Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
It is possible to sell to the Palestinian Authority (PA). Please review the Treasury/OFAC Guidance on Transactions with the PA, dated May 14, 2013. The PA procures all its needs from local prequalified vendors who represent the U.S. and international companies.
The PA is not a member of the World Trade Organization (WTO) but has consistently expressed an interest in Permanent Observer status, having participated in the 2005, 2009, 2011, 2013, 2015, and 2017 WTO Ministerial meetings as an ad hoc observer and has applied to join the international organization as a member. Exports to and imports from the U.S. are not subject to any duties as Palestinian products benefit from the 1996 Duty-Free Treatment of Products of the West Bank and Gaza.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Project finance is available to U.S. investors from the following U.S. government agencies: The U.S. International Development Finance Corporation (DFC) and the U.S. Trade and Development Agency (TDA). The World Bank’s International Finance Corporation (IFC) and the European Community’s local development banks and credit agencies also provide project finance, although loans from the latter generally go to local Palestinian companies or firms with a connection to European companies.
The U.S. International Development Finance Corporation is an agency that brings together the capabilities of OPIC and USAID’s Development Credit Authority, while introducing new and innovative financial products to bring private capital to the developing world better. DFC provides direct loans and guarantees up to $1 billion per eligible project through its full range of financial tools, which includes equity and debt financing, political risk insurance, and technical development and assistance. DFC targets investments with less than 50% government ownership. This includes public private partnerships (PPP) projects, financial institutions, and investment funds. DFC assesses the development impact of all projects, including the impact on local economic growth and job creation, innovation, inclusion, and environmental and social impacts. DFC supports projects in a variety of sectors, including critical infrastructure, power generation, healthcare, telecommunications, housing, agribusiness, and financial services. Due to operating conditions or other policy considerations, there may be additional constraints on projects in the West Bank and Gaza.
TDA promotes economic development in developing countries by funding feasibility studies, consultancies, training programs, and other project-planning services. TDA has financed several feasibility studies in the food, ICT, and wastewater sectors and organized and financed orientation visits to the United States for power and telecommunications officials and stone and marble executives from the West Bank.
EXIM does not have a program for the West Bank and Gaza, but one exists for Jordan that Palestinian importers could use if they have a partner in the Jordanian market. EXIM provides project finance in the form of direct loans, guarantees, or a combination of both through its Project Finance Division, in which outside consultants are contracted to evaluate projects. These services are available to major U.S. suppliers and to project sponsors without access to bank or government guarantees. The equity investor must be both creditworthy and exposed to meaningful financial risk. The direct loan and/or guarantee can cover up to 85% of the contract amount. EXIM is committed to completing its evaluation and issuing a preliminary indication of willingness to finance a project within 45 days from the day all the required documentation is submitted with the application for financing.
International Finance Corporation (IFC), the private sector arm of the World Bank, was established to encourage private-sector activities in developing countries. IFC provides loans, equity investments, guarantees, and stand-by financing. Multilateral Investment Guarantee Agency (MIGA) also offers political risk insurance.
USAID/West Bank and Gaza Mission has funded activities and programs to increase private-sector economic opportunities for Palestinians, encouraging broad-based growth by addressing key problems which hinder economic opportunities: access to financial services, access to markets, productivity and competitiveness of Palestinian firms, trade facilitation, public financial management, and the policy framework for private-sector development. Improving private-sector opportunities to achieve increased employment and incomes will help build support for the peace process and provide a stable foundation for long-term prosperity. USAID programs ceased in 2019 but were re-established in 2021.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
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