WASHINGTON – The World Bank Group’s Board of Executive Directors on December 18, 2015 approved a US$5 million grant focused on job creation in Palestine. The Finance for Jobs project aims at catalyzing private investment in high potential sectors for job creation.
This initial Finance for Jobs Project – which is anticipated to be one in a series – will test the effectiveness of selected financial interventions. This will commence with a matching grant instrument to foster job creation through support to business start-up investment funds currently operating in Palestine. The series of projects will build on lessons learned and achievements over time and will scale-up the design in the direction of the most efficient financing.
“Jobs are among the most pressing issues in Palestine. In the absence of new private sector investment, there is a limited potential for new employment. It is crucial to identify new ways and means to bring sustainable transformational impacts on the livelihoods of the Palestinian people despite the difficult investment climate,” said Steen Lau Steen Lau Jorgensen, World Bank Country Director for West Bank and Gaza.
According to the WB press release, the Palestinian population continues to grow at an annual rate of 3 percent while a quarter of the Palestinian labor force is unemployed. Amongst Gaza’s youth, the rate exceeds 60 percent. In a context of fragility and conflict, there is a need to mobilize private sector financing and know-how in support of jobs and entrepreneurship. However, the political instability and the continued restrictions on movement, access, and trade subdue the private sector to perform below its potential.
The project, the WB states, will develop a new financing instrument ‘Development Impact Bonds’ to support private sector focused skills development, particularly for youth ages 18–29 years with a targeted share of 30 percent women. The Development Impact Bond is designed to crowd-in private sector financing of skills training. The investors are then remunerated based on achieving specific job-related outcomes. This will foster a closer link between private sector needs and skills supply and bring private sector efficiencies to service delivery. Other financial support will also be investigated as part of the project with a view to increasing new private investment for jobs.
“The Development Impact Bonds will help improve the employment generation. The skills mismatch in the labor market is a key constraint to employment outcomes, especially for youth and women. This new funding model seeks to increase efficiency in program implementation to ensure job creation,” said Abdalwahab Khatib, World Bank Private Sector Development Specialist.
The private sector will benefit of capacity building services and better qualified staff. In addition, the public-private collaboration to facilitate market incentives and new development policies will have social and economic returns – ones that ensure financial stability and promote social inclusion.
Story adapted from WB report