The project consists in the establishment of a regional MENA SME Initiative (“MSI” or “Initiative”) to scale up and support SME financing in the MENA region. MSI proposes to offer a comprehensive package to enhance SME access to finance in MENA in a systemic and sustainable manner. It will consist of two core pillars: (a) A financial intermediation pillar, the MENA SME Facility (“SME Facility” or the “Facility”), to enhance SME lending by local banks; and (b) An advisory pillar, the MENA MSME Technical Assistance Facility (“MSME-TAF”) to support capacity building in the micro and SME sector. The MSME TAF is a joint initiative between IFC and IBRD and would involve a strong collaboration between IFC, IBRD and other IFI partners. The SME Facility will involve collaboration between IBRD, IFC, and partner DFIs/IFIs. Donor funding is expected to provide the first loss junior tranche complemented by IBRD contingent loan financing arrangements where governments of the targeted countries decide to allocate IBRD resources to back guarantees or risk sharing arrangements by the IFC-led SME Facility. The initial target countries for the SME Facility are: Jordan, Tunisia, Lebanon, Egypt, and Morocco. The SME Facility will be organized as a Facility and IFC would be the Facility Agent, helping to establish the SME Facility and to: identify PFI and originate PFI engagements, appraise PFI engagements, and to approve and supervise investments in accordance with IFC’s operational/credit standards and processes. The SME Facility is expected to partner with banks and financial institutions engaged in SME lending and financial services in the targeted MENA countries. In addition to risk sharing facilities with banks and financial institutions on a portfolio basis, the SME Facility may also offer term credit facilities to support working capital financing to SMEs and to finance machinery and equipment. The needs and the solutions in respect of SMEs are likely to be diverse among different markets and to change over time and evolve to adapt to country developments and new requirements that may emerge in the target countries changes. The project is in response to the recent events in the region, which have amplified the importance of fostering broad-based and equitable growth and emphasized that private sector led, job-creating economic growth remains the cornerstone of any growth strategy for countries in the MENA region.