RIYADH: The World Bank is providing funding for small and medium enterprises (SMEs) involved in renewable energy and cleaner production projects in the Kingdom.
The International Finance Corporation (IFC), member of the World Bank Group, signed off on a SR75 million investment in Saudi Orix Leasing Company (SOLC) last week to expand sustainable energy financing and increase access to finance for smaller businesses in Saudi Arabia.
"The loan will help SOLC, the largest private leasing company in Saudi Arabia, increase the number of leases it provides to small and medium enterprises that are investing in energy efficient, renewable energy and cleaner production projects," said Walid Almurshed, IFC's country manager for Saudi Arabia.
Under the agreement, IFC will also provide advisory services to help SOLC increase its sustainable energy finance portfolio in Saudi Arabia.
IFC has made three previous investments of over SR20 million, SR22 million and SR65 million in SOLC, in 2000, 2003 and 2006 respectively.
"Through this investment, IFC demonstrates its commitment to expanding sustainable energy finance in the region to address the effects of climate change,'' Almurshed added.
The investment in SOLC is part of IFC's strategy in Saudi Arabia to help SMEs access finance through alternate financial instruments, such as insurance and mortgage finance. IFC has also worked with financial institutions in Saudi Arabia to strengthen their risk management systems and corporate governance practices.
"IFC's investment will provide us with an opportunity to lead Saudi Arabia's financial institutions in providing sustainable financing opportunities that will help cut carbon emissions, while also supporting the small businesses that drive job creation," said Waheedullah Shah, SOLC's assistant general manager for marketing.
Leasing plays an important role in promoting a strong and sustainable private sector in emerging markets, helping micro, small, and medium enterprises gain access to finance.
Leasing can also be an effective channel in tackling the critical global challenges of climate change and food shortages by supporting investments in energy efficiency, renewable energy, cleaner production, and agribusiness equipment.
IFC creates opportunities for people to escape poverty and improve their lives.
It fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing capital for private enterprise, and providing advisory and risk mitigation services to businesses and governments.
Its new investments totaled $14.5 billion in the 2009 fiscal year, helping channel capital into developing countries during the financial crisis.
By MD RASOOLDEEN
© Arab News 2010
