Swedish Guarantee Facility TA/ SGF2 MEII
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The grant funded technical assistance program through MEII has a two-folded purpose: 1) technical assistance and capacity building proper, 2) management of the Swedish Guarantee Facility (SGF2). The MEII technical assistance program (TAP) works with direct technical assistance to SMEs on accounting capabilities and financial literacy. MEII’s capacity building...
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- C01 - Project-type interventions
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The grant funded technical assistance program through MEII has a two-folded purpose: 1) technical assistance and capacity building proper, 2) management of the Swedish Guarantee Facility (SGF2). The MEII technical assistance program (TAP) works with direct technical assistance to SMEs on accounting capabilities and financial literacy. MEII’s capacity building works to equip entrepreneurs with the knowledge and capacity to fully understand their financials, to confidently present their business’ financial reports and thereby improve their chance of getting a loan and expanding their business. MEII is trying to give priority and preferential treatment to female-run businesses and has in the previous phase of cooperation been collaborating with local chambers of commerce and unions. The technical assistance also includes a matchmaking platform where entrepreneurs anonymously can present their financial needs to multiple financial intermediaries including banks, leasing companies, equity investors, and microfinance institutions. The proposed contribution will also include technical assistance to: develop the ability of financial intermediaries to better underwrite renewable energy loan applications, engage local technical experts to conduct energy efficiency assessments for MSMEs with high energy consumption needs, and develop an awareness campaign for MSME’s regarding the benefits and cost saving associated with investing in renewable energy and energy efficiency equipment and technologies. Further, the proposed contribution will also finance MEII’s management of the Swedish Guarantee Facility (SGF), which is set up in a separate contribution (PLANit ID 11275). The proposed guarantee facility is set up by Sida and the Middle East Investment Initiative (MEII). It builds on experience from the first phase of the SGF and is designed to increase access to finance of MSMEs in the marginalized areas of East Jerusalem, Gaza, Hebron and Area C of the West Bank. Under SGF2, Sida issues a guarantee to MEII, expected to amount to USD 29 million. MEII, who works as an intermediary between Sida and the participating financial institutions (FIs), extends the Sida guarantee to the FIs who may place eligible loans under the guarantee. In the facility, nine FIs with operations in Palestine will participate, of which seven are Palestinian and two Jordanian. These include both regular banks and microfinance institutions. These will be selected in advance of launching the facility, so is their respective share of the maximum guarantee amount. The SGF2 is a revolving guarantee facility, meaning that repayment of loans allows the FIs to place new loans under the guarantee (within the fixed share amount of each respective FI.)
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Total aid 36,331,000 SEK distributed on 0 activities
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Result
Sida assess the MEII operations and relationship to work very well. Most result indicators are exceeding the targets. Some key results for the guarantee during the reporting period: MEII approved 289 SGF2 loans totaling $20.4 million, compared to a target of 227 loans totaling $18.3 million. 1,165 jobs were sustained by these MSMEs, compared to a target of 1,015. 29% of the SGF2 loans went to new borrowers SME, compared to a target of 60%. On a cumulative basis, 37% of SGF2 loans went to new borrowers SME. This is likely due to the difficult geopolitical and security situation throughout 2023. MEIIs loan approval rate was 69%, compared to a target rate of 90%. Interestingly, the approval rate for banks was higher at 80%, while MFIs had a much lower approval rate of 64%. This is likely due because banks enjoyed a longer experience working with MEII than the MFIs who are still developing their MSME lending capabilities and experience with MEII standards. Some key results for the Technical Assistance during the reporting period: 194 MSMEs received technical assistance, compared to a target of 300. 166 micro-enterprises were trained, compared to a target of 145. 84 accounting software programs were installed, compared to a target of 180. 16 university interns were trained, compared to a target of 33. 60% of those found post-internship employment. 81 business plans were developed, compared to a target of 57. 327 new MSMEs registered on Tamweeli, compared to a target of 260. 190 MSMEs completed the Tamweeli loan application process and had their loan requests fulfilled, totaling $14.2 million posted on the platform.
The overall Swedish engagement with MEII in Palestine is designed to support private sector activity in the marginalized economies of East Jerusalem, the Gaza Strip, and Area C of the West Bank under the two interlinked contributions; Swedish Guarantee Facility 2 (SGF) and the Technical Assistance Programme (TAP). The TAP entails: 1) Tamweeli Matchmaking platform, 2) Financial literacy TA for MSMEs (Mashroi3), 3) TA for renewable energy and energy efficiency, and 4) Accounting and bookkeeping internship program. Under the Swedish Guarantee Facility, the intervention will stimulate appropriately structured credit to eligible micro, small and medium enterprises (MSMEs) by providing lenders with partial loan guarantees. Under the Technical Assistance Program, the contribution shall provide technical assistance to MSMEs to improve their financial literacy and accounting capabilities and providing technical assistance and public awareness on Resource Efficient and Cleaner Production (RECP). In order to facilitate these interlinkages, MEII has developed an integrated results framework for the SGF2 the TAP at impact level. The overall impact is formulated as: - The number of business and job creation in Sweden's target areas have increased. - Palestinian SMEs access to affordable, reliable, and clean source of energy. It is assessed that an integrated framework at impact level is conducive to ensure synergies between the SGF2 and TAP. At outcome level, the expected results are tailored specifically for the SGF2 and TAP respectively. For the TAP, they are formulated as: - Improved financial literacy and transparency of Palestinian MSMEs, and female entrepreneurs. - Develop financial instruments and experience for renewable energy projects.
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