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Arab Fund for Economic & Social Development

Annual Report 2016

Arab Fund for Economic & Social DevelopmentP.O. Box: 21923 - Safat 13080, Kuwait

Telephone: +965 24 95 90 00Facsimile: +965 24 95 93 90 / 91 / 92

Electronic Mail: [email protected] Web Site: www.arabfund.org

Address: Arab Organizations Headquarters BuildingAirport Road, Shuwaikh

State of Kuwait

Annual Report 2016 3

Arab Fund For Economic & Social Development

Member States, Governors and Alternate Governors

(1) States are listed in the order in which their names appear in the list of signatories to the Agreement Establishing the Fund, and according to the date of adhesion to the Agreement.

(2) Names of Governors and Alternate Governors are given as at 31/12/2016.

* Membership suspended pursuant to the Board of Governors Resolution No. 3 of 1993, which has been extended annually by subsequent resolutions of the Board of Governors until 2016.

Member States(1) Governors(2) Alternate Governors(2)

The Hashemite Kingdom of Jordan H.E. Mr. Imad Najib Fakhoury H.E. Dr. Saleh A. Al-Kharabsheh

The Republic of Tunisia H.E. Mr. Mohamed Fadhel Abdelkefi -

The Algerian Democratic and Peoples Republic H.E. Mr. Hadji Baba Ammi -

The Republic of Sudan H.E. Mr. Bader El-Din Mahmoud Abbas -

The Republic of Iraq - -

The Kingdom of Saudi Arabia H.E. Mr. Mohammed Bin Abdullah Al Jadaan -

The Syrian Arab Republic - -

State of Libya H.E. Mr. Osama Saad Hamad Saleh -

The Arab Republic of Egypt H.E. Dr. Sahar Nasr H.E. Dr. Ashraf El-Araby

The Republic of Yemen H.E. Dr. Muhammad Saeed Al Saadi H.E. Dr. Mohamed Ahmed Ali Al-Hawri

The State of Kuwait H.E. Mr. Anas Khalid Al Saleh H.E. Mr. Abdulwahab Al-Bader

The Republic of Lebanon H.E. Mr. Nabil Adnan Al-Jisr H.E. Mr. Alain Bifani

The Kingdom of Morocco H.E. Mr. Mohamed Boussaid -

United Arab Emirates H.E. Mr. Obaid Humaid Al-Tayer -

The Kingdom of Bahrain H.E. Sheikh Ahmed Bin Mohammed Al-KhalifaH.E. Mr. Yousif Abdulla Humood

The State of Qatar H.E. Mr. Ali Shareef Al Emadi -

The Somali Democratic Republic* - -

The Islamic Republic of Mauritania H.E. Mr. El Moctar Ould Djay H.E. Mr. Abass Sylla

Sultanate of Oman H.E. Mr. Darwish Bin IsmaeelBin Ali Al-Bulushi -

Palestine H.E. Dr. Nabil Hani Al-Qaddumi H.E. Dr. Ismail El-Zabri

The Republic of Djibouti H.E. Mr. Ilyas Moussa Dawaleh -

The Union of the Comoros H.E. Mr. Said Ali Said Chayhane -


Director General/Chairman of the Board of Directors

Mr. Abdlatif Y. Al-Hamad

Members of the Board

Mr. Abdulwahab Al-Bader

Mr. Ibrahim Bin Mohamed Al Mofleh

Mr. Abderrahmane Raouya

Mr. Taher Sarkez

Dr. Shehab Eldin Marzban

Mr. Saeed Rashid Al Yateem

Mr. Ali Bin Mohammad Redha Bin Jaffar

Mr. Fouzi Lekjaa

Board of Directors


(KD Million)

Capital* 2740.8

Total Resources 3333.5

Loans

Number of Loan Agreements Signed During the Year 9

Total Amount of Signed Loan Agreements During the Year 445

Total Number of Loans 650

Cumulative Amount of Loan Agreements Signed 9269.7

Cumulative Disbursements on Effective Loans 6013.8

Cumulative Loan Repayments 3202.1

Outstanding Debt Owed to the Arab Fund 2811.7

Grants

Total Number of National and Inter-Arab Grants 1111

Cumulative National and Inter-Arab Grant Commitments 215.0

Cumulative Contributions to the Urgent Program to Support the Palestinian People 129.1

Cumulative Contributions to the Program to Support the Resistance of Jerusalem 29.7

* During its Annual Meeting held on April 2, 2013, the Board of Governors resolved to increase the authorized capital of the Arab Fund to KD 4 billion and to raise the subscribed capital to KD 3 billion. This capital increase is to be effected through the capitalization of part of the additional reserve in the amount of KD 500 million, and by means of additional subscriptions by member states in the aggregate amount of KD 500 million, to be paid in installments over 5 years. The amount mentioned above represents the paid-in capital.

Basic Financial Data on the Arab Fund

as at 31/12/2016

8 Annual Report 2016

Overview of Arab Fund Activities

IntroductionDuring 2016, the Arab Funds lending program focused on continued support to Arab countries efforts in implementing high-priority economic and social development projects. Priority was given to infrastructure projects aimed at providing facilities and basic services, increasing production capacity, and improving the investment environment in Arab countries. In addition, the Arab Fund continued to allocate national and inter-Arab grants to member countries aimed at providing institutional support and training, contributing to the financing of general studies and research, as well as organizing seminars and conferences, in addition to providing support to the Palestinian people through the Urgent Program and the Program to Support the Resistance of Jerusalem.

Loans During the year, the Arab Fund extended 9 loans, to 6 Arab countries, for a total amount of KD 445.0 million. These loans contributed to the implementation of 9 projects, including 8 new and 1 previously financed project. The total cost of these projects was estimated at about KD 1.9 billion, with the loans provided by the Arab Fund covering about 23.5% of that amount. The share of loans provided to the energy and electricity sector represented about 28.1% of the total loan commitments during the year, that of the water and sewerage sector and the agriculture and rural development sector about 24.7% each, and that of the transport and telecommunications sector about 22.5%, of the total amount of loans.

Cumulative LoansSince the commencement of its activities in 1974 and until the end of 2016, the cumulative number of loans provided by the Arab Fund to the public and private sectors has reached 650 for a total amount of about KD 9.3 billion. These loans contributed to the financing of 550 projects in 17 Arab countries, and covered about 25.6% of the total cost of these projects. The infrastructure sectors received the majority of loans extended during that period, with a share of about 69.8% of the total amount of loans, followed by the productive sectors with about 20.0%, then the social services sectors with about 7.1%, and the other sectors with about 3.1%. The cumulative number of loans extended to the private sector over that period has reached 14, for a total amount of about KD 56.0 million. Cumulative disbursements of loans extended to both the public and private sectors over the period 1974 - 2016 amounted to about KD 6.0 billion, representing about 76.1% of the net amount of effective loans. The Arab Fund also contributed to the capital of 7 private companies, for a total amount of about KD 31.7 million, in addition to its contribution to the capital of the fund established by the International Finance Corporation (IFC), in an amount of KD 10.0 million.


GrantsThe Arab Fund provided 20 national and inter-Arab grants in 2016, for a total amount of about KD 3.9 million. These grants included 10 national grants for a total amount of about KD 2.1 million, about 83.3% of which was allocated for institutional support and training, about 16.2% for general studies and research, and about 0.5% for seminars and conferences. The grants also included 10 inter-Arab grants for a total amount of about KD 1.8 million, about 85.4% of which was allocated for institutional support and training, about 9.0% for seminars and conferences, and about 5.6% for general studies and research. The Arab Fund also continued its annual contribution to support the Palestinian people, allocating about KD 7.8 million during 2016 to the fourteenth phase of the Urgent Program, and about KD 15.3 million to the Program to Support the Resistance of Jerusalem.

Cumulative GrantsThe cumulative amount of grants extended by the Arab Fund, since the commencement of its operations and until the end of 2016, has reached about KD 373.7 million, of which about KD 149.3 million were provided for the implementation of 586 national grants, about KD 65.7 million for the implementation of 525 inter-Arab grants, about KD 129.1 million as contributions to the 14 phases of the Urgent Program to Support the Palestinian People, which began in 2001, and about KD 29.7 million as contributions to the Program to Support the Resistance of Jerusalem, during the years 2010 and 2016. Total disbursements of these grants amounted to about KD 294.9 million, or about 82.3% of their net amount.

Joint Arab Action The Arab Fund continued, in 2016, its activities in various areas in support of priority sectors and in response to decisions and directives of Arab summits, which accorded a special importance to projects and issues related to joint Arab action. In this context, these activities included coordination between the Arab national and regional development institutions, and cooperation with international institutions, enhancement of Arab food security, support to small and medium enterprises, financing of Arab trade, establishment of an Arab development portal, preparation of the Joint Arab Economic Report, cooperation with the World Bank in the Arab Spring Development Initiative, and support to Arab and regional institutions.

Financial StatementsAccording to the Arab Funds financial statements for the year ending 31/12/2016, total income was about KD 82.11 million compared to about KD 96.50 million in 2015, while total administrative expenses were about KD 8.52 million compared to about KD 8.51 million in 2015. The Arab Funds net profit for the year 2016 was about KD 59.18 million, compared to about KD 77.51 million for the year 2015. The statements also show that total member countries equity was about KD 3333.52 million as at 31/12/2016, compared to about KD 3223.69 million at the end of 2015.


First: The Lending Program

PreambleDuring 2016, the Arab Fund continued to support projects that have high priority in the development plans of Arab countries and strengthen their economic and social development efforts. The lending program for the year focused mainly on projects in the energy and electricity sector, the water and sewerage sector, and the transport and telecommunications sector. The program also included projects in the agriculture and rural development sector.

Appraisal of Projects and Signed Loan Agreements During the year, the Arab Fund studied several requests it received from member countries for financing projects. These projects were appraised by the Arab Funds technical staff through office work and field trips to ensure their technical and economic feasibility, and their conformity with development program priorities in member countries.

A total of 9 loan agreements were signed during the year, for a total amount of KD 445.0 million. These loans contributed to the financing of 9 projects in 6 Arab countries. The total cost of these projects was estimated at about KD 1.9 billion, with the loans provided by the Arab Fund covering about 23.5% of that amount.

Effective Loan Agreements A total of 10 loan agreements with 7 Arab countries, amounting to KD 329.0 million, became effective in 2016. These loans were provided for the implementation of projects in the sectors of transport and telecommunications, energy and electricity, water and sewerage, social services, and in other sectors. Public Sector ProjectsThe Arab Fund extended 9 public sector loans during the year, amounting to KD 445.0 million, for the implementation of 8 new projects and 1 previously financed project. Table 1 shows the loan commitments by the Arab Fund during 2016, and Annex 1 provides the project sheets for these loans.

Infrastructure sectors accounted for about 75.3% of the total amount of loans provided during 2016, in light of priorities set in member countries plans and programs that focused on improving these sectors and providing an environment conducive to investment and employment opportunities. In this context, three loans were extended to finance energy and electricity projects, and amounted to KD 125.0 million or about 28.1% of the total. These projects aim at meeting the increasing demand for electricity in Egypt through the construction of a power generating station, and in Mauritania through the construction of a wind farm, as well as reinforcing the electrical interconnection between Mauritania and Senegal. Two loans were extended to finance water and sewerage projects, and amounted to KD 110.0 million or about 24.7% of the total amount of loans extended during the year. The first loan was allocated for the construction of two dams and related water conveyance facilities in Tunisia, and the second for the construction of


two transmission lines of desalinated water in Oman. Two loans were also extended to finance transport projects, for a total amount of KD 100.0 million or about 22.5% of the total. The first loan was allocated for the completion of the railroad for a high-speed train between Tangier and Casablanca in Morocco, and the second for the development and expansion of the main roads in Oman. The Arab Funds loans for the year also included two loans for agriculture and rural development projects, for a total amount of KD 110.0 million or about 24.7% of the total, the first to finance phase I of the Roseires irrigation project in Sudan, and the second to finance a project to supply water and develop the agricultural system in the Sinai Peninsula in Egypt.

Softening of Lending TermsWith a view to increasing the grant element in Arab Funds loans, the Board of Directors resolved, at its meeting held on November 27, 2016, to amend the Arab Funds lending terms by reducing the rate of interest from 2.5% to 2.0% for low income member states, and from 3.0% to 2.5% for other member states, and to increase the loan repayment period to 30 years, including a grace period not exceeding 7 years, for all member states.

Private Sector Projects The Arab Fund continued to support the role of the private sector in the economic and social development of Arab countries. During the year, the Arab Fund approved a contribution to the financing of a project to build a campus for a private university in Bahrain, through a subscription to the capital of the company which owns the project, and approved, in principle, the provision of a loan to the company. The Arab Fund also approved a contribution to the capital of a real estate company which is constructing a commercial and residential center in Morocco. It also studied several requests to participate in the financing of private sector projects in 4 Arab countries; they included projects in the industry, agriculture, fisheries and energy sectors. These requests remain under study.


Table 1Loan Commitments During 2016

No. Country ProjectAmount of Loan

(KD Million)

Date of Signature of Loan

Agreement

1 Republic of TunisiaConstruction of Saida and Kalaa Kebira Dams, and Related Water Conveyance Facilities

50 26/01/2016

2 Islamic Republic of Mauritania

Reinforcing the Electrical Interconnection between Mauritania and Senegal (Nouakchott - Tobein Line)

30 02/02/2016

3 Arab Republic of Egypt Damanhour Combined Cycle Power Generating Station (1800 MW) 60 05/04/2016

4 Republic of Sudan Roseires Irrigation (Phase I) 60 05/04/2016

5 Arab Republic of Egypt Water Supply and Development of the Agricultural System in the Sinai Peninsula 50 05/04/2016

6 Islamic Republic of Mauritania Construction of a Wind Farm in Boulenoir 35 06/04/2016

7 Kingdom of Morocco High-Speed Train Tangier - Casablanca (Second Loan) 50 22/12/2016

8 Sultanate of Oman Development and Expansion of Main Roads 50 28/12/2016

9 Sultanate of OmanTransmission Lines of Desalinated Water from Al Ghubrah to Al Seeb and from Barka to Ad Dakhiliya Governorate

60 28/12/2016

Total 445


Monitoring of Public and Private Projects The Arab Fund continued to monitor the progress of ongoing projects, follow up the fulfillment of the conditions set forth in their loan agreements, and take the necessary steps to ensure their proper implementation. During 2016, 6 projects were completed; their total cost amounted to about KD 1.2 billion, with the Arab Fund covering about 19.4% of that cost.

Cumulative Lending ActivitiesSince the commencement of its operations in 1974 and until the end of 2016, the Arab Fund extended 650 loans, for a total amount of about KD 9.3 billion. These loans contributed to the financing of 550 projects in 17 Arab countries, and covered about 25.6% of the total cost of these projects. Annex 3 presents a summary of the loans extended to member countries over the period 1974 2016, while Annex 5 provides details on these loans.

The cumulative amount of loans extended by the Arab Fund for infrastructure projects has reached about KD 6.5 billion, or about 69.8% of the total amount of loans, of which about KD 3.0 billion was allocated for energy and electricity projects, about KD 2.5 billion for transport and telecommunications projects, and about KD 1.0 billion for water and sewerage projects.

Loans for the productive sectors projects amounted to about KD 1.8 billion, or about 20.0% of the total amount of loans, of which about KD 1.3 billion was allocated for projects in agriculture and rural development, and about KD 0.5 billion for projects in industry and mining. Loans for projects in the social services sectors amounted to about KD 0.7 billion, accounting for about 7.1% of the total, and were allocated to projects in education, health, housing and social development. The remaining 3.1% of the total amount of loans, about KD 0.3 billion, was provided to finance projects in other sectors, which include earthquake mitigation, financial leasing and administrative development.

In addition to financing the main components of projects, the Arab Funds loans also contributed to institutional support of the entities involved and training of their employees in order to enhance their efficiency. Table 2 shows the sectoral distribution of the loans extended by the Arab Fund during 2016 and over the period 1974 2016, while Annex 4 provides a summary of that distribution among beneficiary member countries over the same period.

The cumulative lending activities of the Arab Fund also included 14 loans for private sector projects, for a total amount of KD 56.0 million, which contributed to 12 projects in Bahrain, Yemen, Mauritania, Sudan, Jordan and Egypt. These projects covered various areas, as they included the development of the productive sectors, especially iron and steel, sugar, grain silos and flour mills, glass and cement, as well as the tourism, health and financial sectors. In addition to the loans extended to the private sector, the Arab


Fund also contributed to the equity capital of 7 private companies in 4 Arab countries, namely Saudi Arabia, Egypt, Yemen and Sudan, in the fields of glass container manufacturing, iron and steel production, cement production, sugar production, power generation, healthcare services and storage facilities. By the end of 2016, the Arab Funds total equity participation in these companies reached about KD 31.7 million, in addition to its contribution to the capital of the fund established by the International Finance Corporation (IFC) in the amount of KD 10.0 million.


Sector2016 1974 - 2016

Amount % Amount %

1. Infrastructure Sectors

Transport and Telecommunications 100.00 22.5 2450.90 26.4

Energy and Electricity 125.00 28.1 2984.75 32.2

Water and Sewerage 110.00 24.7 1037.25 11.2

Subtotal 335.00 75.3 6472.90 69.8

2. Productive Sectors

Industry and Mining - - 479.70 5.2

Agriculture and Rural Development 110.00 24.7 1368.80 14.8

Subtotal 110.00 24.7 1848.50 20.0

3. Social Services Sectors* - - 661.50 7.1

4. Other Sectors - - 286.83 3.1

Grand Total 445.00 100.0 9269.73 100.0

* Includes mainly the Education, Health, Housing and Social Development Sectors.

Table 2 Loan Commitments by Sector

(KD Million)

During the Period 1974 - 2016

Sectoral Distribution of Loan Commitments (Percentage)

During 2016

Water and Sewerage

24.7%

Agriculture and Rural Development

24.7%

Energy andElectricity

28.1%

Transport andTelecommunications

22.5%

Industryand Mining

5.2%

Agriculture and Rural

Development14.8%

Social Services Sectors7.1%

Water and Sewerage

11.2% Energy and

Electricity32.2%

Other Sectors3.1%

Transport andTelecommunications

26.4%


Inter-Arab ProjectsThe Arab Fund maintained its support to joint Arab efforts to build a basic framework and to strengthen means of communication and interconnections between member countries. Since the start of its operations in 1974 and until the end of 2016, the Arab Fund extended 68 loans for a total amount of about KD 394.1 million. These loans contributed to the implementation of 32 inter-Arab projects in the areas of telecommunications, electric power, natural gas and international roads. Total disbursements of these loans have reached about KD 291.7 million at the end of 2016, or about 82.7% of their net amount. Annex 6 provides details on the loans extended by the Arab Fund to finance inter-Arab projects over the period 1974 2016.

Co-Financing ActivitiesThe Arab Fund also continued its co-financing of projects in Arab countries with Arab national, regional and international development institutions. During 2016, 4 projects were co-financed with other institutions in Mauritania, Egypt, Sudan and Morocco, in the sectors of energy and electricity, transport and telecommunications, and agriculture and rural development. During the period 1974 2016, the total contribution of the Arab Fund to projects co-financed with Arab national, regional and international development institutions has reached about KD 4.1 billion, representing about 30.6% of the total amount of co-financing of about KD 13.3 billion. Annex 8 provides details on co-financing activities over that period.

Disbursements and Repayments Total disbursements during 2016 amounted to about KD 203.9 million. Cumulative disbursements of all loans over the period 1974 2016 amounted to about KD 6013.8 million, including KD 43.1 million for private sector projects. Repayments of loans in 2016 amounted to about KD 163.6 million, while cumulative repayments over the period 1974 2016 amounted to about KD 3202.1 million, which represented about 53.2% of cumulative disbursements.


Box 1Water Projects in Arab Countries

Water resources in the Arab World are characterized by severe scarcity, as about 67% of its total area receives less than 100 mm/year of rainfall; thus, it is classified as desert and semi-desert. Arab countries suffer from severe strains on their available water resources. As the Arab World represents about 10% of the worlds area and about 5% of its total population, it has only less than 0.5% of the worlds renewable fresh water resources, which makes it among the world lowest rated in water per capita with approximately 700 m3 per year, compared to the world average which exceeds 6000 m3, and it is expected to decline to reach the water poverty level (500 m3/year) by the year 2030. The total renewable water resources in the Arab World are estimated at about 260 billion m3/year and are not all utilizable, as some of these resources are considered marginal and are far away from consumption areas. It should be noted that more than half of the water resources in Arab countries come from outside the Arab region, which constitutes an important issue for Arab water security, as these resources are subject to shortage and to deterioration in quality, especially in the absence of international agreements that secure the rights of Arab countries.

Total water consumption in Arab countries is currently about 235 billion m3, of which about 84% is allocated for agricultural purposes, and the remainder for domestic and industrial purposes. The harsh climatic conditions and the scarcity of water in the Arab region have negatively affected food security in this region, as it has shifted from being nearly self-sufficient in the early seventies to becoming the most dependent region in the world on food imports. The Arab World imports half of its food, despite the large investments made by the agricultural Arab countries to utilize most of their water resources for agriculture and implement major irrigation projects.

Since its inception and until the end of 2016, the Arab Fund has provided 161 loans to finance dams, irrigation, drinking water and sewerage projects, for a total amount of about KD 2.4 billion. Dams and irrigation projects represented about 63% of this amount, and drinking water and sewerage projects represented about 37%. The share of loans in the water sector accounted for about 25% of the total Arab Funds loans over that period, which reflects the importance and priority given to this sector. Among the most important water projects financed by the Arab Fund, are Merowe dam in Sudan, Wehdah dam in Morocco, Sidi El-Barraq dam in Tunisia, Bani Haroun dam in Algeria, conveyance of the Litani water to southern Lebanon for irrigation and drinking purposes, completion of the water conveyor from the Senegal river to supply the city of Nouakchott in Mauritania with drinking water, and the Fustat project to supply greater Cairo with drinking water in Egypt. As for sewerage projects, the Arab Funds contributions focused on the development of sewerage facilities and networks in some Arab countries.


In its continued support to the efforts of Arab countries for the development of the water sector, the Arab Fund provided, in 2016, four loans for a total amount of KD 220 million, which constitutes about 50% of the total amount of loans provided during the year. These loans were extended for the implementation of the following projects: construction of Saida and Kalaa Kebira dams and related water conveyance in Tunisia, Roseires Irrigation (phase I) in Sudan, water supply and development of the agricultural system in the Sinai peninsula in Egypt, and transmission lines of desalinated water from Al Ghubrah to Al Seeb and from Barka to Ad Dakhiliya governorate in Oman. During the year, the Arab Fund also provided two grants, for a total amount of KD 320 thousand, for a water conservation program in southern Tunisia, and for the twelfth Gulf water conference to discuss water sector issues in the Arabian Gulf region.

Over the past four decades, Arab countries have focused on the development of water resources through the construction of dams and the drilling of wells, and the transfer of water to meet the demand for drinking and industrial purposes, in order to increase agricultural production through the development of irrigated areas, and develop drinking water and sewerage services. The Arab Fund gave priority to the water sector in Arab countries, and supported their efforts to implement their plans, strategies and national policies to develop water resources and provide them for different uses. Despite the efforts to rationalize the use of available water resources, there still remains an urgent need to support and intensify efforts to face the challenges of water scarcity. Water projects are given priority in the Arab Funds strategy, through the financing of studies and projects that are a priority in the development plans and programs of member countries.


Second: Grants Grants During 2016Many grant applications were reviewed during 2016, and priorities were determined in coordination with the concerned institutions in member countries, subject to available resources. A total of 20 grants, amounting to about KD 3.9 million, were approved during the year. These grants included 10 national grants, which amounted to about KD 2.1 million and were provided to 9 Arab countries. Grants also included 10 inter-Arab grants which amounted to about KD 1.8 million, and were allocated to support activities of common interest to most Arab countries. In addition, support provided to the Palestinian people within the framework of the Urgent Program amounted to about KD 7.8 million, and that of the Program to Support the Resistance of Jerusalem amounted to about KD 15.3 million. Table 3 presents these grants.

The Arab Fund continued to give priority to activities that reinforce institutional support and training, with 12 grants allocated to these activities for a total amount of about KD 3.3 million, representing about 84.3% of total grants provided during the year. These grants included 7 national grants for a total amount of about KD 1.8 million, and 5 inter-Arab grants for a total amount of about KD 1.5 million. These grants aimed at enhancing the performance of specialized institutions by improving the quality of services they provide, and supporting the activities and programs of a number of research and education centers, in addition to providing a number of health centers with medication and medical equipment and devices in order to improve their services, as well as contributing to the financing of a project aimed at developing old neighborhoods in Muharraq, Bahrain.

The grants provided during 2016 included 3 grants, for a total amount of about KD 0.4 million, for general studies and research in a number of countries. These grants, representing about 11.3% of the total amount of grants provided during the year, aimed at conducting studies on solar technologies, water conservation and waste management. The grants provided during the year also contributed to the organization of a number of seminars and conferences, for a total amount of about KD 0.2 million representing about 4.4% of total grants, on topics of common interest to most Arab countries. Table 4 shows the grant commitments by activity.

Cumulative GrantsThe total amount of grants provided by the Arab Fund, since the beginning of its operations and until the end of 2016, amounted to about KD 373.7 million, of which about KD 215.0 million contributed to the financing of 1111 national and inter-Arab grants, and about KD 158.7 million to support the Palestinian people through the Urgent Program and the Program to Support the Resistance of Jerusalem.

The number of national grants provided reached 586 for a total amount of about KD 149.3 million, and were allocated as follows: about KD 75.2 million for institutional support and training, about KD 17.1 million for feasibility studies and project preparation, about KD 5.9 million for general studies and research, and KD 183 thousand for seminars and conferences. These grants, provided to most Arab countries, aimed at improving the performance of specialized institutions, enhancing the quality of services they provide, training their employees and managers, developing their information systems and statistics, undertaking population censuses, supporting the activities of several research centers, and preserving national heritage. Furthermore, national grants included grants for a total amount of about KD 50.9 million, which were allocated to support emergency programs to alleviate the effects of natural disasters, local disturbances, or damage caused by external aggression on some Arab countries.


The number of inter-Arab grants provided reached 525 for a total amount of about KD 65.7 million, and were allocated as follows: about KD 38.1 million to provide institutional support and training programs in several specialized scientific and research centers, about KD 13.2 million to undertake general studies and research in various economic and social development areas, about KD 6.4 million to conduct feasibility studies for specific projects, about KD 5.1 million to organize seminars and conferences to discuss priority developmental issues for Arab countries, and about KD 2.9 million to implement emergency programs.

The cumulative contributions provided by the Arab Fund to support the Palestinian people within the framework of the Urgent Program, since its beginning in 2001 and until the end of 2016, amounted to about KD 129.1 million, and within the framework of the Program to Support the Resistance of Jerusalem, in 2010 and 2016, amounted to about KD 29.7 million.

Grant Disbursements Cumulative disbursements of grants approved over the period 1974 2016 amounted to about KD 294.9 million, including about KD 171.5 million for national and inter-Arab grants, and about KD 123.5 million for the Urgent Program to Support the Palestinian People and the Program to Support the Resistance of Jerusalem. Annex 7 provides a summary of these grants over that period. During 2016, a total of 34 grants, amounting to about KD 5.8 million, were completed. This brought the total number of national and inter-Arab grants completed during the period 1974 2016 to 949, with a cumulative amount of about KD 153.0 million, while a total of 117 grants, amounting to about KD 53.6 million, remain under execution. Moreover, the total number of reimbursed and fully cancelled grants reached 45, for a total amount of about KD 8.5 million.

Support to the Palestinian PeopleSince the beginning of its operations, the Arab Fund has provided support to Palestine with the aim of limiting the destructive effects of the occupations policies and the deprivation of the Palestinian people from mobilizing their resources and building their civil society. The total amount of contributions made by the Arab Fund to Palestine, over the period 1974 2016, reached about KD 204.3 million, including about KD 187.3 million in the form of grants, and the remaining as concessional loans provided to the Palestinian National Authority.

The Program to Support the Resistance of Jerusalem: In accordance with the Arab Summits decisions regarding support to the city of Jerusalem, the Arab Fund allocated in 2016 an urgent program in an amount of US Dollars 50.0 million (equivalent to about KD 15.3 million) to support the resistance of the Palestinian people in the holy city of Jerusalem, in addition to its contribution to the Urgent Program to Support the Palestinian People. The program aims at supporting institutions and civil societies in their efforts to improve education, health and social services. The program includes the development of school curricula, teaching support and improvement of the quality of teaching in kindergartens by providing a safe learning environment for children, as well as training of teachers in modern teaching and education techniques for students, in addition to the development of the infrastructure of schools in Jerusalem. The program also includes the implementation of housing projects to provide suitable housing to marginalized groups and to those whose houses have been destroyed with the aim to rid the city of an Arab presence. This program also aims at contributing to the support of health institutions to provide appropriate specialized health services for the residents of Jerusalem and other areas, the development of the capacities of the private sector to achieve sustainable economic development through the provision of business development services and


financial services, as well as the support of renovation and rehabilitation works of buildings in the old town of Jerusalem. The Urgent Program to Support the Palestinian People: The Arab Fund continued its efforts to support the Palestinian people within the framework of the Urgent Program to Support the Palestinian People, renewed annually since 2001. During 2016, the Arab Fund allocated an amount of about KD 7.8 million, or about 10% of the Arab Funds net income for 2015, to contribute to the fourteenth phase of the program. Thus, the total contribution of the Arab Fund to this program over the period 2001 2016 reached about KD 129.1 million, and disbursements reached about KD 111.8 million.

The program contributed to the support of Palestine in various economic and social sectors within the framework of developmental priorities and programs. It contributed to the support of primary and university education by allowing for the construction and rehabilitation of school buildings to accommodate the growing numbers of students, and the support of educational institutions which were on the verge on collapse by allowing students to maintain their enrollment in universities and educational institutions to continue their educational role. The program also included support to institutions and civil societies which provide health, education and social services to the local community, to enable them to continue providing their services to the target groups.

The Urgent Program included the development of infrastructure through the construction and rehabilitation of internal and rural roads, the improvement of the electrical grid to illuminate the rural areas, the provision of housing to the marginalized groups, the provision of drinking water to the rural areas, the reclamation and development of agricultural land to stop the settlement crawl, as well as the development of small and medium enterprises and support to the role of the private sector to achieve sustainable development. The program also contributed to the provision of specialized health services for heart disease, diabetes, ophthalmology and obstetrics, as well as medical equipment and devices to hospitals and medical centers, thereby allowing for the opportunity to forego medical services provided by Israel. In addition, the program contributed to the qualification and training of doctors in various medical specializations, and allowed for outstanding students to continue their university education in prestigious universities and educational institutions. The program also contributed to the reinforcement of the perseverance of the residents of Jerusalem and the Palestinian territories, and the provision of job opportunities for young graduates and their qualification and training.

Cooperation with International and National Financial Institutions in Palestine: The Arab Fund continued its cooperation with the Islamic Development Bank, which monitors the implementation of projects financed through Al-Aqsa Fund. This cooperation included support to rural development projects, economic empowerment, emergency reconstruction works of historic buildings, construction of roads and schools, rehabilitation of water wells, reclamation of agricultural land, coverage of tuition and fees of university students, and support to non-governmental organizations that provide health, social and educational services. The total amount committed by the Arab Fund in this domain is estimated at about KD 30.0 million, including support to Jerusalem, and the disbursed amount reached about KD 24.4 million, or about 81%. Coordination between the Arab Fund and the Islamic Development Bank also included the selection of projects to be financed under the fourteenth phase of the urgent program. The Arab Fund also continued its management and follow up of grants provided by the OPEC Fund for International Development to Palestine. The total number of grants managed by the Arab Fund reached 359, amounting to about US Dollars 65.9 million, and disbursements of these grants amounted to about 98.3% of the total.

22Annual Report 2016

Grants Approved During 2016Table 3

No. Beneficiary/GrantAmount

Allocated(KD 000)

No. of Grant Date of Board Approval

A: National Grants

1 Algeria/ Contribution to the Financing of a Program for the Rehabilitation of Capabilities in Algeria (2) 300 2/2016 02/03/2016

2 Yemen/ Contribution to the Provision of Medicine to Cancer Patients (2) 300 5/2016 04/04/2016

3 Lebanon/ Contribution to the Coverage of the Cost of Surgery for Sick Children in the Cancer Center for the Period 2016-2017 (2) 200 6/2016 04/04/2016

4 Bahrain/ Contribution to the Second Phase of the Project on the Development of Neighborhoods in Muharraq (2) 150 7/2016 04/04/2016

5 Jordan/ Contribution to the Construction of an Additional Building (Student Dormitories and Teachers Apartments) for Kings Academy (2) 200 8/2016 19/06/2016

6 Morocco/ Contribution to the Financing of a Study on the Integration of Solar Technologies to Enhance Agricultural Production Inside Greenhouses (3) 40 DG/13-2016 27/07/2016

7 Kuwait/ Contribution to the Financing of the Forum for Blind Arabs (4) 10 DG/14-2016 24/11/2016

8 Egypt/ Contribution to the Financing of the Second Phase of the Sustainable Development Plan and the Demining of the North Western Coastline (2) 300 15/2016 27/11/2016

9 Tunisia/ Contribution to the Financing of a Water Conservation Program in Southern Tunisia (3) 300 16/2016 27/11/2016

10 Jordan/ Contribution to the Coverage of the Cost of a Tomography Device to Diagnose and Treat Cancer in the King Hussein Cancer Center (2) 300 17/2016 27/11/2016

Total National Grants 2100

(1) Feasibility Studies and Project Preparation (2) Institutional Support and Training(3) General Studies and Research (4) Seminars and Conferences(5) Emergency Programs


Gra

nts

App

rove

d D

urin

g 20

16Ta

ble

3

No.

Ben

efic

iary

/Gra

ntA

mou

nt

Allo

cate

d(K

D 0

00)

No.

of

Gra

ntD

ate

of B

oard

A

ppro

val

A: N

atio

nal G

rant

s

1Al

geria

/ Con

tribu

tion

to th

e Fi

nanc

ing

of a

Pro

gram

for t

he R

ehab

ilitat

ion

of C

apab

ilitie

s in

Alg

eria

(2)

300

2/20

1602

/03/

2016

2Ye

men

/ Con

tribu

tion

to th

e Pr

ovis

ion

of M

edic

ine

to C

ance

r Pat

ient

s (2

) 30

05/

2016

04/0

4/20

16

3Le

bano

n/ C

ontri

butio

n to

the

Cov

erag

e of

the

Cos

t of S

urge

ry fo

r Sic

k C

hild

ren

in th

e C

ance

r Cen

ter f

or th

e Pe

riod

2016

-201

7 (2

)20

06/

2016

04/0

4/20

16

4Ba

hrai

n/ C

ontri

butio

n to

the

Seco

nd P

hase

of t

he P

roje

ct o

n th

e D

evel

opm

ent o

f Nei

ghbo

rhoo

ds in

Muh

arra

q (2

)15

07/

2016

04/0

4/20

16

5Jo

rdan

/ Con

tribu

tion

to th

e C

onst

ruct

ion

of a

n Ad

ditio

nal B

uild

ing

(Stu

dent

Dor

mito

ries

and

Teac

hers

Apa

rtmen

ts)

for K

ing

s Ac

adem

y (2

)20

08/

2016

19/0

6/20

16

6M

oroc

co/ C

ontri

butio

n to

the

Fina

ncin

g of

a S

tudy

on

the

Inte

grat

ion

of S

olar

Tec

hnol

ogie

s to

Enh

ance

Agr

icul

tura

l Pr

oduc

tion

Insi

de G

reen

hous

es (3

)40

DG

/13-

2016

27/0

7/20

16

7Ku

wai

t/ C

ontri

butio

n to

the

Fina

ncin

g of

the

Foru

m fo

r Blin

d Ar

abs

(4)

10D

G/1

4-20

1624

/11/

2016

8Eg

ypt/

Con

tribu

tion

to th

e Fi

nanc

ing

of th

e Se

cond

Pha

se o

f the

Sus

tain

able

Dev

elop

men

t Pla

n an

d th

e D

emin

ing

of th

e N

orth

Wes

tern

Coa

stlin

e (2

)30

015

/201

627

/11/

2016

9Tu

nisi

a/ C

ontri

butio

n to

the

Fina

ncin

g of

a W

ater

Con

serv

atio

n Pr

ogra

m in

Sou

ther

n Tu

nisi

a (3

)30

016

/201

627

/11/

2016

10Jo

rdan

/ Con

tribu

tion

to th

e C

over

age

of th

e C

ost o

f a T

omog

raph

y D

evic

e to

Dia

gnos

e an

d Tr

eat C

ance

r in

the

King

H

usse

in C

ance

r Cen

ter (

2)

300

17/2

016

27/1

1/20

16

Tota

l Nat

iona

l Gra

nts

2100

(1) F

easi

bilit

y St

udie

s an

d Pr

ojec

t Pre

para

tion

(2) I

nstit

utio

nal S

uppo

rt an

d Tr

aini

ng(3

) Gen

eral

Stu

dies

and

Res

earc

h

(4

) Sem

inar

s an

d C

onfe

renc

es(5

) Em

erge

ncy

Prog

ram

s

Annual Report 201623

Grants Approved During 2016Table 3 (Continued)

No. Beneficiary/GrantAmount

Allocated(KD 000)

No. of Grant Date of Board Approval

B: Inter-Arab Grants

1 ERF/ Contribution to the Financing of the Activities of the Arab Spring Initiative for Development during the Period 2014-2016 (the Portion for 2016) (2) 260 1/2016 01/01/2016

2 Arab Planning Institute/ Contribution to the Institutes Programs and Activities for the Financial Year 2015/2016 (2) 100 3/2016 02/03/2016

3 ERF/ Supporting ERFs Twenty Second Annual Meeting (4) 100 4/2016 02/03/2016

4 ICARDA/ Support to the Project for the Sustainability and Operation of the Regional Research Centers in Five Arab Countries (2) 1000 9/2016 19/06/2016

5 Arab Educational Information Network (Shamaa)/ Contribution to the Financing of the Networks Executive Program for the Period 2016-2018 (2) 60 10/2016 19/06/2016

6 Middle East and North Africa Health Policy Forum/ Contribution to the Coverage of the Forums Expenses (4) 30 DG/11-2016 26/07/2016

7 Arab Planning Institute/ Contribution to the Coverage of the Costs of the Forum on Media and Technology for Development (4) 10 DG/12-2016 04/09/2016

8 Inter-Arab/ Kuwait Environment Protection Society/ Contribution to the Financing of a Project to Develop Waste Management in Some Arab Countries (3) 100 18/2016 27/11/2016

9 Gulf Federation for Cancer Control/ Contribution to the Financing of the Cancer Awareness and Prevention Program (2) 100 19/2016 27/11/2016

10 Water Science and Technology Association/ Contribution to the Financing of the Twelfth Gulf Water Conference (4) 20 DG/20-2016 15/12/2016Total Inter-Arab Grants 1780Total National and Inter-Arab Grants 3880Fourteenth Phase of the Urgent Program to Support The Palestinian People 7751Program to Support the Resistance of Jerusalem 15250Grand Total 26881

(1) Feasibility Studies and Project Preparation (2) Institutional Support and Training(3) General Studies and Research (4) Seminars and Conferences(5) Emergency Programs


Gra

nts

App

rove

d D

urin

g 20

16Ta

ble

3 (C

ontin

ued)

No.

Ben

efic

iary

/Gra

ntA

mou

nt

Allo

cate

d(K

D 0

00)

No.

of

Gra

ntD

ate

of B

oard

A

ppro

val

B: I

nter

-Ara

b G

rant

s

1ER

F/ C

ontri

butio

n to

the

Fina

ncin

g of

the

Activ

ities

of t

he A

rab

Sprin

g In

itiat

ive

for D

evel

opm

ent d

urin

g th

e Pe

riod

2014

-201

6 (th

e Po

rtion

for 2

016)

(2)

260

1/20

1601

/01/

2016

2Ar

ab P

lann

ing

Inst

itute

/ Con

tribu

tion

to th

e In

stitu

tes

Pro

gram

s an

d Ac

tiviti

es fo

r the

Fin

anci

al Y

ear 2

015/

2016

(2)

100

3/20

1602

/03/

2016

3ER

F/ S

uppo

rting

ER

Fs

Twen

ty S

econ

d An

nual

Mee

ting

(4)

100

4/20

1602

/03/

2016

4IC

ARD

A/ S

uppo

rt to

the

Proj

ect f

or th

e Su

stai

nabi

lity

and

Ope

ratio

n of

the

Reg

iona

l Res

earc

h C

ente

rs in

Fiv

e Ar

ab

Cou

ntrie

s (2

)10

009/

2016

19/0

6/20

16

5Ar

ab E

duca

tiona

l Inf

orm

atio

n N

etw

ork

(Sha

maa

)/ C

ontri

butio

n to

the

Fina

ncin

g of

the

Net

wor

ks

Exec

utiv

e Pr

ogra

m

for t

he P

erio

d 20

16-2

018

(2)

6010

/201

619

/06/

2016

6M

iddl

e Ea

st a

nd N

orth

Afri

ca H

ealth

Pol

icy

Foru

m/ C

ontri

butio

n to

the

Cov

erag

e of

the

Foru

ms

Exp

ense

s (4

)30

DG

/11-

2016

26/0

7/20

16

7Ar

ab P

lann

ing

Inst

itute

/ C

ontri

butio

n to

the

Cov

erag

e of

the

Cos

ts o

f th

e Fo

rum

on

Med

ia a

nd T

echn

olog

y fo

r D

evel

opm

ent (

4)10

DG

/12-

2016

04/0

9/20

16

8In

ter-A

rab/

Kuw

ait E

nviro

nmen

t Pro

tect

ion

Soci

ety/

Con

tribu

tion

to th

e Fi

nanc

ing

of a

Pro

ject

to D

evel

op W

aste

M

anag

emen

t in

Som

e Ar

ab C

ount

ries (

3)10

018

/201

627

/11/

2016

9G

ulf F

eder

atio

n fo

r Can

cer C

ontro

l/ Co

ntrib

utio

n to

the

Fina

ncin

g of

the

Canc

er A

ware

ness

and

Pre

vent

ion

Prog

ram

(2)

100

19/2

016

27/1

1/20

16

10W

ater

Sci

ence

and

Tec

hnol

ogy

Asso

ciat

ion/

Con

tribu

tion

to th

e Fi

nanc

ing

of th

e Tw

elfth

Gul

f Wat

er C

onfe

renc

e (4

)20

DG

/20-

2016

15/1

2/20

16To

tal I

nter

-Ara

b G

rant

s17

80To

tal N

atio

nal a

nd In

ter-

Ara

b G

rant

s38

80Fo

urte

enth

Pha

se o

f the

Urg

ent P

rogr

am to

Sup

port

The

Pal

estin

ian

Peop

le77

51Pr

ogra

m to

Sup

port

the

Res

ista

nce

of J

erus

alem

1525

0G

rand

Tot

al26

881

(1) F

easi

bilit

y St

udie

s an

d Pr

ojec

t Pre

para

tion

(2) I

nstit

utio

nal S

uppo

rt an

d Tr

aini

ng(3

) Gen

eral

Stu

dies

and

Res

earc

h

(4

) Sem

inar

s an

d C

onfe

renc

es(5

) Em

erge

ncy

Prog

ram

s

24Annual Report 2016

Grant Commitments by Activity(KD 000)

Table 4

Activity

During 2016 During the Period 1974 - 2016

National Grants Inter-Arab Grants Total National Grants Inter-Arab Grants Total

Amount % Amount % Amount % Amount % Amount % Amount %

1 Feasibility Studies and Project Preparation - - - - - - 17120 11.5 6380 9.7 23500 10.9

2 Institutional Support and Training 1750 83.3 1520 85.4 3270 84.3 75175 50.3 38137 58.0 113312 52.7

3 General Studies and Research 340 16.2 100 5.6 440 11.3 5940 4.0 13171 20.0 19111 8.9

4 Seminars and Conferences 10 0.5 160 9.0 170 4.4 183 0.1 5109 7.8 5292 2.5

5 Emergency Programs - - - - - - 50870 34.1 2930 4.5 53800 25.0

Total National and Inter-Arab Grants 2100 100.0 1780 100.0 3880 100.0 149288 100.0 65727 100.0 215015 100.0

Urgent Program to Support the Palestinian People 7751 129071

Program to Support the Resistance of Jerusalem 15250 29651

Grand Total 26881 373737


Gra

nt C

omm

itm

ents

by

Act

ivit

y(K

D 0

00)

Tabl

e 4

Act

ivity

Dur

ing

2016

Dur

ing

the

Perio

d 19

74 -

2016

Nat

iona

l Gra

nts

Inte

r-A

rab

Gra

nts

Tota

lN

atio

nal G

rant

sIn

ter-

Ara

b G

rant

sTo

tal

Am

ount

%A

mou

nt%

Am

ount

%A

mou

nt%

Am

ount

%A

mou

nt%

1Fe

asib

ility

Stud

ies

and

Proj

ect

Prep

arat

ion

--

--

--

1712

011

.563

809.

723

500

10.9

2In

stitu

tiona

l Sup

port

and

Trai

ning

1750

83.3

1520

85.4

3270

84.3

7517

550

.338

137

58.0

1133

1252

.7

3G

ener

al S

tudi

es a

nd R

esea

rch

340

16.2

100

5.6

440

11.3

5940

4.0

1317

120

.019

111

8.9

4Se

min

ars

and

Con

fere

nces

100.

516

09.

017

04.

418

30.

151

097.

852

922.

5

5 Em

erge

ncy

Prog

ram

s-

--

--

-50

870

34.1

2930

4.5

5380

025

.0

Tota

l Nat

iona

l and

Inte

r-A

rab

Gra

nts

2100

100.

017

8010

0.0

3880

100.

014

9288

100.

065

727

100.

021

5015

100.

0

Urg

ent P

rogr

am to

Sup

port

the

Pale

stin

ian

Peop

le77

5112

9071

Prog

ram

to S

uppo

rt th

e R

esis

tanc

e of

Jer

usal

em15

250

2965

1

Gra

nd T

otal

2688

137

3737


General Studies and

Research16.2%

Seminars and Conferences

0.5%


9.0%

General Studies and

Research5.6%

Institutional Support and Training

83.3%


85.4%

Feasibility Studies and ProjectPreparation

9.7%Institutional Support and

Training58.0%

General Studies and

Research20.0%

EmergencyPrograms

4.5%

Seminars and

Conferences7.8%


50.3%

EmergencyPrograms

34.1%

Feasibility Studies and Project Preparation

11.5%

General Studiesand Research

4.0%


0.1%

Grant Commitments by Activity(Percentage)

National Grants during 2016

National Grants during the Period 1974 - 2016

Inter-Arab Grants during 2016

Inter-Arab Grants during the Period 1974 - 2016


Box 2

The Security, Economic and Cultural Impacts of Antiquities Destruction and Theft in Arab Countries

Arab Countries are rich with hundreds of archeological sites that contain valuable antiquities left by the many civilizations which flourished in the region since the dawn of mankind. These antiquities constitute part of the regions cultural heritage and a valuable economic resource, attracting international tourism and providing jobs.

Recent political unrest in some countries of the region has led to a weakening of the law enforcement agencies and deterioration in the economic and living conditions of people, which exposed many antiquity sites, museums and antiquity storage warehouses, to looting by criminal gangs and terrorist groups which smuggle and sell their loot to finance their activities. Experts estimate the size of this looting activity in the tens of billions of dollars.

This activity has resulted in the deprivation of countries in the region of their cultural heritage, and the destruction and vandalism of archaeological sites, thus inflicting severe damage to the tourism sector in the countries concerned, and undermining the security and stability of those countries, most notably Egypt, Iraq, Syria, Libya and Tunisia.

Due to its commitment to support the efforts of Arab countries in facing this negative phenomenon and strengthening cooperation between countries of the region to combat it, and in response to a request by a number of concerned Arab countries, the Arab Fund sponsored, in collaboration with the Middle East Institute and the Antiquities Coalition, two international institutions with vast practical experience in security, economic and cultural issue, two regional meetings attended by the ministers in charge of antiquities and culture, and experts from countries of the region and from international institutions. The first meeting was held in Cairo, Egypt during the period 13 - 14 May, 2015 and was attended by six countries, while the second meeting was held in Amman, Jordan on September 8, 2016 with the participation of 17 Arab countries. The statements issued at the conclusion of these meetings (the Cairo Statement and the Amman Statement) outlined the required mechanisms to combat this phenomenon and eradicate it, which include information sharing, capacity building, raising of awareness, and coordination at the national, regional and international levels.


Third: Joint Arab Action

IntroductionThe Arab Fund continued, in 2016, its activities in various areas in support of priority sectors and in response to decisions and directives of the Arab summits, which accorded a special importance to projects and issues related to joint Arab action. The Arab Funds interventions in support of Arab cooperation were numerous; they included financing of projects, technical and economic studies for Arab interconnection projects, seminars, research, as well as participation in initiatives related to the support of specialized inter-Arab institutions. Thus, the Arab Fund provided support to any activity aimed at achieving Arab integration between member countries. The following provides a brief of the main activities.

Coordination between the Arab National and Regional Development Institutions and Cooperation with International InstitutionsThe Arab Fund continued to act as the Coordination Secretariat of the Coordination Group, which includes the Arab national and regional institutions, preparing and participating in their periodic meetings and the meetings of the technical committees, as well as preparing and participating in the Coordination Groups meetings with regional and international financing institutions. During the year, the fifteenth meeting of the Heads of the Coordination Group institutions took place at the headquarters of the OPEC Fund for International Development in Vienna, Austria on January 17, 2016. The meeting was dedicated to the discussion of several topics, which included the Global Partnership for Effective Development Co-operation (GPEDC), and the strengthening of cooperation with the World Bank in numerous fields, particularly those related to food and water security, energy, social development, financial markets and poverty reduction. A High Level meeting was also held between the Heads of the Coordination Group Institutions and the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD/DAC) at the headquarters of the OPEC Fund for International Development on January 18, 2016. At this meeting, joint working methods to achieve the sustainable development goals for 2030 were explored.

The seventy seventh Coordination Group meeting took place at the headquarters of the OPEC Fund for International Development during the period 9 11 May, 2016. At that meeting, many topics were studied and discussed, including partnership between the Coordination Group and the World Bank, for which a work program was agreed upon, and the New Financing Initiative to Support the Middle East and North Africa, for which the members of the Coordination Group expressed their willingness to contribute. The seventy eighth Coordination Group meeting, hosted by the Kuwait Fund for Arab Economic Development during the period 25 27 October, 2016, was dedicated to the latest developments in those topics, in addition to the discussion of cooperation between the members of the Group regarding the development of the financial and banking sector, as well as the Islamic Development Bank Groups initiative to establish a Lives and Livelihoods Fund.

The Arab Fund participated during the year in two meetings related to the New Financing Initiative, which was launched by the Islamic Development Bank Group, the World Bank


and the United Nations, to support the Middle East and North Africa region through the mobilization of sufficient new financial resources to meet the large needs of the region. The first meeting was held in Amman, Jordan on January 26, 2016, and the second meeting was held in Jeddah, Saudi Arabia on March 14, 2016.

Enhancement of Arab Food Security1. Support to Agricultural Research to Achieve Food SecurityThe Arab Fund continued its efforts to support research and use of modern agricultural technology, as they constitute the proper gateway to achieve sustainable agricultural development and Arab food security. The Arab Fund contributed to the financing of the second phase of the project on Enhancing Food Security in Arab Countries, in cooperation and coordination with the International Center for Agricultural Research in Dry Areas (ICARDA), and national agricultural research centers in ten Arab countries. The Arab Fund worked on mobilizing the necessary funds to implement the second phase of the project in cooperation with various lending institutions such as the Kuwait Fund for Arab Economic Development, the Islamic Development Bank, the International Fund for Agricultural Development (IFAD) and the OPEC Fund for International Development.

The project resulted in the dissemination of advanced technology ready to be implemented by farmers, the expansion of applied research to address the obstacles faced by farmers such as drought and disease, and the enhancement of the professional and research capabilities of the technical cadre. The project also reinforced the existing strategic partnerships between the national agricultural research centers, ICARDA and the Consultative Group for International Agricultural Research (CGIAR), to expand the adoption, circulation and dissemination of modern technology. The use of the technology packages led to an increase in wheat productivity by 30%, a decrease in water use by 25% and an increase in water efficiency in the field by 75%.

The second phase of the project will focus on expanding the scope of field implementation of the results among farmers in the Arab countries included in the project, to achieve sustainable growth in the productivity of grain production systems, adopt integrated production management, expand the establishment of model pilot areas to disseminate knowledge and apply the technology on a wide scale, and link these results with the study on Arab food security to implement agricultural development projects.

2. Study of Arab Food SecurityThe Arab Fund provided, in 2014, a grant for the undertaking of a study aimed at achieving Arab food security through development projects in Sudan. The study comprised four tasks: the first task included identification of the magnitude of the Arab food security problem and its impact, and estimation of the food gap up to the year 2030; the second task included assessment of the water and land resources available in Sudan that could contribute to the resolution of the Arab food security problem. The third task involved construction of a mathematical model to determine the best method for the utilization of resources available in Sudan for producing and exporting competitively priced products, both agricultural and industrial. The fourth task involved the development of a timely sectoral plan to study and implement projects in Sudan that would contribute to the achievement of Arab food security. The final report of the study was submitted by the consultant in mid-2016, and steps are currently being taken to implement its recommendations.


Support to Small and Medium EnterprisesThe Arab Fund supports the financing of small and medium enterprises in Arab countries through its contribution to the capital of the Special Account in the amount of US Dollars 100 million, as well as through its management of this account for which it provides an independent administration and separate accounts. The Special Account was established to support small and medium private sector enterprises in Arab countries, by providing loans to Arab governments and intermediary Arab financial institutions. To date, a total of 18 Arab countries contributed to the capital of this account, for a total amount of US Dollars 1310 million, of which about US Dollars 1267 million has been paid. The total number of loans provided by the Special Account by the end of December 2016 reached 32, in 12 Arab countries, for a total amount of US Dollars 1136 million; total disbursements of these loans reached about US Dollars 573.5 million.

Arab Trade FinanceTrade contributes to the economic and social development of Arab countries, through its support to Arab exports, by enhancing Arab productive capabilities, and through the provision of development requirements including equipment, machinery and devices. The Arab Trade Finance Program aims at achieving the goals of the Agreement for the Facilitation and Promotion of intra-Arab Trade, and the Agreement on the Arab Free Trade Area, and enhancing the competitiveness of Arab exports. The Arab Fund contributed to the establishment of this program, in cooperation with the Arab Monetary Fund, and contributed to its capital. The Arab Fund is the second largest contributor to the program, after the Arab Monetary Fund, with a share of about 22.6% of the programs issued and paid-in capital of US Dollars 986.9 million. By the end of December 2016, the total amount of approved financing requests reached about US Dollars 13.3 billion; these requests were submitted through 217 national agencies in all Arab countries (mostly from national and central banks, in addition to some relevant ministries and institutions). Arab Development PortalThe Arab Fund, as a member of the Coordination Group which includes national and regional Arab development institutions, contributed to the financing of a project to develop an Arab Development Portal, aimed at strengthening the management efficiency of development operations in Arab countries and increasing their effectiveness, and providing a platform to access references and information from several sources. The project is being implemented in three phases. The first phase consisted of the development of a database for five themes in Egypt and Tunisia, while in the second phase the scope of the portal was expanded to include several additional themes, and the number of countries involved was increased to include all Arab countries. However, the data collected for the Arab countries was limited to the period 2010 2014.

Following the successful completion of the first two phases, the Coordination Group institutions are currently financing the third phase of the portal, which is being developed by the UNDP. This phase includes the completion of data on sectors that were not included in the previous two phases, and the addition of data covering the periods 1980 2009 and 2015 2018 for all sectors and all Arab countries. The third phase also includes the establishment of a protocol by which the database will be automatically updated when any of the contributing national statistics offices updates their data. The implementation of the third phase is expected to last three years, after which the portal will be managed by


one of the Arab institutions involved in the project or by an independent party. In order to ensure continuous cooperation with the UNDP, the Coordination Group institutions formed a technical committee and a steering committee to oversee the execution of the project.

Preparation of the Joint Arab Economic ReportThe Joint Arab Economic Report is considered an important source of economic and social information on Arab countries, for both researchers and decision makers. The Arab Fund continues its annual participation in the preparation of this report, in cooperation with the General Secretariat of the League of Arab States, the Arab Monetary Fund and the Organization of the Arab Petroleum Exporting Countries (OAPEC). The Arab Fund prepares the chapters of the report on economic and social development, the agriculture and water sector, the industrial sector and Arab development aid. In addition, the Arab Fund prepares, on a rotating basis with the participating institutions, the chapter that addresses the theme of the report. The theme of this years report, which was prepared by OAPEC, was Non Traditional Oil Sources: Facts and Prospects, and Impact on Arab Countries. Arab Spring Development Initiative In the framework of addressing the pressing developmental issues in Arab countries with a view to closing the knowledge gap within the community of researchers and decision makers, the Arab Spring Development Initiative (ASDI) was launched as a partnership between the World Bank and the Arab Fund, in the context of their longstanding cooperation. The Economic Research Forum (ERF) provides support to the initiative through the supervision of the implementation of the initiatives activities. ASDI, launched in 2014, aims at supporting the developmental efforts of the Arab countries undergoing political and economic transformation, known as the Arab Spring countries, in this critical transitional juncture of their history, through enhanced access to data and knowledge pertaining to the pressing developmental issues for decision makers in these countries. ASDI focuses on three main areas of activity, which are: open access to data and survey-based research and their harmonization and wide dissemination, implementation and publication of policy-relevant research in relation to the political and economic transformation in the Arab Spring countries, and creation of a variety of platforms for policy discussions and dialogue on varying pressing topics for policy makers, researchers and other stakeholders such as the media and various segments of civil society, and making research outcomes available to them. The published studies and research within this initiative may be accessed through the following internet link: http://erf.org.eg/erf_programs_tax/asdi.

Support to Arab and Regional InstitutionsThe Arab Fund supports the activities of Arab and Regional institutions that promote Arab development directly or indirectly, especially in the areas of human resource development, studies and research, or seminars and conferences, as well as contributes to the enhancement of the ability of those institutions to carry out their missions. The Arab Fund has, in this regard, provided 52 grants to support the activities and programs of the International Center for Agricultural Research in the Dry Areas (ICARDA), for a total amount of about KD 14.1 million, of which a grant of KD 1 million was extended in 2016. The Arab Fund has also provided 36 grants to the Economic Research Forum, for a total amount of about KD 6.4 million, of which two grants amounting to KD 360 thousand were extended in 2016.


Fourth: Financial Statements for the Financial YearEnded at 31 December 2016

I. Financial Position

Assets:The value of Arab Fund assets increased in 2016 by KD 116 million 4% compared to 2015 reaching KD 3,416 million, this increase was mainly in Investments and loans as shown in the below schedule:

Variation20152016Assets KD

Million %KD

Million %KD

Million

201%462%66Cash & Cash Equivalents

5810%33111%389Investments

12%482%49 Share in the Capital of RelatedInstitutions

12%762%77Investment in Associate

4084%2,76982%2,809Loans

(4)1%301%26Others Assets

116100%3,300100% 3,416 Total

4%

Liabilities:The value of Liabilities increased in 2016 by KD 6.5 million 9% compared to 2015 reaching KD 82.8 million, this increase was mainly in other liabilities as shown in the below schedule:

Variation20152016Liabilities KD

Million %KD

Million %KD

Million

(5.5)44%33.534%28.0Grants

0.617%12.816%13.4Provision for Pension Fund

11.439%30.050%41.4Other Liabilities

6.5100%76.3100%82.8 Total

9%


Members Equity:The value of members Equity increased in 2016 by KD 109 million 3% compared to 2015 reaching KD 3,333 million, this increase was mainly in Share Capital as shown in the below schedule:

Variation20152016Members Equity KD

Million %KD

Million %KD

Million

8183%2,66082%2,741Share Capital

58%2638%268General Reserve

279%28910%316 Additional Reserve

(4)0%120%8Other Reserves

109100%3,224100% 3,333Total

3%

II. Income & Expenditures

Income:The total Income for the year end amounted to KD 82.1 million compared to KD 96.5 million in 2015, with a decrease of (15%) reaching to KD (14.4) million. This decrease was mainly from Interest Income from loans as shown in the below schedule:

Variation20152016Income KD

Million %KD

Million %KD

Million

(22.8)91%87.378%64.5Interest Income from Loans

9.08%8.021%17.0Net Investment Gain

(0.3)1%0.91%0.6 Income from Arab Trade FinanceProgram

(0.3)0%0.30%0.0(Other operating Income / (Expenses

(14.4)100%96.5100%82.1Total

(15)%

Expenditures:The total Administrative Expenses for the year end amounted to KD 8.5 million which is almost the same amount of expenses for the previous year as shown in the below schedule:

Variation20152016Expenditures KD

Million %KD

Million %KD

Million

0.080%6.880%6.8Salaries & Staff Provisions

0.020%1.720%1.7Other Expenses

0.0100%8.5100%8.5Total

0


Net Profit:The net profit for the year end amounted to KD 59.2 million compared to KD 77.5 million in 2015, with a decrease of KD (18.3) million (24%) as shown in the below schedule:

Variation20152016Net Profit KD

Million %KD

Million %KD

Million

(14.4)114%88.0124%73.6Net Profit before Provisions

(3.9)(14)%(10.5) (24)%(14.4)Investments & Loans Provisions

(18.3)100%77.5100%59.2Net Profit of the Year

% (24)

III. Cash Flows Shown below is a schedule summarized for the main cash flows:

KD MillionCash Flows

20152016

(43.0)(54.6)Net change in investments at fair value through the statement of income

(195.4)(203.9)Disbursements of loans

181.1163.6Repayments of Loans

(7.6)(8.9)Disbursements of grants

85.069.3Interest received

105.480.5Capital Paid

IV. Financial Indicators of Arab Fund Performance

20152016Financial Ratios

% %

2.3%1.7%Net Income/ Assets - ROA

2.4%1.8%Net Income/ Members Equity - ROE

8.8%10.4%Expenditures/ Revenues

83.9%82.2% Loans/ Assets

85.9%84.3% Loans/ Members Equity


Arab Fund for Economic and Social DevelopmentStatement of Financial Position

As at 31 December 2016(KD 000)

2016 2015

Assets

Cash and cash equivalents 66,444 46,313

Investments 389,254 330,554

Share in the capital of related institutions 48,789 47,773

Investment in an associate 77,253 76,329

Loans 2,808,658 2,768,537

Receivables from participants in the building 5,985 6,331

Other assets 19,948 24,151

Total assets 3,416,331 3,299,988

Liabilities and members equity

Liabilities

Grants 28,046 33,490

Provision for pension fund 13,379 12,803

Other liabilities 41,391 30,008

Total liabilities 82,816 76,301

Members equity

Share capital 2,740,819 2,660,326

General reserve 268,319 262,401

Additional reserve 315,908 288,689

Grants reserve 3,424 3,898

Change in the fair value reserve 5,045 8,373

Total members equity 3,333,515 3,223,687

Total liabilities and members equity 3,416,331 3,299,988


Arab Fund for Economic and Social DevelopmentStatement of Comprehensive IncomeFor the year ended 31 December 2016

(KD 000)

2016 2015

Income

Interest income from loans 64,472 87,322

Net investments gain 16,457 7,616

Interest income from time deposits and call accounts 564 335

Gain from an associate 656 861

Net operating (expenses) / income (36) 361

Total income 82,113 96,495

Administrative expenses

Salaries and staff provisions 6,797 6,758

Other expenses 1,722 1,756

8,519 8,514

Net Income before provisions 73,594 87,981

Provision for impairment of investment contribution Private sector (14,156) (7,718)

Provision for loans Private sector (259) (2,750)

Net profit for the year 59,179 77,513

Other comprehensive (loss) / income

Net change in fair value of investments available for sale (3,328) 4,253

Other comprehensive (loss) / income for the year (3,328) 4,253

Total comprehensive income for the year 55,851 81,766


Arab Fund for Economic and Social DevelopmentStatement of Changes in Members Equity

For the year ended 31 December 2016(KD 000)

Share capital

General Reserve

Additional Reserve

Grants Reserve

Change in fair value Reserve

Retained Earnings Total

Balance as at 1 January 2016 2,660,326 262,401 288,689 3,898 8,373 - 3,223,687

Profit for the year - - - - - 59,179 59,179

Other comprehensive loss for the year - - - - (3,328) - (3,328)Total comprehensive income for the year - - - - (3,328) 59,179 55,851

Paid-up capital share 80,493 - - - - - 80,493

Transfer to support people of Palestine - - (23,001) - - - (23,001)

Transfer to Arab Academic Fellowship - - - - - (82) (82)

Transfer to grants reserve - - - 2,959 - (2,959) -

Transfer to general reserve - 5,918 - - - (5,918) -

Transfer to additional reserve - - 50,220 - - (50,220) -

Grants approved - - - (3,900) - - (3,900)

Grants cancelled and transferred - - - 467 - - 467

As at 31 December 2016 2,740,819 268,319 315,908 3,424 5,045 - 3,333,515

Balance as at 1 January 2015 2,554,909 254,650 233,781 4,296 4,120 - 3,051,756

Profit for the year - - - - - 77,513 77,513

Other comprehensive income for the year - - - - 4,253 - 4,253 Total comprehensive income for the year - - - - 4,253 77,513 81,766

Paid-up capital share 105,417 - - - - - 105,417

Transfer to support people of Palestine - - (8,443) - - - (8,443)

Transfer to Arab Academic Fellowship - - - - - (55) (55)

Transfer to grants reserve - - - 3,876 - (3,876) -

Transfer to general reserve - 7,751 - - - (7,751) -

Transfer to additional reserve - - 65,831 - - (65,831) -

Grants approved - - (2,480) (4,751) - - (7,231)

Grants cancelled and transferred - - - 477 - - 477

As at 31 December 2015 2,660,326 262,401 288,689 3,898 8,373 - 3,223,687


Arab Fund for Economic and Social DevelopmentStatement of Cash Flows

For the year ended 31 December 2016 (KD 000)

2016 2015

Operating activities

Net Profit for the year 59,179 77,513

Adjustments:

Interest income from loans (64,472) (87,322)

Gains on investments at fair value through statement of income (19,874) (9,502)

Interest income from time deposits and call accounts (564) (335)

Share in results from an associate (656) (861)

Provision for Impairment of investment contribution Private sector 14,156 7,718

Provision for Loans Private sector 259 2,750

Provision for pension fund 1,786 1,767

(10,186) (8,272)

Changes in operating assets and liabilities

Net change in investments at fair value through statement of income (54,613) (42,965)

Disbursements of loans (203,938) (195,426)

Repayment of loans 163,558 181,124

Disbursements of grants (8,877) (7,563)

Receivables from participants in the building 346 346

Other assets (110) (155)

Special Account for Financing Small and Medium Enterprises 0 (79,412)

Other liabilities (11,700) (6,965)

Cash flows used in operations (125,520) (159,288)

Interests received 69,349 84,982

Provision for employees pension paid (1,210) (1,776)

Net cash flows used in operating activities (57,381) (76,082)

Investing activities

Net changes in other investments (2,981) (1,825)

Net cash flows used in investing activities (2,981) (1,825)

Financing activities

Capital paid 80,493 105,417

Net cash flows from financing activities 80,493 105,417

Net increase in cash and cash equivalents 20,131 27,510

Cash and cash equivalents at beginning of the year 46,313 18,803

Cash and cash equivalents at end of the year 66,444 46,313


Arab Fund for Economic and Social DevelopmentIndependent Regional Arab Financial Organization - Kuwait

Significant Accounting Policies

a) Statement of complianceThe financial statements of the Fund are prepared in compliance with accounting policies set out below and in the establishment convention of the Fund.

b) Basis of measurementThe financial statements are prepared on a fair value basis for investments at the fair value through comprehensive income statement and investments available for sale, except those with no available and reliable measure of fair value. Other financial assets and liabilities and non-financial assets and liabilities are carried at amortized cost or historical cost. The accounting policies followed by the Fund are agreeing accordingly with the same policies followed in the previous year, except in discounting loan provision for impairment.

c) Investments Financial assets are classified as financial assets investments at fair value through comprehensive income statement, loans and receivables, or investments available for sale as deemed appropriate. The Fund determines the classification of its financial assets in principle upon recognition.

Investments are designated at fair value through comprehensive income statement if they are managed, and their performance is evaluated on reliable fair value basis in accordance with documented investment strategy. Investment assets at fair value through comprehensive income statement are carried in the statement of financial position at fair value with changes in fair value recognized in the statement of comprehensive income.

Equity investments classified as available for sale are those, which are neither classified as held for trading nor designated at fair value through income statement. Investments available for sale are subsequently measured at fair value with unrealized gains or losses recognised in other comprehensive income until the investment is derecognized, at which time the cumulative gains or losses are recognised in the comprehensive income statement; or until these are identified for impairment, then the cumulative losses are recorded in the comprehensive income statement. Financial statements whose fair value cannot be reliably measured are carried at cost less impairment losses, if any.

d) LoansLoans are stated at the amortized cost less provision for impairment. No impairment provisions are accounted for loans granted to the public sector as these are considered sovereign loans guaranteed for payment by consecutive governments of the member states. The impairment provision for loans granted to the private sector are estimated if their collection is no longer probable; and recorded at the statement of comprehensive income.


e) ImpairmentAn assessment is made by the Fund at each reporting date to determine whether there is objective evidence that a financial asset or group of financial assets may be impaired. All impairment losses are recognized in the statement of Comprehensive Income.

f) Investment in associateThe investment in the associated entity is equity accounted. The funds share of the profit or loss shall be recognized on the basis of the equity percentage of the Fund of the total equity.

g) Fixed assetsFixed assets are not capitalized but rather are directly recorded in statement of comprehensive income in the year of purchase.

h) Provision for pension fundProvision for t

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