Currently, there are 8 Micro Finance Institutions (MFIs) affiliated with the Palestinian Network for Small and Micro Finance. The 8 MFIs operate under various legal structures, such as non-governmental organizations (NGOs), co-operatives, non-profit companies, and donor programs.
Several studies, which were carried out in the Palestinian credit space, have uniformly agreed on the pre-existence of a significant gap between finance demand and supply in Palestine. A study by Federcasse and the PMA estimated this credit gap to be over $80 million per year. ICON-INSTITUTE estimated the lending gap attributable to MSMEs in Palestine to be between US$ 623 million – US$ 668 million. This indicates a significant shortage of finance for Palestinian MSMEs and an immeasurable obstruction to the full development of the Palestinian economy.
On a regulatory level, the microfinance sector has undergone shifts that require MFIs to transform into company structures, which provides a window of opportunity for investors interested in potential value in the industry.
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