SMEs have consistently
suffered from major hurdles in accessing sources of finance
mainly due to lack, insufficient or unacceptable collateral. Not
only that these factors could discourage the creation of new
enterprises, but also directly affect the continued
viability and sustainability of existing enterprises.
The European Palestinian
Credit Guarantee Fund (EPCGF) was established to overcome
these obstacles. EPCGF is a development programme for the
Palestinian Authority financed by the European Commission
Federal Republic of Germany through KfW Entwicklungsbank and European Investment Bank to
enhance SME competitiveness and, on a sustainable basis,
support income generation, employment creation, and poverty
reduction. The EPCGF represents a good mechanism and
opportunity for participating partner banks to tap the
often-neglected SME market segment and broaden their
outreach by making access to finance easier by this large
sector of the economy through a risk sharing formula.
The Fund provides an
additional level of comfort to lending institutions in
dealing with SMEs given the elevated degree of risk
associated with this segment of the market.