Private Sector Grant Facility
The Portland Trust recommends that a consortium of donors establish a Palestinian Grant Leveraging Facility (PGLF), specifically for large private sector projects that generate significant development benefits. In light of pressure on aid budgets at a time of contraction in credit markets, and given the urgent need for sustainable growth and job creation in the Palestinian economy, we believe this is a crucial new role for donors to play. The private sector has a vital role to play in helping to raise the Palestinian standard of living. But it needs encouragement and support to overcome obstacles inherent to the nature of large Palestinian projects, especially infrastructure and housing.
The PGLF will boost the private sector’s ability to attract finance, by making available at the outset of a project a grant equivalent to 15% of the total investment, through innovative risk-sharing revolving mechanisms. $250 million of aid used in this way would attract $1.5 billion of investment from the private sector, with very significant impact on the Palestinian economy.
The concept has been welcomed by the Palestinian private sector, by the Palestinian Authority and by international entities. Discussions on the structuring with the international law firm Norton Rose Group continue alongside development of an initial pipeline of projects.
