Bank of Palestine concluded its participation in the Middle East Annual Banking Forum 2014, which was held Jumeirah Hotel in Dubai, United Arab Emirates, under the title "Innovation in a digitally connected world”. The forum was organized by UAE Banks Federation and The Banker magazine which is owned by Financial Times.
The Bank was represented by Mr. Hashim Shawa, Chairman and General Manager of Bank of Palestine, Mr. Rushdi Ghalayini, Deputy General Manager and Mrs. Raya Sbitany, Business and Product Development Department Manager. Shawa participated as a keynote speaker through presenting a concept paper regarding the Bank’s role in developing and supporting small and medium-sized enterprises in Palestine, throughout a session that focused on the countries and banks’ contribution in the development of the economy by supporting and financing small and medium-sized enterprises.
Through his participation, Shawa spoke about the high interest rates imposed by banks in the Middle East region to finance small and medium-sized enterprises; since the halting of such projects is unlikely, an increasing support and financing for these projects is needed, as they represent a new form of development for the banks’ services. Shawa emphasized on the necessity to develop tools that help quick financing of small and medium-sized enterprises, assist them to develop and grow, meet with them personally, help them in preparing financial data, plans, and execution tools and equip them to for the future; as the success of these projects will enhance the banks’ productivity and develop their services, and stimulate economy growth in general.
Shawa referred to the Bank’s efforts to motivate and empower its employees to reach entrepreneurs and owners of small and medium-sized enterprises by allocating a special unit of field employees and develop their marketing, technical and administrative skills and capabilities. Shawa also spoke about the Bank’s development to a number of banking services, in addition to non-financial consulting services provided to owners of small and medium-sized enterprises, in order to support them and help them to develop their work, improve their financial and non-financial management and make their enterprises more attractive to Banks for financing purposes.
In response to a question concerning the effectiveness of the approach taken by Bank of Palestine, Shawa emphasized that the results cannot be fruitful if limited to one activity or one case, as there needs to be a multi-level approach and multi-dimensional services in order to make the needed change and greatly develop the economy with stable growth, built on solid and sound foundations, with small and developed businesses as its base. In Palestine, the efforts of the Palestinian Monetary Authority contributed in different areas to enable the banks and provide them with tools and incentives to finance small and medium-sized enterprises; the electronic system to inquire about customers provided the banks with the needed information to make the decision about financing. The Monetary Authority also passed a group of incentives, including the exemption of banks from forming reserve risk of 1.5% in exchange to facilitations provided to small and medium-sized enterprises.
Other points discussed in the session emphasized that the banks put a high interest on loans for small and medium-sized enterprises due to lack if available information about these businesses and their financial data. In Singapore, financial data for all enterprises (including small and medium-sized) can be found online, thus, the interest on loans for small and medium-sized enterprises are less there than it is in the Middle East. Participants added that that we need to benefit from the experience in Singapore and how they deal with small and medium-sized enterprises; for example, they have a specialized unit for small and medium-sized enterprises in their Central Bank.
One of the speakers revealed that the financing gap for small and medium-sized enterprises in the Middle East reaches up to $240 million, stressing the need to create an enabling environment to support these projects. They discussed that the studies based on questionnaires for owners of small and medium-sized enterprises indicated that the obstacles to receive financing from banks are the required guarantees by the banks and the high interest rates. Another study based on information from banks and financing institutions confirmed that the lack of information about small and medium-sized enterprises represent an obstacle in financing them.