AFESD Activities



The main activity of the Arab Fund is to provide loans to support the development efforts in the Arab countries. The loans provided by the Fund can be divided into two types, as follows: loans provided to Arab countries to contribute to financing projects implemented by the public sector, and loans provided for the implementation of private sector projects.

Lending Operations Objectives

One of the main objectives for which the Arab Fund was established is to contribute to the economic and social development of the Arab countries. This is accomplished by advancing the pace of development and establishing an economic base capable of meeting the basic needs of the Arab citizens. Accordingly, the Fund contributes to financing priority vital development projects in many sectors, assisting the supervising bodies in implementing development plans and policies in the beneficiary countries, increasing their capacity to prepare and implement projects, training the staff and skilled labor necessary for their operation and maintenance, raising their performance efficiency, and increasing productivity. It, also, includes providing the necessary equipment and supplies.
Public Sector

The public sector project life cycle, in the Arab Fund, begins with becoming familiar with the project through communications between the Director General / Chairman of the Board of Directors of the Arab Fund with officials from beneficiary countries, followed by receiving a request from the Arab Fund’s Governor for the country requesting the project, accompanied by a technical and economic feasibility study. After taking into consideration the guidelines approved by the Fund’s Board Directors, with respect to loan allocations among the various Arab countries, and reviewing the Fund’s lending program, the project is first desk-evaluated by the technical staff of the Fund. This might involve requesting additional documents and information necessary to complete the evaluation process.


The Arab Fund then dispatches a loan committee, from among the members of its technical staff, to field evaluate the project. In the event that the members of the loan committee ascertain the feasibility of the project, they proceed to prepare a draft loan agreement (and a draft guarantee agreement if necessary). The loan agreement is then negotiated between the members of the Loan Committee and the representatives of the concerned country, and the agreement is initialed.


The loan committee, then, submits, to the Director General of the Fund, a project evaluation report regarding the project, containing its financing proposal and its conditions. A report from the Director General is then submitted to the Fund’s Board of Directors, accompanied by the project evaluation report, the loan committee report, and the loan agreement (and the guarantee, if any), for final approval.


Following the approval of the Board of Directors, the final version of the loan agreement is signed by the authorized representative of the borrower and the Director General/ Chairman of the Board of Directors of the Fund. The borrower then proceeds with the procedures of ratification of the agreement in accordance with the constitutional requirements in the beneficiary country for the enforcement of the loan agreement.


After the Fund receives confirmation of this, the borrower is notified that the agreement has become effective and that the borrower is entitled to withdraw from the loan, in accordance with the applicable withdrawal procedures.


During the project implementation phase, the technical staff of the Arab Fund continues following up on the progress of the works, either through reviewing progress reports, sent by the consultant, or, if necessary, through site visits.


Private Sector

The project cycle for private sector projects, in the Arab Fund, begins following the receipt of a request from the project owner (or the project’s promoter) for financing, along with the technical and economic feasibility study for it.


In the event that the Fund, in principle, agrees to consider reviewing the funding request, the Fund requests that that the project owner (promoter) send additional detailed data about the project, including, but not limited to, information about its promoters, the company to be established for its implementation, its financing plan and implementation timeframe, the procurement and contracting procedures that will be used, the various project risks and how to hedge to reduce or avoid them, and the guarantees that will be provided by the owner of the project.


Upon completion of the required documents and data and the formation of an initial conviction, by the technical staff of the Fund, about the project’s merits, a recommendation is made to the Fund’s management to field evaluate the project. In the event that the Fund’s management agrees to the above-mentioned recommendation, the Fund then dispatches a mission to field evaluate the project. Upon their return, the members of the mission prepare project evaluation reports to be presented to the Fund’s Board of Directors.


After presenting the reports to the Board and obtaining its approval to provide a loan to contribute to the financing of the project, the Fund sends a letter to the concerned Fund’s Governor seeking his/her no objection to the Fund extending the loan.


Upon receipt of the no-objection letter from the Governor, or the expiry of the period specified for objecting to the provision of the loan, the Fund then negotiates with the project owner about the specifics of the loan agreement, including the financing terms and the guarantees.


After the signing of the loan agreement, the Fund begins registering the guarantees and mortgages provided by the borrower, in preparation for announcing the fulfillment of the requirements for withdrawing from the loan, and then transferring the loan payments to the company that will implement the project, in accordance with the loan withdrawal schedule agreed upon with the Fund.


Public Sector

Applications for Public Sector loans have to be submitted by the Governor representing the country requesting the loan.

The request has to be accompanied by a techno-economic feasibility study of the project to be considered for financing. The techno-economic feasibility study should contain the following minimum information:

On the Technical side
  • Description of the nature of the project
  • Demand for the project
  • Estimated project cost
  • Estimated schedule for implementing the project
  • Conceptual design of the project
  • Environmental effects of the project
On the Economic Side
  • Justification of the project
  • Explanations for why the project represents the most suitable solution to meet demand
  • Economic rate of return (EIRR) of the project
  • Financial rate of return (FIRR) of the project
  • Sensitivity analysis for both the EIRR and FIRR of the project
Private Sector
Applications for Private Sector loans from eligible establishments

An eligible establishment has to meet several minimum requirements:

  • It has to be a legally independent entity,
  • It has to have a sound financial position,
  • It has to have good management practices,
  • It must operate on a purely commercial basis,
  • Its main objective should be developing the economy(ies) of one or more member countries,
  • Should meet the financing requirements for private sector financing.
Requirements for Private Sector Financing

Not less than 51% of the establishment’s capital should be owned by citizens of member states.

The Fund also participates in financing projects jointly owned by the public and the private sector in a member state, as long as the establishment, which enjoys complete legal, financial and operating autonomy, is run on a strict commercial basis, and meets several additional requirements for the distribution of its capital. For further details, please refer to the “General Policies and Guidelines for Private Sector Operations” issued by the Arab Fund.

Financing Application Procedure

Eligible establishments can apply for Private Sector Financing directly to the Arab Fund. The application should be accompanied by a techno-economic study of the project, financial statements and a business plan of the establishment, along with the names and citizenships of the major shareholders.

Public Sector

Prior to any loan withdrawals, the following requirements should be met:

  • The Loan Agreement has to be declared effective.
  • The borrower has to send the Arab Fund the necessary documents delegating one or more people to sign the Withdrawal Application Forms.
  • The beneficiary has to provide the Arab Fund with copies of the signed contracts that will be financed by the loan agreement.

Loan withdrawals can occur under any of the following conditions:

Case1: where the Fund re-imburses the beneficiary for money they have already paid to a contractor.

Case 2: where the Fund directly pays the contractor according to invoices approved by the beneficiary or his designate.

Case 3: where the Fund issues an agreement to reimburse the beneficiary.

For more details on the procedures for withdrawal of the loans, please download the “Withdrawal Application Procedure” document under Publications.

Private Sector

Before any withdrawals are made from a Loan, the following requirements have to be met:

  • The Loan Agreement has to be signed by both parties.
  • The Borrower has to satisfy all conditions precedent to first disbursement set forth in the Loan Agreement and furnish to Arab Fund all required documents and certifications.
  • The Borrower should reaffirm the continuing validity and observance of all representations, covenants and undertakings given by the Borrower under the Loan Agreement, as at the date of the relevant disbursement.
  • The Borrower has to furnish to the Arab Fund a formed document evidencing the authority of the person or persons who sign withdrawal applications, together with specimen of their signatures duly authenticated by the representative of the Borrower in the Loan Agreement.
  • The Borrower has to provide the Arab Fund with copies of all signed contracts and purchase orders eligible to be financed by the Loan Agreement.

Loan withdrawals can occur under any of the following conditions:

Case1:where the Fund re-imburses the beneficiary for payments that he has already made to a contractor, supplier, or consultant.

Case 2:where the Fund directly pays the contractor according to invoices approved by the beneficiary or his designated representative, in settlement of outstanding amounts due for payment.

Case 3:where the Fund issues an Agreement to reimburse the beneficiary bank at which a letter of credit has been opened by the Borrower in respect of eligible payments under a contract financed under Loan Agreements.

For more details on the procedures for withdrawal of the loans, please download the “Withdrawal Application Procedure” document under Publications.