UNDP has signed a Joint Statement of Intent with the Islamic Corporation for the Development of the Private Sector (ICD) and the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), both part of the Islamic Development Bank Group, to establish a new blended finance structure aimed at accelerating private investment in climate-smart sectors across the Arab States region. The initiative uses credit insurance and risk-sharing tools to mobilize capital for green small and medium-sized enterprises (SMEs), supporting broader climate and sustainable development goals.
The partnership is designed to expand financing in key sustainability areas, including climate mitigation and adaptation, renewable energy transition, water management, circular economy solutions, sustainable agriculture, and resilient food systems. By reducing investment risk and improving access to finance, the initiative seeks to strengthen the role of SMEs as drivers of green growth and economic resilience in the region.
UNDP emphasized that SMEs are central to regional economies and critical to advancing inclusive climate action. Through this collaboration, the organization will connect financial institutions with SMEs engaged in development programmes and help mobilize resources to reduce the cost of risk-sharing mechanisms, in line with its Green Finance Platform.
Under the arrangement, ICD will provide financing facilities to partner banks and financial institutions, while ICIEC will offer credit insurance and risk mitigation tools to encourage greater lending to green sectors. ICIEC will also leverage reinsurance partnerships to enhance the scale and sustainability of the financing structure.
Both ICD and ICIEC highlighted that combining financing, risk mitigation, and development expertise creates a scalable model to support private sector growth. The initiative aims to build a more inclusive and sustainable SME ecosystem by enabling financial institutions to confidently channel investments into climate-related sectors.
UNDP will act as a coordinating partner, ensuring stronger linkages between SMEs and financial institutions while supporting efforts to expand blended finance solutions. The collaboration is expected to improve access to green finance, stimulate innovation, and contribute to long-term climate resilience and sustainable economic transformation across the Arab States region.
