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Economic Development Sector

The Italian Cooperation in Palestine is committed to economic development: to that end, taking into account the changes in the context and in the local and international markets, two loan programmes have been set up:

  • EUPM Programme (Electric Utility Management Project - EUMP), aimed at strengthening the electricity distribution system. In the context of the  Palestinian Energy Authority (PEA) general strategy, the EUPM Programme seeks to contribute to the modernization and efficiency of the Palestinian electric power network;
  • SME Programme (Small and medium enterprises - SME), designed for providing credit to local businesses at lower interest rates, aimed at delivering private productive investments. This Programme has been improved to take into account access procedures and financial conditions of the beneficiaries. Within the same context, a consultancy service for beneficiary SME was launched and a low interest small loans scheme is being set up, to respond to the local need for low cost credit. 

In September 2013, the START UP Palestine Programme was launched to promote the creation of financial and technical assistance to boost employment opportunities (in particular for young graduates, women and the unemployed) and income generation in Palestine.
As emerged during the Bilateral Steering Committee Italy – Palestine (Country Presentation - Rome, 23 November 2012), the development of the Palestinian private sector is closely linked to the provision of a variety of financial and non-financial services designed on the needs of local businesses. 80% of the Palestinian economy is based on micro-businesses (fewer than 4 employees) working in traditional sectors. Commercial banks rarely absorb the credit demands of these businesses, given the high transaction costs of loans and the high risks posed by this type of commercial venture. Banks operating in Palestine are generally unable to evaluate loan requests from this sector, limiting their operations to investing in real estate and granting credit to a small number of solvent clients. Access to non-onerous financial resources is one of the key priorities the Palestinian National Authority to support new entrepreneurship. This priority is also the main tool to promote employment opportunities, especially for women and young people, with a focus on agriculture and labour-intensive sectors.
To that effect, the Italian Cooperation is committed to improving its support offered in the SME Programme; through the new START UP Palestine initiative and the creation of new vehicles  it seeks to widen access to credit for local entrepreneurs, in view of promoting and amplifying the benefits of inclusive economic development. 
 
The new Programme includes the creation of various financial and technical assistance tools to facilitate access to credit for young graduates, women and the unemployed, in order to promote new employment and income-generation opportunities. The Programme also includes support to non-bank financial institutions (NBFI), such as the Palestinian Fund for Employment and Social Protection and the Union of Cooperative Associations for Saving and Credit, in order to improve and widen the range of services that these actors provide their beneficiaries.
In the same context, in responding to the need to improve access to private productive credit, the support of the Palestinian Monetary Authority (PMA) is expected to develop a model of cooperative banking in Palestine in light of the Italian experience.
As such, this new initiative is complementary to the SME Programme: it is tailored to a group of beneficiaries with smaller-scale needs and completes the range of financial vehicles offered by the Italian Cooperation in support of the private sector development.
 
In 2008, the Italian Cooperation funded the International Arbitration Chamber of Palestine, with the support of the Region of Umbria. It includes:   

  • Creating the International Arbitration Chamber of Palestine (CAP) and drafting the norms and the statute establishing the CAP as well as its rules of procedure;
  • Supporting its establishment and consistency with existing norms set out by the Board of Directors and Steering Committee of the CAP, to ensure proper functioning and professional accountability;
  • Providing competent personnel to deliver the CAP services, through professional training by qualified instructors;
  • Supporting the first CAP operational branch for nine months, to ensure the launch of its activities through funding and assistance during the initial period.