Financial inclusion, which encompasses the effective access to and use of available, affordable, convenient, quality and sustainable financial services, is central to poverty reduction and sustainable development.

In fact, access to finance underpins the international community’s development agenda as articulated in the United Nations Sustainable Development Goals for 2030. 

This need is particularly evident in the MENA region, which has some of the highest unemployment rates in the world and rampant political, economic and social instability.

According to the World Bank, MENA also has the lowest bank loan usage of all regions except sub-Saharan Africa, and MENA small and medium-sized enterprises (SMEs) utilize equity investments at the lowest rate in the world.


For nearly a decade, MEII has been proving that SMEs are both credit worthy and net contributors to job creation in the MENA region. 

Starting in Palestine in 2008 and expanding to Tunisia and Jordan in 2015 and 2017, respectively, MEII has financed over US $200 million in lending to more than 1,550 businesses with a cumulative loss rate of less than 2%.  Over this period, an estimated 23,000 jobs have been created and sustained in the region.  Key to this success is developing long term strategic programs instead of short term fixes, managed by experienced locally-based teams, with a strong understanding of the real needs of indigenous entrepreneurs and SMEs.


MEII is now seeking to expand its scale and impact throughout MENA and is looking for regional partners to join in this effort.  In particular, MEII is focusing on three pillars of activity:

  • STIMULATING LOCAL BANK LENDING by providing local financial intermediaries with loan guarantees or lines of credit and technical assistance to expand their SME client base and structure loans to meet borrower working capital and longer-term capital needs. 

  • IMPROVING ENTREPRENEUR AND SME FINANCIAL LITERACY by providing them with direct technical assistance – often focused on finance and accounting  so that they can improve their business plans and communicate to potential lenders in the language of finance. 
  • DEVELOPING A REGIONAL "RISK CAPITAL" INVESTMENT FUND  to be administered centrally and deployed locally.  Importantly, the fund will fill a critical gap in the MENA market by providing appropriate financing to “Missing Middle” SMEs – those businesses that are too large for microfinance or family investment, but too small to attract traditional risk capital – through a model known as “revenue capital,” which is a hybrid of bank lending and venture capital.

The first two pillars effectively leverage existing financial sector intermediaries, combining technical assistance and capacity building with local financial resources.  Typically, we have done this through the use of AAA backed guarantees to stimulate incremental lending to the SME sector, and MEII’s decade long experience as a back-office operator has provided us with intimate knowledge of how financial institutions work.  MEII has also successfully linked SMEs looking for funding with potential lenders through an innovative web based platform, It has also convinced us that most Missing Middle SMEs will not able to access finance through these channels, which is why we are developing the “risk capital” fund.


Banking in the MENA region is characterized by conservative lending practices.  Credit risk is managed by minimizing exposure and imposing high collateral requirements making credit available only to large, highly capitalized businesses.  Lending also tends to be short-term, ignoring the fixed capital requirements of borrowers.  These practices hurt both SMEs and lenders.


MEII stimulates SME lending by providing local partner banks with loan guarantees and technical assistance to assess the viability of their SME clients and structure loans to meet borrower working capital and longer-term needs.  MEII designed and manages four loan guarantee facilities (LGFs) totalling $330 million in Palestine and Tunisia.  Our LGFs are not intended to be permanent fixtures in the local economy – they are temporary (often 10-12 year) interventions intended to address local market bottlenecks and stimulate lending to SMEs. MEII’s strategy is to develop the SME underwriting experience of loan officers, and allow SMEs to develop a good track record and credit history so that banks and SMEs eventually interact on a bilateral basis and without the need for a third-party intermediary like MEII.


SMEs in the MENA region have limited access to capital, yet many of these businesses have the potential for growth which will generate significant economic benefits through increased productivity, employment, and economic stability.  Banks in the region report that the poor quality of loan applications (lack of financial statements, business plans, etc.) is a serious impediment to due diligence.  Many SMEs lack the capacity and knowledge to organize and present the information.  This weakness perpetuates a negative perception in the credit market resulting in prohibitively high collateral requirements and effectively restricting most small businesses from access to adequate credit.


MEII has developed technical assistance programs aimed at improving the accounting and financial literacy of SMEs. MEII believes that improved financial literacy leads to enhancing financial transparency and governance which can facilitate better access to finance for SMEs that will allow them to grow and hire more people. By developing more transparent financial disclosure, SMEs’ access to finance can be facilitated through an innovative online platform, which allows financial intermediaries, mainly banks and other investors, to examine financing requests posted by SMEs throughout the country.  In 2015, MEII launched this platform in Palestine where a team of business advisors is working closely with local SMEs to develop their accounting capabilities and guide them through the online application process. 


Only 20% of MENA SMEs have a bank loan or line of credit, largely due to excessive collateral requirements.  Furthermore, SMEs in the region use equity at a lower rate than anywhere else in the world, due in part to a lack of third-party exits, high transaction costs, and challenging business environments. In our experience, however, when these “Missing Middle” businesses – SMEs that require capital ranging from $50,000 to $1.5 million – are given access to well-structured capital, they tend to grow, hire new employees, and stimulate additional economic activity in their communities.


Because banks and traditional equity investors are not meeting the needs of these SMEs, MEII is developing a regional risk capital finance facility, which will couple flexible and patient capital with targeted, post-investment technical assistance specific to the client’s business, industry, and needs.  The facility will employ locally-based teams of investment professionals who will target entrepreneurs and SMEs (1) from any sector with a viable business; (2) who require capital between $100,000 to $1.5 million; and (3) where the structure of the investment will provide the necessary capital at a return proportionate to the risk.