The European Bank for Reconstruction and Development and the private sector arm of the Islamic Development Bank will launch a $120 million fund to support small businesses in the southern and eastern Mediterranean region.

The fund is part of the first agreement between the EBRD and the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD) to help develop small and medium-sized enterprises in Egypt, Jordan, Morocco and Tunisia.

The fund will extend financing to SMEs using equity and quasi-equity structures, with the two institutions contributing capital to the fund and seeking additional institutional investors and donors, a statement by the ICD said.

The EBRD, the development bank set up in 1991 after the fall of the Berlin Wall, has been expanding its role to Arab countries since the region's uprisings in 2011.

Established in 1999, the ICD supports the economic development of its 51 member countries by financing private sector projects which follow Islamic principles. – Reuters