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AFESD at a glance
Year Established : 1974
Number of Member States : 22
Purpose

The Arab Fund for Economic and Social Development, is an Arab regional financial institution funding economic and social development through:
  1. Funding Publicly owned projects through concessional loans.
  2. Funding private sector projects.
  3. Participating in Equity financing.
  4. Establishing and Managing Private Funds.
  5. Encouraging the utilization of private and public capital.
  6. Providing expertise to member states.
  7. Financing SMEs.

As at 30/06/2021

Shareholders' Capital

KD Million
Authorized

4,000

Issued

3,000

Paid -in

2,901

Shareholders' Equity

3,900

The Arab Fund is similar in functions to the major regional multilateral development-finance institutions. Its principal purpose is to contribute to the financing of economic and social development projects in Arab States via loans and equity financing , grants and SME support.
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PUBLIC SECTOR FINANCING

To attain its purpose, the Arab Fund provides financing for economic development projects in the Arab countries by providing loans on concessionary terms to governments and public corporations and enterprises of member states, giving preference to projects which are vital to the Arab World and joint Arab projects. It serves as a catalyst for encouraging the investment directly or indirectly of public and private capital in a manner conducive to the development of the Arab economy and provides expertise and technical assistance in the various spheres of economic development.
PRIVATE SECTOR FINANCING

The Arab Fundís private sector financing operations aim at enhancing the developmental and catalytic role of the Fund. To this end, the Fund seeks to contribute to the development of the private sector in member states and to foster the participation of the private sector in their economic development endeavors. Assistance in support of eligible projects and enterprises takes various forms, including loans on market terms, loan syndication, guarantees, lines of credit, equity participation, leasing, underwriting of securities, the establishment of venture capital funds, and the provision of related institutional support and advisory services.
Lending Terms

Rate (%) Grace Period (Years) Term (Years)
Low Income Countries

2

4-7

30

Other Countries

2.5

4-7

30

Lending Terms and Conditions

Lending terms are determined based on the ongoing rates in the Kuwaiti financial market, after taking into consideration the borrower's financial situation, and risks involved in investing in the project. The maximum amount for a loan is KD 10 Million, or 35% of the total project cost, whichever is smaller.
Summary of Cumulative Operations (1974-June 2021)

Loans

KD Million
No. of Loans

688

No. of Projects

593

No. of Benefiting Countries

17

Amount

11,067

Net Amount

9,694

Withdrawn

6,988

Paid

3,774

Outstanding

3,214


Summary of Cumulative Operations (1974-June 2021)

Loans

KD Million
No. of Loans

16

No. of Projects

14

No. of Benefiting Countries

6

Amount of Loans

61.9

Net Amount of Loans

49

Withdrawn

45

Paid

21.5

Outstanding

23.5


Cases of Equity Participation (Companies)

9

Amount of Equity Participation (KD Million)

40.2

Contribution to Private Equity Fund (KD Million)

4.3


Sectoral Distribution of Loans (1974- June 2021)


Sector KD Million
Electricity & Energy

3,368

Transportation & Telecommunication

2,965

Agriculture, Irrigation & Rural Development

1,488

Water and Sanitation

1,483

Education, Health & Housing

1,001

Industry & Mining

518

Other Sectors

306

Total

11,129

As at 30/06/2021
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Grants

Each year, about 5% of the profit from operations is directed towards grants. These grants aim at providing institutional support to member states, enhancing efficiency in project implementation and conducting technical and economic studies related to vital development issues.
Grant amounts range from KD 25 thousand to KD 300 thousand, and must be approved by the Board of Directors. A grant becomes effective after the signing, by the Fund and the beneficiary organization, of a "Letter of Understanding" spelling out the procedures for the execution of the grant and the disbursement schedule.
Within the framework of providing support to the Palestinian People in order to reinforce their resistance and presence on their land, and improve their economic and social conditions, the Arab Fund, each year since 2001, allocates 10% of its profit to support the Urgent Program to Support the Palestinian People. The program includes support to non-government institutions and civil societies which provide education, health and social services to local communities, support to universities and educational institutions, and rehabilitation of school buildings, as well as raising the quality of health services through the rehabilitation and development of health institutions, rural development and economic empowerment.
Cumulative Grant Commitments (1974- June 2021)

No. of Grants Amount KD Million Percent
National Grants

661

175

69%

Inter-Arab Grants

600

78

31%

Total

1261

253

Urgent Program to Support the Palestinian People

180

Program to Support the Resistance of Jerusalem

30

Total

210

Grand Total

463

Distribution of National Grants by Type of Activity

Click to Enlarge
Distribution of Inter-Arab Grants by Type of Activity

Click to Enlarge
As at 30/06/2021
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Establishment of the Special Account

The Arab Economic and Social Development Summit, held in the State of Kuwait on 19 Ė 20 January 2009, endorsed the initiative of his highness the late Amir of Kuwait Sheikh Sabah Al Ahmad Al Jaber Al Sabah to create a financial facility to fund and support SMEs in Arab countries. The Arab Fund for Social and Economic Development was entrusted to establish and manage the Special Account. The Arab Fundís Board of Governors approved the establishment of this facility and its management by the Arab Fund.

SME Private Program (2011 - June 2021)

Participating Arab Countries 18
Capital Commitments $ 1,310 Million
Paid Capital by Arab Countries $ 1,169 Million
Paid Capital by Arab Fund $ 100 Million

Lending Terms

Interest Rate (%) Repyment (Years) Grace Period (Years)

2-3

10

3

Its Objectives

The main objectives of the Special Account are as follows:
  1. Contribute to the financing of private sector projects on commercial and developmental basis, in accordance with the decisions of its Management Committee.
  2. Encourage the flow of private capital, both from within as well as from outside the Arab countries, to finance private sector projects in the Arab countries aimed at effectively contributing to their economic development.
  3. Attract funding for private sector projects in accordance with the principles, controls and standards set forth by the Management Committee.
  4. Help develop and strengthen the capacity of the private sector by providing suitable technical and advisory assistance.
SME Financed (2011 - June 2021)

No. of Benefiting Countries 12
No. of Benefiting Entities 26
No. of Approved Loans 45
No. of Cancelled Loans 8
Net Number of Loans 37
No. of Projects Financed 94,030
Total Value of Approved Loans $ 1,441 Million
Total Value of Cancelled Loans $ 271 Million
Net Amount $ 1,171 Million
Cumulative Amount Withdrawn $ 982 Million
Cumulative Amounts Repaid - Principal $ 330 Million
Cumulative Amounts Repaid - Interest $ 82 Million
No. of Jobs Created 453,799
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