MEII takes a specialized approach to each of our countries of operation.
SME Technical Assistance
Missing Middle SMEs
First, to support the Palestinian SME sector, the Middle East Investment Initiative (MEII), in partnership with the U.S. Agency for International Development (USAID), the U.S. International Development Finance Corporation (DFC), and the Government of Norway launched MEII’s first Loan Guarantee Facility in 2008. The MEII Loan Guarantee Facility (LGF), launched in 2008, and subsequent facility (LGF3) launched in 2016, seek to stimulate appropriately structured lending to bankable Palestinian SMEs utilizing cash flow-based lending techniques.
Second, MEII has developed Tamweeli Assist and Tamweeli Academy which is aimed at improving the accounting and financial literacy of SMEs. MEII believes that improved financial literacy leads to enhancing financial transparency and governance, which can facilitate better access to finance for SMEs and allow them to grow and hire more people. By developing the financial literacy and financial disclosure, SMEs can transparently present their bankability and cash flows to financial intermediaries, which in turn can better assess risk and underwrite loans.
Third, In 2015, MEII launched the Tamweeli Matchmaking Platform in Palestine. Tamweeli is an innovative online platform that harnesses the security, speed, and simplicity of the internet to streamline the financing process for both financial intermediaries and SMEs by connecting businesses with financing requests to financial intermediaries, mainly banks and MFIs.
Fourth, MEII is seeking to leverage its accumulated experience and is committed to raising the Fund in order to create jobs, reach a greater number of entrepreneurs and businesses, and fundamentally transform SME access to finance in the MENA region. The principal rationale for the Fund is to address a market failure to provide adequate and appropriate financing to feed growth in MENA’s SME sectors and introduce new financial products that better suit the needs of the “Missing Middle” SMEs.
An economic update published by the World Bank states that real GDP growth in the Palestinian economy was positive by a small margin due to a slowdown in the West Bank. It is estimated that 70-80% of Gaza's GDP was kept afloat by donor aid and spending by the Palestinian Authority (PA).
In large part due to longstanding conflict in the region, the unemployment rate in the West Bank and Gaza is roughly 26% (MacroTrends). Additionally, the Palestinian Central Bureau identified a large gap in labor force participation between genders. It estimates that where every 7 out of 10 males are employed, only 2 out of 10 females are employed.
Amidst the COVID-19 pandemic, economic activity suffered due to shut-downs and a surge in the virus. The World Bank states that not only has the fiscal position in the West Bank and Gaza worsened, but the outbreak also caused a political standoff that is disrupting the flow of revenues.
SMEs in Palestine
SMEs are integral to the Palestinian economy and make up the vast majority of Palestinian enterprises. They serve as a primary source of employment, attract investments and are central to efforts for increasing economic prosperity. 99% of economic enterprises in the occupied Palestinian Territory (OPT) are SMEs with less than 20 employees.
In an already weak economy, the COVID -19 pandemic in addition to rising conflict in the West Bank have left the SME sector vulnerable. Nearly half of Palestinian firms are expected to shrink by almost 50% in production and sales and lay off 24% of their employees because of the COVID-19 impact. (World Bank)
As for credit penetration and access, the World Bank’s Doing Business Report 2021 ranked the West Bank and Gaza 117 out of 185 countries.