The project sponsor is Palestine for Credit and Development, Faten, a leading MFI in West Bank and Gaza that was established in 1999 as a non-profit Limited Liability Company. Faten’s vision is to enable low-income earners and productive poor to improve their social and living standards through micro and small-sized enterprises with special focus on women entrepreneurs. Faten is the largest MFI in West Bank & Gaza in term of portfolio and second largest in term of number of clients. As at September 2010, Faten had 9,760 active loans (of which 83% were loans to women) and an outstanding portfolio of $20.7 million. Faten serves its clients through three regional offices and 10 branches across the West Bank and Gaza and emplyees 67 people. Faten provides a range of products that address the evolving needs of its target clientele.

The proposed IFC investment is up to $3 million A loan for IFC’s own account.

3.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.0
Equity

* These investment figures are indicative

Faten is headquartered in Ramallah and has 10 branches covering different areas of the West Bank and Gaza. Investments can be made throughout the Country.

i) Access to finance: Through this project, IFC would support the growth of a well managed and financially sound MFI in West Bank and Gaza, Faten, which would result in expanding much needed access to finance for low-income Palestinians. ii) Job creation: The small and micro enterprises (SMEs) sector accounts for about 79% of total employment and as such is a key source of job creation and income generation and a powerful tool for combating poverty. IFC's engagement with Faten would have a significant impact since Faten is a major player in the market and solely dedicated to serving the micro entrepreneurs. (iii) Medium-term funding: IFC will provide Faten with the much needed medium-term funding that is otherwise not available in the market, to enable the company to continue supporting, and further grow its clients' base. The social and developmental impacts would be very high especially that women borrowers represents significant percentage of Faten's clients.

IFC's additionality would be in supporting viable financial institutions in WBG, a conflict affected country in MENA, to further improve access to finance to the targeted microfinance segments of the market. IFC will assist Faten to further penetrate the Palestinian microfinance market by providing needed medium term funding, which is otherwise unavailable in the market, help the company to diversify its funding mix, and assist Faten in leveraging its balance sheet and reducing the pressures on portfolio growth stemming from lack of funding.

This project involves IFC support for the business of Microfinance, and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC analyzed the FI portfolio, for types of transactions, size, tenor and industry sectors and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with the FI portfolio and considering IFC’s investment. Considering the nature of activities supported, the project will be required to:
· Develop within an agreed time frame a procedure relevant to its business process, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the Microfinance exclusion list
· Identify qualified persons to manage and implement the procedure prior to disbursement.
· Commit to implement the procedure.
· Submit a periodic report to IFC as per a format to be provided by IFC