Three years after the launch of SUNREF Palestine, AFD Group and the EU have signed an agreement to launch the second phase of its joint green finance program in partnership with its longstanding partners, Bank of Palestine (BOP) and Cairo Amman Bank (CAB). The latest iteration of the program, SUNREF II, features an Islamic financing offer to final beneficiaries, a mark of how Palestine is increasingly embracing Shariah compliant financial tools.
As part of the program, Proparco, a subsidiary of AFD Group, extended US$30 million in financing to BOP and U$25 million in financing to CAB on top of the EUR11.5 million (US$12.82 million) funding provided by the EU.
The funds will be utilized to finance investment incentives and technical assistance to help unlock demand and stimulate the sourcing of investments, especially in the more innovative and risky sector of energy efficiency.
SUNREF II comprises two new features: an increased focus on energy efficiency and the inclusion of an Islamic-lending offer for businesses through the partner banks’ subsidiaries, Arab Islamic Bank (a subsidiary of BOP) and Safa Bank (a subsidiary of CAB).
Launched in 2018, the SUNREF program in Palestine was set up to support local banks in stimulating a then-nascent market by increasing their lending to green energy projects. SUNREF I was financed via EUR25 million (US$27.87 million) provided by AFD to BOP and CAB, as well as EUR8 million (US$8.92 million) in funding extended by the EU.
“After the success of SUNREF I and with a greater focus on energy efficiency in SUNREF II, we hope to build and grow a community that supports clean energy projects, particularly SMEs aiming at developing the economy, sustaining the environment and providing society with higher quality standards of living,” said Hashim Shawa, the group chairman of BOP.
The program aims to provide solid tools for the two Palestinian banking groups to continue expanding into green finance and supporting their clients particularly in the field of energy efficiency.
The initiative comes as a joint effort of Team Europe partners, the Palestinian Authority and private sector institutions to foster European investment in Palestine contributing to job creation, sustainable growth and welfare.
The signing ceremony was held in the framework of the third high-level meeting of the EU–Palestine Investment Platform and was attended by the Prime Minister of Palestine, the European Union Representative, the Consul General of France and the Representative of the Federal Republic of Germany.
Together six agreements worth EUR200 million (US$222.95 million) were signed between the EU, the Governments of France and Germany, their financial institutions Proparco and KfW Development Bank, as well as several Palestinian banks.