World Bank's IFC aims to increase investment in Mena region

The International Finance Corporation, the private sector investment arm of the World Bank, aims to invest close to a record US$2.5 billion in the Arab world this year.

The International Finance Corporation, the private sector investment arm of the World Bank, aims to invest close to a record US$2.5 billion (Dh9.18bn) in the Arab world this year as it intensifies its focus on job creation.

A large slice of the resources will go towards bolstering small and medium-sized enterprises and upgrading infrastructure, said Mouayed Makhlouf, an IFC director, Middle East and North Africa.

"Our focus remains on job creation," he said.

"We are looking to restore confidence as after the Arab Spring, confidence was shaken in many parts of the region."

Last year, the IFC pumped $2.2bn into the region, 21 per cent more than the year before.

It generated a further $700 million in investment from other sources in keeping with its policy of typically committing funds in tandem with the private sector in a project or industry that might otherwise struggle to attract finance.

The IFC has been gradually ratcheting up its investment in the region since 2011, when a wave of unrest ricocheted across the region, scaring off foreign investors and dimming hopes of cutting unemployment.

"It's definitely a refocus of IFC's investment," said Mr Makhlouf. "Mena is a priority for IFC as it's a region in transition and we see a huge need for the IFC here.

"These countries have been through a lot in recent years and we can't expect everything to go back to normal straight away."

It is planning to launch currency swaps in Egypt to help companies meet foreign exchange needs. Some companies in the country are struggling to access US dollars to cover imports and debt repayment as instability drains the level of government reserves.

It is also considering supporting local currency bonds in some countries.

A key area of focus is improving access to capital, especially for SMEs. Only 15 per cent of loans in Mena go to SMEs, said Mr Makhlouf. In the GCC, the allocation for SMEs falls to 2 per cent.

In December 2011, it sealed a $170m loan to Bank Muscat to help bolster the bank's capital position and free up dollar funding for smaller companies. The IFC followed that move with a $195.1m investment in Bank Muscat in February.

It has also been working with the UAE Ministry of Finance on draft legislation to set up a register of small businesses assets to help them secure loans. Once it receives final approval, the measure is expected to increase the banking sector's willingness to lend to local entrepreneurs and reduce dependence on cheques as a means of backing business loans.

"We have been engaging with the Ministry of Finance for about a year and we expect the asset registry law to come out in the next six months," he said.