The International Finance Corporation (IFC), a member of the World Bank Group, recently announced that it is partnering with the European Investment Bank (EIB), the long-term lending bank of the European Union (EU); Agence Française de Développement (AFD), France’s international development agency; and the European Commission, the legislative body of the EU, via the Neighborhood Investment Facility (NIF), to establish a USD 380 million financing facility for small and medium-sized enterprises (SMEs) in the Middle East and North Africa (MENA). NIF is an EU financial instrument that mobilizes grant funds from the European Commission and EU member countries to the EU “neighborhood” region. The MENA SME Facility will receive investments of USD 150 million each from IFC and EIB, USD 50 million from AFD, and EUR 24 million (USD 31 million) from NIF. The facility will mobilize funds via risk sharing arrangements with local banks in Egypt, Jordan, Lebanon, Morocco and Tunisia. The implementation of the facility will be led by IFC. The World Bank will provide technical assistance to MENA SMEs. In MENA countries, SMEs represent 80 percent of all businesses and 40 percent of total employment [1].
As of 2012, IFC has 184 member countries and total assets of USD 75.8 billion.
By Jennifer Young, Research Associate
About International Finance Corporation (IFC)
A member of the US-based World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2012, IFC has 184 member countries, total assets of USD 75.8 billion, return on assets of 1.8 percent, return on capital of 6.5 percent and USD 15.5 billion mobilized to 576 projects.
About European Investment Bank (EIB)
The European Investment Bank (EIB) was created in 1958 and now serves as the long-term lending bank of the European Union. In addition to supporting projects in EU member states, its main priorities include financing investments in likely future member states and EU partner countries, principally in the area of small and medium-sized enterprises. According to its website, “the EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.” The total subscribed capital of EIB is EUR 242 billion (USD 317 billion) as at December 2011.
About the Agence Francaise de Developpement (AFD)
Established in 1941, Agence Francaise de Developpement (AFD) is a bilateral development finance institution whose public mandate is to finance development according to the overseas development assistance policies of the French government. In 2011, AFD reportedly committed approximately EUR 7 billion (USD 9.2 billion) to financing aid activities in developing and emerging countries and the French Overseas Communities. These investments involved providing primary schooling for 13.4 million children, improving drinking water supplies for 33 million people and disbursing microloans to 700,000 people.
About the Neighborhood Investment Facility
The Neighborhood Investment Facility (NIF) is a financial instrument that mobilizes grant funds from the European Commission and European Union (EU) member countries to the EU “neighborhood” region that includes Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Occupied Palestinian Territory, Syria, Tunisia and Ukraine. It supports infrastructure projects in sectors including transport, energy, social, environmental and private sector initiatives. As of 2012, NIF has contributed EUR 418 million (USD 547 million) to projects in the region.
Sources and Additional Resources
[1] International Finance Corporation Press Release, “IFC, EIB, and AFD Support Small Businesses and Mobilize Investment in MENA,” http://www.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/940583B07DEE83AC85257B7500564D61
MicroCapital Story, June 3, 2013, “MICROCAPITAL BRIEF: European Commission, European Investment Bank Launch Small, Medium-Sized Enterprise Financing Website,” https://www.microcapital.org/microcapital-brief-european-commission-european-investment-bank-launch-small-medium-sized-enterprise-financing-website/
MicroCapital Story, March 15, 2013, “MICROCAPITAL BRIEF: Agence Francaise de Developpement (AFD) to Guarantee Grameen Credit Agricole Microfinance Foundation (GCAMF) Loans, Largely in Sub-Saharan Africa,” https://www.microcapital.org/microcapital-brief-agence-francaise-de-developpement-afd-to-guarantee-grameen-credit-agricole-microfinance-foundation-gcamf-loans-largely-in-sub-saharan-africa/
MicroCapital Story, December 11, 2012, “MICROCAPITAL BRIEF: Arab Spring Foundation’s Farasee Seeking to Raise $1b for “1 Million Jobs for MENA Initiative” in Morocco,” https://www.microcapital.org/microcapital-brief-arab-spring-foundations-farasee-seeking-to-raise-1b-for-1-million-jobs-for-mena-initiative-in-morocco/
MicroCapital Story, November 21, 2012, MICROCAPITAL BRIEF: Part of $38b Commitment From European Investment Bank, World Bank, European Bank For Reconstruction and Development To Support SMEs,” https://www.microcapital.org/microcapital-brief-part-of-38b-commitment-from-european-investment-bank-world-bank-european-bank-for-reconstruction-and-development-to-support-smes/
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