IFC, a member of the World Bank Group, the Bank of Palestine, and the Palestine Education Fund, an initiative of the Paltel Group Foundation, today signed an agreement to introduce a new student loan program in the West Bank and Gaza. This will support the education of university students and help reduce the burden on families.
The Bank of Palestine will fund and administer the loans and manage the overall program. The Palestine Education Fund will cover costs during studies and for up to a year after graduation, and IFC will structure the deal to reduce risk. The student loan facility will provide loans of up to $10 million to about 8,000 students a year. The tenor of the loans will be eight to nine years.
Although the West Bank and Gaza's tertiary enrollment rate is 40 percent, rivaling that of many industrial countries, demand far outweighs supply. Universities are supported by donors, yet they lack the funding to expand. Students are relying on government loans, which are often not repaid. This project will introduce some fiscal normalcy to the sector, helping create a culture of repayment for education loans while providing universities with a stable flow of tuition funds.
Hashim Shawa, General Manager of the Bank of Palestine, said, "The project touches on many critical aspects of the Palestinian economy, especially higher education. For the first time in the West Bank and Gaza, the Bank of Palestine and its partners are creating a sustainable student loan product. IFC's role has been key to assessing the market, bringing all relevant parties together, and designing the loan instrument."
Abdulmalik Al-Jaber, Chairman of the Board of Trustees of the Palestine Education Fund, said, "We are happy to support this program and are committed to ensuring its sustainability and scalability. We are confident that our partnership with the Bank of Palestine and IFC will encourage other banks to offer similar products and persuade foundations to contribute to the Palestine Education Fund."
Guy Ellena, IFC Director for Health and Education, said, "The project will provide a stable source of funding for universities in the West Bank and Gaza. It will help guide students toward strategic disciplines and careers that have the most employment potential and are most needed for the Palestinian economy."
Michael Essex, IFC Director for the Middle East and North Africa, said, "This project will create linkages between local financial institutions and universities, helping develop private sector alternatives to state-sponsored financing schemes."
Source: IFC
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