About AFESD

AFESD at a glance

Home About AFESD at a glance

Purpose

The Arab Fund for Economic and Social Development, is an Arab regional financial institution funding economic and social development through:
Year Established
1974
Number of Member States
22
Capital
KD Million
Authorized
4,000
Issued
3,000
Paid -in
2,903
Shareholders' Equity
4,061
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.
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.
Lending Terms for Green Projects


Rate(%)

Grace Period (Years)

Term (Years)

Low Income Countries

2.0

Up to 4 years (*)

30

Other Countries

2.5

Up to 4 years (*)

30

Lending Terms for Other Projects


Rate(%)

Grace Period (Years)

Term (Years)

Low Income Countries

2.5

Up to 4 years (*)

30

Other Countries

3.0

Up to 4 years (*)

30

(*) The BOD can approve a longer grace period, based on project completion period.
Summary of Cumulative Operations (1974-Sept.2023)

Loans


No. of Loans

712

No. of Projects

604

No. of Benefiting Countries

18

Amount (KD Million)

11,239

Net Amount (KD Million)

9,651

Withdrawn (KD Million)

7,591

Re-paid (KD Million)

4,198

Outstanding (KD Million)

3,393

Private Sector Financing
The Arab Fund’s 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 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-Sept.2023)

Loans


No. of Loans

17

No. of Projects

15

No. of Benefiting Countries

7

Amount (KD Million)

62.3

Net Amount (KD Million)

49.4

Withdrawn (KD Million)

47.6

Re-paid (KD Million)

21.9

Outstanding (KD Million)

25.7

Cases of Equity Participation (Companies)

9

Amount of Equity Participation (KD Million)

36.0

Contribution to Private Equity Fund (KD Million)

1.7

Sectoral Distribution of Loans (1974- Sept. 2023)

Sector

KD Million

Electricity & Energy

3,422

Transportation & Telecommunication

2,937

Agriculture, Irrigation & Rural Development

1,505

Water and Sanitation

1,525

Education, Health & Housing

1,001

Industry & Mining

518

Other Sectors

299

Total

11,208

As at 30/09/2023
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.
Distribution of Grants Provided to Arab Countries (by Type of Activity)
Cumulative Grant Commitments (1974- Sept. 2023)


No. of Grants

Amount KD Million

Percent

Grants Provided to Arab Countries

690

187

70

Grants Provided for Joint Arab Projects

617

79

30%

Total

1307

266


Urgent Program to Support the Palestinian People

200


Program to Support the Resistance of Jerusalem

30


Total

230


Grand Total

496


Distribution of Grants Provided for Joint Arab Projects (by Type of Activity)

As at 30/09/2023

Establishment of the Special Account
The Arab Economic and Social Development Summit, held in the State of Kuwait on 19 – 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 Fund’s Board of Governors approved the establishment of this facility and its management by the Arab Fund.
SME Private Program (2011 – Sept. 2023)

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 (%)

Repayment (Years)

Grace Period (Years)

2-3

10

3

Its Objectives
The main objectives of the Special Account are as follows:
SME Financed (2011 – Sept. 2023)

No. of Benefiting Countries

12

No. of Benefiting Entities

31

No. of Approved Loans

55

No. of Cancelled Loans

9

Net Number of Loans

46

No. of Projects Financed

116,937

Total Value of Approved Loans

$ 1,716 Million

Total Value of Cancelled Loans

$ 314 Million

Net Amount

$ 1,402 Million

Cumulative Amount Withdrawn

$ 1,123 Million

Cumulative Amounts Repaid – Principal

$ 526 Million

Cumulative Amounts Repaid – Interest

$ 112 Million

No. of Jobs Created

537,836