IFC Helps Increase Mobile Communications Capacity in Iraq
As Iraq continues to emerge from a period of conflict and instability, IFC recently completed its largest-ever investment in the country, a $400 million, seven-year debt facility for mobile communications operator Zain Iraq that will expand service coverage and stimulate economic growth.
Zain Iraq expects to add over 4 million Iraqi mobile users over the next five years, growing its customer base to close to 20 million subscribers in a country that has one of the lowest mobile penetration rates in the region. While neighboring countries have almost 100 percent penetration, the rate in Iraq is presently 70 percent. Many of Zain’s new users are expected to come from some of Iraq’s poorest governorates, including Al-Anbar, Diala and Salahuddin.
“To achieve our target of increased coverage, Zain Iraq expects creation of job opportunities through new sites roll-out, as well as increased demand for distribution facilities,” says Zain Iraq CEO Emad Makiya. “Our research shows that for every new job in the telecoms sector, eight other jobs are created through a multiplier effect.”
Country risk and a weak business environment mean that despite strong gains in the telecommunication sector in recent years, operators such as Zain continue to face difficulties securing long term financing for their networks.
That’s why Zain Group, a long-time IFC client, turned to IFC to mobilize a comprehensive debt package. In response, IFC brought together the commercial bank market and the development finance community to provide access to different financing sources and to help promote the development of a syndicated loan market in Iraq.
The $400 million facility for Zain Iraq consists of an IFC A loan of $155 million, a $50 million B loan committed by Ahli United Bank, and four syndicated parallel loans totaling $195 million by Proparco, Infrastructure Crisis Facility-Debt Pool (funded by KfW), DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, and FMO (Netherlands Development Finance Company).
The facility also demonstrates IFC's commitment to supporting economic integration by facilitating cross-border investments within the region.
In addition to expanded coverage and improved quality, this loan will help unlock opportunities for entrepreneurship and innovation, increase employment in a key non-oil industry, while demonstrating IFC’s ongoing commitment to supporting economic integration by facilitating cross-border investments within the region.