OPIC Board Approves $500 Million for Small Business Lending in Egypt and Jordan
July 1, 2011
(OPIC)
WASHINGTON, D.C. – Making significant progress toward fulfilling Secretary of
State Hillary Clinton’s pledge of U.S. investment support for the Middle East
and North Africa (MENA), the Board of Directors of the Overseas Private
Investment Corporation (OPIC) approved $500 million in financing to support
lending to small businesses in Egypt and Jordan. The project is the result of a
cooperative effort between OPIC and the U.S. Agency for International
Development (USAID), which will provide grant funding and technical assistance
to the initiative.
During her March trip to Egypt and Tunisia, Secretary Clinton announced that
OPIC would provide up to $2 billion in financial support to catalyze private
sector investment in the MENA region. Intended to encourage partnerships between
U.S. and Arab businesses, she said the OPIC initiative would prioritize support
for small and medium-sized enterprises (SMEs) and grant projects fast-track
approval to mobilize capital quickly. OPIC President and CEO Elizabeth
Littlefield joined Secretary Clinton on the trip.
Today’s project represents significant progress toward fulfillment of the OPIC
commitment in the region. OPIC will guaranty loans by local banks to SMEs,
microfinance institutions, non-banking financial institutions and other approved
borrowers under a loan guaranty facility that will provide up to $250 million
each for Egypt and Jordan.
The facility will target the shortage of SME credit availability in Jordan and
Egypt, removing an important impediment to private sector growth. According to a
recent study by the International Finance Corporation and McKinsey, there are
between 1.9 and 2.3 million formal SMEs in the MENA region, and although more
than half of them maintain bank accounts, most do not have access to credit.
In providing credit to Egyptian and Jordanian SMEs, the project is expected to
catalyze growth, expand employment, and support the region’s progress toward
democratization. It also aims to transform how banks view lending to SMEs
through technical assistance and training programs for both bank managers and
SME management.
“As Secretary Clinton said in March, one of the best ways to support the
transformation in Egypt and Jordan is to support small businesses – they are the
universal engine of economic growth. The OPIC project approved today achieves
precisely that, by providing the long-term credit that is essential for
stability, growth and job creation in the MENA region,” said Ms. Littlefield.
“We are extremely pleased to be able to make such significant progress so
quickly toward the realization of the Obama Administration’s pledge.”
USAID Administrator Rajiv Shah said, “By strengthening the private sector in the
Middle East, we help increase entrepreneurial activity and generate new jobs. We
are committed to working with the governments and people of Egypt and Jordan to
improve economic conditions and build the framework for long-term, viable growth
that expands economic opportunity for all.”
The U.S. sponsors of the project are two nonprofit corporations, CHF
International (CHF) and the Middle East Investment Initiative (MEII).
USAID has agreed to provide approximately $11 million in grant funding in Egypt
and up to $9.7 million in Jordan to cover CHF’s and MEII’s operating expenses.
USAID is also expected to support technical assistance to lenders and their
downstream borrowers through other grant resources.
CHF and MEII have a track record of successfully executing similar projects with
OPIC. The OPIC-supported loan guaranty facility in the Palestinian territories,
for example, has delivered approximately $62 million in lending through bank
selection and credit standards developed and implemented by CHF and MEII.
CHF’s mission is to serve as a catalyst for long-lasting, positive change in
low- and moderate-income communities and works in 27 countries around the world.
CHF currently operates 13 finance programs monitoring and managing over $200
million of microfinance and SME-lending finance assets.
MEII partners with public and private organizations to make credit and business
financing more available in order to stimulate economic activity and create
jobs. MEII has led efforts to establish a loan guarantee program in the
Palestinian territories.
For more information go to www.opic.gov
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