By providing a guarantee, GuarantCo enabled Wataniya Palestinian Telecom (“WPT”) to access USD 25m of financing from two local banks, the Bank of Palestine and Commercial Bank of Palestine. WPT was keen to involve as much financial support from the Palestinian banking sector as possible.
BoP and CBoP have substantial USD deposits (Palestine doesn’t have its own currency) and were enthusiastic to support this major investment. However local bank regulations limited the amount they could lend without a guarantee. Offshore financing also came from overseas lenders including IFC, Standard Bank and Ericsson Credit (the latter two partially guaranteed by EKN, the export credit agency of Sweden)
Mobile phone penetration in Gaza and the West Bank was a relatively low 29% in 2008 as the service was poor. WPT has introduced high quality communications services at affordable prices. Increased competition is expected to lead to lower tariffs and reliable services for consumers which will reduce the cost of doing business in all sectors. Given the restrictions on movement for Palestinians, good mobile telecommunications are even more critical for social and economic development than elsewhere.
The single largest private sector investment in Palestine, WPT will demonstrate to other investors that the investment climate has improved and that other infrastructure projects are possible.