1. SANAD MENA Fund for MSME Babette Stein von Kamienski Head of Division Sustainable Economic Development, MENA Workshop on Support for Euro-Mediterranean industrial cooperation, Milan, December 13-15 2011

2. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 222 Status Quo: Severe lack of access to finance for MSMEs Reasons  High liquidity is used for government financing  Lack of appropriate SME lending technologies  Missing middle – no access to finance Why SANAD?

3. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 333  Reducing poverty  Creating employment  Building inclusive financial systems SANAD – Regional Fund for MSME Mission

4. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 44 Investors Micro-, Small and Medium Enterprises Partner Financial Institutions BMZ / EU International Finance Institutions Public donors Arab Investors Private Investors, Trusts, Funds, etc Products: Loans / Guarantees / Equity Maturities: Medium / Long term maturities Currency: foreign & local currencies Technical Assistance Facility NGO Bank MFI ….. NGO MFI Mechanism to improve access to finance Investors – SANAD – Partners – MSME

5. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 5 Algeria Egypt Iraq Jordan Lebanon Morocco Palestinian Territory Syria Tunisia Yemen 5 Target Countries

6. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 666 Focus on the Missing Middle: USD 10,000 to USD 100,000  The Fund is estimated to reach a portfolio of 100-300m USD within five years segmented into -50% to micro and very small enterprises -27% to small enterprises -23% to medium enterprises  Initial funding -16m EUR plus 4m EUR for TA - BMZ -8m EUR plus 2m EUR for TA - European Union -Further Donors and IFIs currently approached Targeting Policy Investments & Funding

7. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 777  MFIs - Short-term tailor-made TA in areas such as product development, risk management, financial management/ALM, and strengthening middle management capacities  Banks - Support banks in down-scaling to the lower segment of SME (“missing middle”) - Market/feasibility studies, strategy development, product development, training and coaching of staff etc.  New initiatives - Concept development, feasibility studies, start-up phase Technical Assistance Facility (I) TA Target Areas

8. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 8 Implementation Launch  August 2011 Up to now  First countries: Egypt, Jordan, Lebanon, Tunisia  Investments: First three loans approved  TA Measures: First TA to MFI (Egypt) approved (Credit Risk & Delinquency Management) Further steps  Preparation to also provide equity by 2012  Approaching further Investors to join

9. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 999 Contact Details Babette Stein von KamienskiKfW Bankengruppe Head of DivisionPalmengartenstraße 5–9 Middle East / North Africa60325 Frankfurt am Main Education and Private Sector DevelopmentPhone +49 69 7431-3705 babette.stein@kfw.de Thank you

10. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 10 Backup (I) Risk Subordination and Leverage Waterfall Principle – Tranches - Investors C-shares B-shares A-shares Notes Commercial Investors Development Finance Institutions Public Donors KfW on behalf of BMZ (unlimited duration) EU / NIF (15 years) Losses Income Waterfall

11. © KfW SANAD Euro-Med Workshop, Milan December 14, 2011 11  Strategic orientation towards MSME target group  Minimum thresholds in outreach and regional diversification Financial Strength  Minimum standards in portfolio quality, capital adequacy and profitability  Qualified management and sound internal systems and processes ESG (Environmental, Social, Governance)  Maintenance and promotion of good governance standards  Adoption of international and local social and environmental guidelines  Adherence to Responsible finance principles MSME Target Group Orientation Backup (II) Eligibility Criteria for Partner Institutions Target Group Orientation – Financial Strenght – ESG