Ramallah: Largest ME private equity group to open office
Abraaj Capital sets up $50m fund for investment in Palestinian economy.
By ADAM GONN / THE MEDIA LINERamallah street 248.88(photo credit: Courtesy)
The Dubai-based private equity group Abraaj Capital has announced plans to open an office in the West Bank city of Ramallah that will handle the company’s $50 million Palestine Growth Capital Fund, which invests in small- and medium-sized enterprises.Since its establishment in 2002, Abraaj Capital has raised $7 billion and distributed almost $3 billion to its investors. The Palestine Growth Capital Fund is part of a $700 million regional enterprise investment platform called Riyada Enterprise Development.“The Fund highlights Abraaj Capital’s confidence in and commitment to the Palestinian economy, and the entrepreneurial spirit of the Palestinian people,” Abraaj Capital said in a statement.“Backed by a dedicated Riyada Enterprise Development team, with eight offices across the region – including Dubai, Amman and Cairo, [new country manager] Mr. [Fayez] Husseini’s primary focus is on SMEs [small- and medium-sized enterprises] that need capital and institutional support, with a preference for those that can leverage technology and innovation,” the statement reads.Dr. Oussama Kanaan, representative for the West Bank and Gaza division of the International Monetary Fund (IMF), said that the decision could be seen as part of a general trend. “It’s a period of high growth and a recovery trend so people tend to be quite optimistic,” Kanaan told The Media Line. According to data from the World Bank, the Palestinian economy grew by 6.8 percent in 2009 from 5 percent in 2008. The economy is heavily dependant on foreign donations, which in 2009 totaled $1.4 billion. One factor that is frequently said to be hampering the Palestinian economy is the restriction on movement of people and goods in the West Bank, due to Israeli roadblocks and checkpoints. These were put in place during the second intifada to prevent Palestinian terrorists from reaching major Israeli cities.As the security situation has improved over the last few years, however, more roadblocks have been removed. “This notwithstanding, the political tensions and the uncertainty on the future developments still represent huge challenges to the future development of the Palestinian economy and institutions,” the World Bank said in its brief on the Palestinian economy.
Dr. Mahmoud K. El Jafari, dean of the Business and Economics Faculty at Al-Quds University in Jerusalem very much agrees with the view of the World Bank.“In Gaza we will not have an economy to talk about at the end of the year,” El Jafari told The Media Line. “In the West Bank it is growing, but the service…is dependent on donations.”“Without the donations we would not be able to finance the budget. Fifty percent of the budget is donations,” he said.“That why [they] talk peace all the time because if they don’t talk peace they will not get any donations,” El Jafari added. Asked is Abraaj Capital will have a hard time finding companies to invest in, El Jafari answered that they would.One of the sectors of the Palestinian economy that has managed to grow and develop despite the underlying circumstances is the information and communications technology (ICT) industry.“The services and manufacturing sectors have the highest potential for employment when considering their current percentage of the Palestinian private sector and their contribution to GDP,” stated a recent report from the Palestinian IT Association.
