Through investment and advisory services in the Middle East and North Africa, IFC is playing a major role in the region's growth. Examples from the United Arab Emirates and Lebanon demonstrate the full range of our support to the region’s private sector.
A Commitment to Lebanon
By some estimates, the conflict in Lebanon destroyed infrastructure worth $3.6 billion in 2006. The real cost is hard to determine, given the lives lost, displaced people, destruction of homes and businesses, and the loss of revenue as foreign investors hesitate to invest in the country. IFC, an active investor in Lebanon since 1956, is committed to helping the country recover and maintain its position as one the region’s most important business and banking centers.
In January 2007, when the international community met in Paris to garner donor support to help rebuild Lebanon, IFC pledged up to $275 million in financing and agreed to lead the Bank Group’s efforts on the country’s private sector development. The World Bank also pledged $700 million in IBRD financing.
IFC is working with the Lebanese government and business community to improve the country’s investment climate. IFC and the Ministry of Economy and Trade have agreed to overhaul and simplify the business registration process. IFC Advisory Services in the Middle East and North Africa — PEP-MENA — is also working on a corporate governance program and examining other areas where the Corporation can support government reform efforts.
Investing in Recovery
IFC’s help in the reconstruction efforts focuses on private banking institutions. The Corporation is channeling up to $200 million through banks to increase access to finance for private sector companies and individuals who were adversely affected by the conflict. On a recent visit to Lebanon, Lars Thunell, the head of IFC, signed agreements to provide financing to Blom Bank, the country’s largest bank; Fransabank, another of its top 10 banks; and Kafalat, a Lebanese company that helps small and medium enterprises access commercial bank funding through a guarantee program. The signings marked one of the first arrivals of funds honoring the pledges at the Paris donor conference.
IFC’s investment will help Blom Bank reach a large percentage of the population through corporate, retail, and private banking. The investment in Fransabank will help it serve new and existing clients’ postconflict needs. Together, Blom Bank and Fransabank have nearly 150 branches and thousands of employees throughout Lebanon. The impact of our investments will be far-reaching across the country, playing a major role in increasing businesses’ access to financing.
Through advisory services, IFC will help Kafalat increase its capacity to process applications for financing. IFC will also help develop a medium-range business plan for the company, which is also drawing on trust fund support from the World Bank.
A Lebanese Company Invests in Egypt
IFC is helping a Lebanese company expand and compete in international markets. Our $26.4 million loan will help Interstate Paper Industries, a company that operates a tissue mill for clients throughout the Middle East and the United Kingdom. IPI will build a new factory in Egypt’s Sadat Industrial City and expand its operations, creating a wealth of new opportunities.
With this investment, IFC is directly increasing the sustainability of one of Lebanon’s major employers and investing in the region’s future.
|
Backing the United Arab Emirates
Developing and promoting investment between markets is also IFC’s focus in the United Arab Emirates. Since the discovery of oil some 30 years ago, the country has transformed itself into a global economic force. The Emirates have been very successful in opening and diversifying their economy and attracting foreign investment. With Dubai becoming an international trading hub to rival Hong Kong and Singapore, the opportunities for partnerships on a range of issues are growing.
Foreign direct investment from the Gulf Cooperation Council’s member states, including the United Arab Emirates, more than doubled between 2004 and 2005, from $5.7 billion to $14 billion. IFC is encouraging and enabling this type of trade to help achieve our goal of reducing poverty and improving people’s lives.
Supporting Investments across the Region
Investment opportunities stretch beyond the United Arab Emirates to all of the Gulf Cooperation Council’s member states. Ahli United Bank, Bahrain’s third-largest bank, is expanding its operations abroad through acquisitions of local commercial banks and financial institutions.
IFC is helping AUB meet its goals with a convertible subordinated tier II term loan of $200 million and an equity investment of up to $40 million in Egypt’s Delta International Bank, which was recently acquired by AUB. The project is expected to increase the flow of private sector investment from resource-rich GCC countries to their lower-income neighbors.
|
Advisory Services for Businesses and Young Entrepreneurs
IFC has helped launch Hawkamah, Dubai’s Institute for Corporate Governance. The institute will support corporate governance reforms and help countries across the region develop policies based on international best practices.
By 2010, the population of the United Arab Emirates is expected to reach 5 million, with over half under the age of 20. To sustain the level of opportunities for young Emiratis, IFC has partnered with the Mohammed Bin Rashid Establishment for Young Business Leaders to promote entrepreneurship. The programs are based on IFC Business Edge, the brand name for the Corporation’s range of international management training products. These programs, which are implemented through IFC PEP-MENA, reflect IFC’s long-term commitment to the country and its people and a desire for a lasting partnership.
Looking Ahead
IFC’s increasing private sector development activities in the Middle East and North Africa are integrating investments and advisory services. We are not only assisting in conflict recovery, but also helping reduce poverty, including through our support for companies expanding across the region.
For additional information contact:
Riham Mustafa
Communications Analyst
Cairo, Egypt
Tel: 20-2-461-9150
E-mail:
RMustafa@ifc.org
Egidio Germanetti
Communications Analyst
Cairo, Egypt
Tel: 20-2-461-9140
E-mail:
EGermanetti@ifc.org
Published March 30, 2007
