.
The aim of the loan is to provide financing to local small and medium size enterprises (SMEs), which generate 85% of all economic activity in the Palestinian economy, which has struggled amid the war in Gaza and rising tensions in the West Bank.
“As a long-time partner of Bank of Palestine, Proparco is proud to stand once more by the Bank in these challenging times,” said Françoise Lombard, chief executive officer of Proparco.
Lombard said she was “confident” the loan will achieve “its ambitious yet crucial objective of helping Palestinian SMEs to withstand the current downturn and play a significant part in the coming economic recovery.”
AFD Group, which includes Proparco, has been in partnership with Bank of Palestine for 12 years.
Economic devastation
The conflict in Gaza and the subsequent humanitarian crisis have led to a huge drop in economic activity in the Palestinian territories. According to a World Bank report in May, almost half a million jobs have been lost in the Palestinian economy since October 2023, with the economy forecast to shrink between 6.5% and 9.6% this year.
Bank of Palestine, which was founded in 1960 and is based in Ramallah in the central West Bank, “has championed the financing of the SME sector and remains committed to the well-being of this sector and its clients”, said Hashim Shawa, chairman of Bank of Palestine.
The credit line provided by the consortium was “an important financing tool equipping the bank with liquidity and the long-term ability to provide needed financing for a vital economic sector”, Shawa said.
Critical period
Bank of Palestine, which covers the West Bank and Gaza and is listed on the Palestine Stock Exchange, is the largest financial group in the Palestinian territories, with a market share of 33% .
With over one million customers, including in underserved areas, it plays a key role in the local economy. It is a leader in SME lending and also promotes green finance as well as investments in digital innovation, the empowerment of women, youth and sustainability.
A healthy SME sector “would enable the real economy to revive, recover and grow”, said Shawa. He said he was “thankful” for the partnership with the DFIs, which had been created “in record time” during a “very critical period facing the Palestinian economy.”
