The World Bank said it hopes to raise a $500m fund to invest in the Middle East and North Africa (MENA) region in the wake of the Arab Spring.
International Finance Corp, a unit of the World Bank, announced it is setting up the fund in addition to the $2.2-$2.4bn it expects to invest in the region over the next year, its regional director said on Monday.
“We’ve invested $2.4bn in the past 12 months in MENA countries and expect to do the same range next year,” Mouayed Makhlouf, regional director for IFC in the Middle East and North Africa, told Reuters.
“We see an increase in equity investment opportunities and working capital needs in countries like Morocco, Tunisia, Egypt and Jordan,” the director said, adding that the uprisings in the Arab world have underscored the economic and political consequences of unemployment.
IFC invests in developing the private sector in emerging economies to provide loans, equity investments and advisory services to companies, with a special focus on small to medium-sized enterprises.
“We’ve realised that the need for investments in the region after the Arab Spring is more than we can support, so we’re now starting to manage third-party money,” Makhlouf added.
The World Bank subsidiary announced it will provide $100m of seed investment for the new fund while attracting institutional investors, sovereign wealth funds and development agencies.
Makhlouf said the Washington-based global financial institution has invested $3bn in the MENA region since the Arab Spring, while transforming into an important conduit of capital for companies that have been adversely affected by unrest in the region.
“Demand for financing is huge now, much bigger than before the Arab revolution,” Makhlouf said.
In April, the IFC and the Islamic Development Bank (IDB), announced their plans to invest up to $100m on major infrastructure projects across the Middle East and North Africa. The institutions are contributing $50m each to the Arab Infrastructure Investment Vehicle, which is part of the Arab Financing Facility for Infrastructure (AFFI), a joint initiative of the World Bank, IDB and IFC.
“The IFC has invested $506m in Egypt in seven transactions,” Makhlouf said. He added that between $200m and $300m have been earmarked for the country before the end of the year.
Libya is one of the countries IFC is planning to enter once security issues are sorted out.
The IFC also provided a $50m loan to cement and construction materials supplier Lafarge last year to support the French company’s cement subsidiary in northern Iraq and spur the country’s post-conflict economic recovery.
It made a $50m equity investment in Orascom Construction Industries and agreed to lend $200m to its subsidiary Egyptian Fertilizers Company in July last year.
IFC also agreed in December to invest up to $110m in Jordan-based Hikma Pharmaceuticals to help to improve access to high-quality generic medicines in the MENA region.
IFC signed a $170m subordinated loan agreement with Oman’s Bank Muscat through its IFC Capitalisation Fund, which supports emerging market banks.