Dubai: International Finance Corporation (IFC), which is a member of the World Bank, financed a record $2.4 billion (Dh8.8 billion) to companies in the Middle East in the year to June, with nearly half of the money being sent to Egypt, its senior executive told Gulf News.
IFC, which offers investment, advisory, and asset-management services to companies in developing economies, made investments in a slew of sectors including solar, agri-business, micro-financing, oil and gas sector among others in Egypt, Iraq, Jordan, and Lebanon in the Middle East.
“These activities were all designed to have a positive impact on their economies, whether it is addressing critical infrastructure bottlenecks through renewables, green bonds and transportation, supporting the real sector including farmers and getting financing to smaller companies and entrepreneurs through banks, funds and microfinance institutions,” Deepak Khanna, Chief Investment Officer & Country Manager, IFC, Mena Region told Gulf News in an interview.
The IFC financed projects worth $1.3 billion in Egypt, making it 46 per cent of the total investments made in the Middle East, as the economy is showing signs of recovery amid tough reforms and an IMF loan.
“We believe Egypt is coming back and the environment continues to improve, we are seeing more private activity there and plan to invest more in the future,” Khanna said.
Even the economic indicators are showing signs of recovery. Egypt’s Gross Domestic Product (GDP) grew by 5.7 per cent in 2017-18 fiscal year, its highest in a decade.
The economy was battered by the protests that happened in 2011 which resulted in the ouster of president Hosni Mubarak. The new government has undertaken a slew of reforms like cutting the subsidy on fuel, among others as part of the requirements of the IMF to process the $12 billion loan.
The IFC will also focus on other countries in the Middle East or projects that have regional links along with Egypt.
“We will remain active in cross-border financing; for example, we recently financed Masdar’s wind project in Serbia and are in discussions with companies here who are expanding to Central Asia, Africa and India in the health care and agribusiness sectors,” Khanna said.
“Our aim is to help close infrastructure gaps in Iraq, Jordan and Egypt in the power and transportation sectors, for example,” he added.
The IFC is also working upstream with the governments to create a pipeline of projects in critical sector, to improve the operating environment for the benefit of private investors.
Stable oil prices should also help in improving the economic environment for businesses, according to Khanna.
“Overall, it’s [oil prices] positive as stable prices reduce uncertainty for both consumers and producers. Much of the fiscal tightening that was underway in the Gulf should abate. More funding is being pumped into domestic economies, which will help the private sector and overall economic activity,” Khanna said.
Most of the countries in the GCC have been implementing reform measures as they diversify their source of revenues away from oil. Saudi Arabia, the biggest oil producer in the region, has plans to privatise Saudi Aramco, which is considered as a crown jewel, along with a few other government-owned companies.
Khanna cautioned that “sometimes, when the pressure is off, there is less willingness to undertake basic reforms which is unfortunate.”