Palestinians get first private equity fund at $15m start up
Investors target small, medium businesses, hope to raise total to $50 million this year.
By The Associated Press Tags: Israel newsTwo Arab investment companies on Sunday announced the launch of the first private equity fund designed to boost the Palestinian economy.
The semi-official Palestine Investment Fund and Dubai-based private equity firm Abraaj Capital will provide an initial $15 million, they said in a statement, hoping to raise the total to $50 million this year.
The investments would target small- and medium-sized businesses in the Palestinian territories.
The cash is a welcome infusion into the battered Palestinian economy which has been hobbled by the ongoing conflict with Israel, internal conflicts and restrictions on trade and cross-border traffic.
Palestinian Prime Minister Salam Fayyad, a Western-backed, internationally respected economist, has said his government would work on boosting the economic and legal infrastructure needed for statehood in two years.
Fayyad has said he would move along with those plans irrespective of progress in peace talks with Israel. The fund could be significant in stimulating the kind of growth needed to bolster self-sufficiency for a government that relies on foreign aid for its revenues.
Bassim Khoury, a former Palestinian economy minister, said the fund would represent a little less than 1 percent of the Palestinian gross domestic product of $4.5 billion.
About 40 percent of the government's revenue comes in the form of direct foreign aid, he said.
Khoury said the fund could benefit the economy, assuming it is managed well and sustainable.
"If you can ensure it is properly invested in the Palestinian economy, it can have a big effect," he said.
The Palestine Investment Fund focuses on investments in the Palestinian territories. Dubai-based Abraaj Capital, which will manage the fund, works throughout the Middle East and North Africa, with offices in six countries.
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Funds like this are for the idealists not the smart investors. If a palestinian entity is created long term it will never be viable in terms of territory ( 22% of mandate palestine if they are lucky ), Israels has 78% and is considered tiny it will also be in 2 parts. No natural recources other than around $4 billion in gas of the Gaza coast. Limited water supplies and land that can support only a limited number of crops. Many profitable businesses will be off limits to them because they could be considered to be connected with the arms industry and this state will not be allowed a military. They will mostly rely in tourism and that alone isn't enough to sustain an economy. Also once they get a state I think they will find that alot of the countries who give them money today will not be as generous in future because they don't feel the same obligation to do anything now the arabs have a state. Also once they get a state UNRWA will be disolved so nothing from them anymore.
Private equity providing capital to small companies PAs best opportunity for peace. Deflects energy away from islamist threats, violence against Israel, and emphasises jobs, and economic security for it's people. Marginalizes Hamas, and creates far better possiblity of negotiations for peace in the future between athe PA and Israel