New World Bank Group Small Business Finance Facility Makes First Loan to Tunisia

*Press Release No:*021/MNA

*WASHINGTON, July 14, 2011* – Micro, small and medium enterprises (MSMEs) in
the Middle East and North Africa are key to driving employment for millions
of young citizens but businesses on the smaller end of the scale in this
region have some of the lowest levels of access to finance in the world.
Today’s approval of a $50 million loan to Tunisia marks the launch of a
World Bank facility designed to address this.

The World Bank Group’s MSME Facility is expected to channel over $500
million to Middle East and North Africa (MENA) countries over the next five
years including support from the International Finance Corporation, regional
partners such as the African Development Bank, and donors.

*“This regional facility, a partnership with a number of development
institutions, is a strong and timely response to a MENA-wide lack of access
to finance and jobs and is a critical pillar of the World Bank’s Arab World
Initiative,”* said *Shamshad Akhtar, Vice President for the MENA region at
the World Bank*.* “SMEs in the region have enormous potential to create
much-needed employment opportunities for a growing, young and increasingly
impatient population. A dynamic, open and growing MSME sector can create
jobs and open up access to market opportunities at a rate that keeps pace
with this growth. We urgently need to start this engine and creating access
to finance is critical.”*

* *

*Akhtar* pointed out that only 10 percent of MSME expenditures in the MENA
region are financed by bank lending. But as important as turning this trend
around was ensuring that money flowed to MSMEs in an atmosphere of fair
regulation, transparency and good governance, she said.

To this end the World Bank will make financing and risk-sharing instruments
available to partner MENA governments through the MSME facility and, jointly
with the International Finance Corporation (IFC), a comprehensive package of
technical assistance will be offered to governments, regulators, financial
institutions, and to MSMEs. Innovative and high potential enterprises will
be linked with growth capital, markets, and know how.

IFC, the private sector arm of the World Bank Group, will invest up to $150
million in the facility that will make it easier for SMEs to access
financing and create opportunities and jobs. Additionally, it will offer a
comprehensive package of advisory services to governments, regulators,
financial institutions, and MSMEs to support the growth of this sector.

IFC is also collaborating with other international financial institutions,
including those in Europe, to support the new facility and to provide a
comprehensive response to the challenges in the region.

*”There are up to 20 million SMEs in the Middle East and North Africa, and
millions of young people facing unemployment. But in their efforts to grow,
these companies face numerous challenges, including red tape, a lack of
access to finance and insufficient training resources. With this facility we
want to demonstrate that unlocking the potential of SMEs can have a great
effect on the growth of regional economies, and job creation”* said *Dimitris
Tsitsiragos, IFC Vice President for Eastern and Southern Europe, Central
Asia, Middle East and North Africa.*

Tunisia is the first country to borrow under the new facility, with loans to
other MENA countries anticipated in the near future.

*“Tunisian MSMEs face a difficult operating environment right now while
Tunisian banks face liquidity constraints,”* said *Douglas Pearce, team
leader for the facility.* *“The World Bank loan is designed to ease
financial constraints of otherwise creditworthy enterprises during this
period, to sustain and grow employment, and to support an expansion of
Tunisia’s MSME sector.”*

* *

MSMEs are the backbone of the Tunisian economy, estimated at making up more
than 97 percent of Tunisian enterprises and accounting for a large share of
total employment. The World Bank support will also contribute to the
Tunisian government’s objective of improving governance so that the
financial sector can more effectively play its catalytic financing role and
contribute to growth and job creation through MSMEs.

* ** *