Algerie Leasing

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Project Description: The project consists of the establishment of Algérie Leasing (AL, the Company) as the first private leasing company in Algiers, Algeria, to offer medium term lease finance mainly to Small and Medium Enterprises (SMEs) in various sectors of the economy, including the transport, construction, agribusiness, and other sectors. AL will be established with a proposed share capital of US$10 million equivalent. The equivalent of a total funding of US$10 million for the Company''s lease operations is expected to be provided in local currency by the Caisse Nationale d''Epargne et de Prévoyance (CNEP), with a partial garantee from IFC (about 40%).Developmental Impact: The developmental impact of the project is expected to be broad and far-reaching. First, the project will provide SMEs with increased access to finance, many for the first time in the formal financial sector. Currently, most SME investment requirements are not met by the existing commercial banks which require heavy collateral and overburdening administration. Projected AL leases over US$500 million are expected to help finance the expansion and modernisation of SMEs in various productive sectors. This would in turn help boost growth and job creation. Second, the project is expected to promote growth and increase competition in the financial sector as the leasing industry grows and brings new players and instruments into the market. Third, the project will introduce new technology, know-how and skills transfer. Tunisie Leasing will provide external and internal training to its staff in the various areas of leasing. Fourth, the project will support Algeria''s economic diversification by financing economic activities in non-oil related sectors. IFC Role: IFC has been a supporter of establishing leasing as an appropriate vehicle for addressing the financing needs of SMEs in Algeria and has assisted the World Bank in drafting the country''s leasing regulations. IFC has approached Tunisie Leasing to act as the technical partner and has put ABC in contact with Tunisie Leasing as the foreign technical partner. IFC is also playing a key role in structuring the project and securing the agreement of all parties by truly assuming its role as “honest broker”. Furthermore, IFC’s involvement is providing comfort to the Government, as well as to both local and foreign investors. IFC is expected to continue to play a role in further developing the Company and the leasing sector. Lastly, this project will also have the added benefit of expanding and developing the Algerian financial markets, especially through non-bank financial institutions.