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Tunis, 22 April 2009 – The Board of Directors of the African Development Bank (AfDB) Group approved on Wednesday, 22 April 2009 in Tunis a Euro 6 million partial credit guarantee facility to Maghreb Leasing Algérie (MLA). This instrument will enable the company to raise the equivalent of € 12 million in Algerian Dinars through a consortium of local banks.
This facility is the Bank Group’s first private sector operation in Algeria and will facilitate MLA’s expansion and help the company develop its leasing portfolio by locally mobilizing the resources required to finance its growth.
MLA is a joint stock company governed by Algerian law incorporated in 2006, under the initiative of its major shareholders, Tunisie Leasing Group (also technical partner) and Amen Bank. These 2 institutions had previously benefited from the Bank’s support. After 3 years of operations, MLA has risen to become the first Algerian leasing company with 25% of the leasing market share in terms of new leases and a target clientele that is exclusively Small and Medium Sized Enterprises (SMEs). The funds mobilized will allow MLA to finance 100 additional SMEs (almost a 20% increase of its current clientele); create 260 new jobs and help in consolidating another 3,000 jobs.
The project is in line with identified Algerian government priorities in private sector promotion and development, in particular, the SME sub-sector, as part of the country’s economic diversification and job creation strategy. It is also consistent with the Bank Group’s policy to strengthen cooperation in middle income countries as well as its Private Sector Operations Strategy to empower financial intermediaries on the continent.
The Bank’s support to the leasing sector is motivated by the fact that leasing is perceived as an efficient way to both promote and modernize SMEs and the financial sectors. Leasing provides alternative financing mechanism to traditional financial products which are not always appropriate for SMEs’ medium- and long-term investment needs. It also gives SMEs the opportunity to develop and modernize their productive infrastructure.
The Board underscored the demonstration effect created by AfDB’s intervention in this new expanding sector, and acknowledged the project’s capacity to enhance technology and know-how transfer within the context of South-South partnership.