Just like in the United States, small businesses are the backbone of the economies of the Middle East and North Africa (MENA), and a strong private sector is vital for increased employment and economic growth. And as President Obama stated in his recent speech about the region, “though these countries may be a great distance from our shores, we know that our own future is bound to this region by the forces of economics and security; history and faith.” However, regional instability has constricted private sector financing and limited the ability of small businesses to grow, which means fewer jobs in a region already struggling with high levels of unemployment, especially among the youth. In response to this urgent problem, the Board of the Overseas Private Investment Corporation (OPIC), which is the U.S. Government’s Development Finance Institution, has just approved $500 million in loan guarantee facilities for Egypt and Jordan that could support up to $1.4 billion in total lending by local banks to small and medium sized businesses.
OPIC’s loan guarantees are a tried and true pathway to economic growth. They will enable local banks in Egypt and Jordan to increase lending to small businesses by guaranteeing a portion of the loans the banks make. The facilities are modeled after a highly successful OPIC program operating in the Palestinian Territories. In just over three years, this program has already approved over 380 small business loans, which have generated over 1,900 local jobs. These loans assist businesses in the trading, manufacturing, and services sectors, and are made possible with its U.S. partners CHF International, the Middle East Investment Initiative, and the U.S. Agency for International Development (USAID), which provided on-the-ground operations and training. All of the loans supported through this program meet OPIC’s environmental, human rights, worker rights, and other developmental policy requirements – and because OPIC charges fees, this comes at no net cost to the U.S. taxpayer.
As President Obama recently noted, “the greatest untapped resource in the Middle East and North Africa is the talent of its people.” OPIC’s loan guarantee programs in Egypt and Jordan will allow entrepreneurs and small businesses to grow and expand, which will create jobs, drive economic growth and promote stability in the region. The approval of these facilities marks a significant step in the Administration’s efforts to support the Middle East and North Africa, and represents the first project of OPIC’s $2 billion commitment to catalyze private sector investment in the region.
For more information about the loan guarantee facilities, see the OPIC press release.