📋 Tender Overview
SMEs are the backbone of the Palestinian economy, generating most private sector jobs. This intervention improves access to finance for SMEs in the West Bank, including East Jerusalem. It addresses both sides of the lending relationship: helping SMEs obtain and manage credit while enabling financial institutions to better serve them. Building on existing loan guarantee schemes, the project mobilises additional financing for SMEs, safeguarding viable firms and jobs in a fragile context and supporting opportunities for growth.
Country/region Topic Period Budget
Occupied Palestinian Territory
Inclusive economic Development
Other
SME development
Sector not specified
Employment creation
01.09.2025 - 31.12.2028
CHF 3’060’000
The project in brief
Background The Palestinian private sector operates in a complex environment marked by political instability, constrained market conditions, and limited financing opportunities. SMEs, which account for over 90% of private businesses and 80% of wage employment, face difficulties accessing credit due to incomplete financial records, limited collateral, and challenges related to formalisation and business planning – many firms operate informally, with limited bookkeeping, unclear legal status, and underdeveloped business strategies. Since the 7 October 2023 attacks and the ensuing hostilities, the situation has further deteriorated, not only in Gaza but also in the WB: disrupted supply chains and declining consumer demand have placed additional stress on SMEs in the West Bank, including in East Jerusalem. While the banking sector functions under a robust regulatory framework led by the Palestinian Monetary Authority, Palestinian banks are overexposed to the public sector as well as Israeli-imposed restrictions on currency exchange and interbank transactions. As a result, they have reduced their SME lending, especially in vulnerable areas such as Jenin and Tulkarem. This is concerning, not only because SMEs are central to economic resilience and inclusion, but also because many private sector initiatives in the oPt remain heavily reliant on donor grants. Limited access to credit continues to be a key constraint to developing a sustainable and self-reliant private sector. In response, some development actors have introduced loan guarantee schemes that partially cover banks’ losses in the event of loan default. These are often paired with technical assistance to strengthen the capacity of financial institutions. While a few such initiatives exist in the oPt, there is clear scope to scale up guarantee amounts to incentivise lending, and to also expand TA offerings to SMEs (not just to banks) to improve their credit readiness and repayment capacity.
Objectives SMEs in the West Bank, including East Jerusalem, can access, manage, and repay loans, allowing them to continue operations amidst a fragile economic context.
Target groups Direct:
At least 750 SMEs in the West Bank, including East Jerusalem, appl
