The European Bank for Reconstruction and Development (EBRD) is intensifying its support for micro, small and medium-sized enterprises (MSMEs) in the West Bank and Gaza, with a US$ 5 million (€4.7 million) loan to microfinance institution the Palestine for Credit and Development (FATEN).The facility will enable FATEN to on-lend to MSMEs based in the West Bank during the challenging operating environment.

The loan is funded by the West Bank and Gaza Net Income Allocation Trust Fund and will be accompanied by a 20 per cent first-loss risk cover, funded by the European Union under its Financial Inclusion Programme in the form of a partial portfolio guarantee.

With these new funds, FATEN will be able to scale up its lending to MSMEs in the West Bank as they struggle with the repercussions of the ongoing war in Gaza and its impact on the wider Palestinian economy. The World Bank estimates that the private sector in the West Bank and Gaza has suffered a severe negative impact valued at around US$ 1.5 billion.

The financing will also help FATEN cater to underserved economic segments such as women and borrowers in rural areas of the West Bank. Currently, women-led businesses face significant difficulties in accessing finance, and they account for less than 5 per cent of all banking sector loans as of the end of 2023.

Established in 1999 as a private non-profit company, FATEN became licensed and monitored by the Palestine Monetary Authority in 2014 and is the largest microfinance institution in the West Bank and Gaza, with a market share of 51 per cent. FATEN operates through 34 branches there, serving nearly 26,600 borrowers.

Since the start of its operations in the West Bank and Gaza in 2017, the EBRD has approved 27 projects worth a total of €142 million.