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Helping Palestinians Harness the Strength of the Private Sector

November 05, 2008—Countries in the Arab World have made significant economic progress over the past few years. Since 2003, economic growth in the region has averaged over 6% per year – the strongest sustained growth performance since the 1970s. But the good fortune has not been shared by all. The Palestinian economy is in a state of near collapse with soaring unemployment and a sharp increase in poverty.

And yet, the potential of the Palestinian private sector is undeniable. A recent World Bank analysis of the Palestinian business environment concluded that it compared favorably with much of the rest of the region.

“Palestinian businesses have the craftsmanship, ingenuity, and entrepreneurial spirit to succeed. They are reliable, committed, and hard working suppliers of high quality products,” said David Craig, World Bank Country Director for West Bank and Gaza.


The key to sustainable job-generation is foreign and domestic investment in productive areas. “But the security situation in the area, and especially movement and access restrictions, presents grave obstacles to investment,” said Daniela Gressani, the World Bank’s Vice President for the Middle East and North Africa region.

Supporting the Palestinian Private Sector

The World Bank Group is keen to help Palestinian people exploit growth opportunities and attract international investment. This was underscored at a recent investor conference in Bethlehem where Managing Director Juan Jose Daboub expressed the Bank Group’s commitment to helping local businesses surmount obstacles that prevent the private sector from realizing its potential.

And MIGA is determined to provide the support necessary. The agency has launched a new trust fund —  co-sponsored by the European Investment Bank, the Government of Japan, and the Palestinian Authority — to encourage investors to increase investment in the West Bank and Gaza. (See press release.)

 Palestinian PM Dr Fayyad and MIGA's James Bond sign agreement for trust fund

At a press conference following the launch of the Trust Fund, the Prime Minister of the Palestinian Authority, Dr. Salam Fayyad said that the agreement signed with MIGA marks a new phase of cooperation between the Palestinian National Authority and the World Bank, and promotes investment and employment opportunities — a common vision of the World Bank and Palestinian Authority.

New Trust Fund to Create New Opportunities

The West Bank and Gaza Investment Guarantee Trust Fund will help MIGA issue guarantees that will allow investors to recoup their investment if the security situation deteriorates to the point where they cannot operate. MIGA’s guarantees will cover investments from both foreign and domestic sources for new projects, as well as expansions and privatizations of existing projects in the area.

“The private sector generates wealth, creates opportunities and employs more people than any other sector. Supporting them is particularly important, given the high unemployment rates in the West Bank and Gaza,” said James Bond, Acting Executive Vice President and Chief Operating Officer of MIGA.

MIGA’s guarantee program helps reduce the noncommercial risks to an investment, providing investors with the support they need to open shop in a developing country. The agency’s presence usually signals to the private sector that the investor’s rights will be respected, an advantage inherent in the agency’s organization as an association of 173 countries and as a member of the World Bank Group.

The World Bank Group’s Arab World Initiative


MIGA’s work in West Bank and Gaza is consistent with the World Bank Group’s Arab World Initiative. The Bank Group is looking to forge a more effective partnership with countries in the Arab world by disseminating global knowledge, facilitating learning, and piloting new approaches that foster broad-based growth, increase trading opportunities, and improve the environment for entrepreneurship and innovation.

“Encouraging greater integration of Arab countries with the global economy is an important initiative of the World Bank Group,” said Executive Director Merza Hassan. “Our work in West Bank and Gaza aims to support economic recovery and development as an underpinning to the peace process in the region.”

The World Bank Group has been present in West Bank and Gaza since the 1993 Oslo Accords. In this time, it has provided $580 million to the Palestinian Authority, and mobilized an additional $1 billion of donor financing. (See the World Bank Group’s Interim Strategy for the West Bank and Gaza FY08-10.)

“The World Bank believes that the private sector is the necessary engine to drive sustainable economic growth in the West Bank and Gaza,” said David Craig.

With the help of the West Bank and Gaza Investment Guarantee Trust Fund, MIGA will promote investment in support of private sector–led growth in the region.

“We hope that MIGA’s participation will give many private investors the confidence to go ahead with investments in the region,” added James Bond.

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