The Middle East Investment Initiative (MEII), a partner organization of Middle East Progress, is an independent, non-profit organization founded by the Aspen Institute in 2005 to strengthen the economies of the Palestinian territories and other countries in the region, recognizing that a strong economic base is critical for social and political stability. Working in partnership with the Palestine Investment Fund (PIF), the U.S. Overseas Private Investment Corporation (OPIC) and CHF International, MEII uses innovative public-private partnerships to improve financial institutions and create new jobs, helping to develop a framework for economic stakeholders in the peace process.
MEII-launched Programs Include:
Loan Guarantee Facility (LGF)
In 2007, MEII and its partners launched the LGF to increase the amount of credit available to Palestinian entrepreneurs—primarily small- and medium-sized enterprises (SMEs). While many businesses in the West Bank and Gaza would like to expand, they cannot obtain loans because of high collateral requirements—a major impediment to economic growth. By creating a loan guarantee program to reduce the need for excessive collateralization, MEII is helping to generate $228 million in lending to these firms. The LGF is also encouraging the market development of new financial products and services tailored to the needs of SMEs.
Current Status:
159: Loans in the MEII portfolio totaling $38,324,100 at the end of October with zero defaults.
3,121: estimated new permanent jobs generated through lending (39 percent of which are for women).
Geographic Breakdown: Bethlehem, Jenin, Nablus and Ramallah each comprise between 10 to 20 percent of the LGF portfolio.
Sectoral Breakdown: The services, trading, manufacturing and construction sectors each account for between 10 to 30 percent of the portfolio
Loan Amounts: About 81 percent of LGF-approved loans are between $10,000 and $200,000. The overall average loan size, excluding three exceptionally large loans above $500,000, is around $139,000. The larger loans have supported Palestinian bank participation in Wataniya Palestine, a second Palestinian mobile phone operator, and the completion of the Movenpick Hotel in Ramallah, both of which are expected to create substantial numbers of jobs.
MEII Programs Not Yet Launched Include:
Affordable Mortgage and Loan Company (AMAL)
MEII is helping address the need for affordable housing in the Palestinian territories. At present, there is no mortgage market available for most Palestinians and no standardized underwriting methods at banks for issuing mortgages. MEII is working with a coalition of organizations, including CHF International, OPIC, the International Finance Corporation (IFC), PIF, Bank of Palestine, Cairo Amman Bank and UN-HABITAT, to develop a half-billion dollar mortgage finance facility (called AMAL, or “hope” in Arabic), which will enable tens of thousands of moderate-income families to finance the purchase of their homes, generate significant economic activity, and complement other development programs. AMAL will extend long-term mortgage loans with tenors of up to 25 years to appropriately vetted and qualified low- to middle-income homebuyers.
Current Status: Project partners expect to launch AMAL in the first quarter of 2010. AMAL management will work closely throughout the year with homebuilders and potential borrowers and likely begin issuing mortgages by September of next year.
Palestinian Political Risk Insurance (PPRI)
MEII is working in cooperation with Middle East Progress, the National Insurance Company, based in Ramallah, OPIC and the Portland Trust to create specialized insurance coverage designed to help Palestinian exporters and investors mitigate risks due to possible political violence and trade disruption. The team is working to link PPRI with a USAID-sponsored supply chain management program that will require businesses to implement additional supply chain security practices in return for key privileges at the border crossings. The increased security procedures and benefits at the crossings associated with the program will boost the economic and security sectors of Israelis and Palestinians alike.
Current Status: Project partners are working to finalize the new insurance product by spring 2010.
This background basics is primarily drawn from the Middle East Investment Initiative website.
