IFC STRATEGY IN IRAQ

OPPORTUNITIES & CHALLENGES

Ziad Badr
Iraq Country Manager
Feb 2018
IFC in Iraq
Significant Scale-up of IFC Engagements Despite the Odds…IFC’s portfolio 10x since
2010
Centers around the following objectives:

• Helping diversify the economy away from

the oil sector and create jobs in the non-oil
sector
• Developing a favorable business and
regulatory environment.
• Strengthening private sector led growth in
non-oil sectors.
• Investments to focus on sectors that
support the reconstruction of Iraq
especially infrastructure

.
.
. Guided by 4 key principles:
Identifying and supporting local investors who
have the potential to grow
Support South-South investments (e.g., investors
from GCC, Lebanon, Jordan, and Turkey).
July 2003 2005 Sept 2011
Mobilization of additional funding from financial
First IFC mission First IFC investment in IFC opened an office institutions particularly in Infrastructure
after the invasion the Credit Bank of Iraq and a representative development
was stationed in Collaboration with the World Bank, MIGA, &
Baghdad in other Donors
… AND PROGRAM IS DIVERSIFIED
IFC INVESTMENTS AND MOBILIZATION IN IRAQ REACHED US$1.2 BILLION

Pipeline
Erbil: Private Hospital Portfolio
Erbil: Rotana Erbil, Arjaan, Al-Safi Danon
Sulaimania: ,Lafarge Bazian, Mass Energy
Global, Suli real estate dev project.
Baghdad: Credit Bank Iraq, Comm Bank of Iraq, Across Geography
Zain Iraq
Baghdad: Telecom up to $250 m
Baghdad power up to $500 m
Karbala: Lafarge Karbala

Umm Qasr Port

Umm Qasr: Nafith, Gulftainer

Iraqi portfolio by industry

Consumer & Agribusiness Financial Markets
Social Services
Manufacturing Infrastructure

& Across Sectors

Telecom
Infra: Power
WHILE ADVISORY PROGRAM IS COMPLEMENTING INVESTMENTS

 Iraq Construction Permits Reform Project (implementation)

Investment
 Iraq Investment Policy Project (pipeline)- assisting Iraq’s National Investment Commission to develop a sub-national
Climate investment policy

PPP  2 MOUs signed: Key sectors of focus include : water, waste, power, transports, and social and municipal services

Corporate  Training activities (awareness and market level work)

 Establishment of a Directors’ Training Institute
Governance  Corporate Governance Assessment (firm level work)
(CG)  Completed CG assessment to 5 private firms, with implementation agreement with one client

 Digital financial infrastructure and EGate

Financial Sector  Advisory supporting private banks with restructuring
 IFC’s Investments in Iraq

IFC’s committed investments in Iraq currently exceeds US$1.2 billion in 11

companies/projects:

• 10% equity stake in Credit Bank of Iraq in partnership with National Bank of Kuwait

• US$30 million loan for the first 5-star Greenfield hotel in Erbil – Erbil Rotana Hotel & Erbil
Arjaan new hotel.

• US$135 million loan to Gulftainer to support their investments in ports

• US$400 million IFC-led facility for Zain Iraq

• US$135 million loan to Lafarge for the Bazian and Karbala cement plants

• US$25 million equity investment in Commercial Bank of Iraq (CBIQ)

• US$18 million Islamic Financing with Safi-Danone Dairy plant

• US$5 million equity investment with Nafith logistic company in Oum Qasr port

• US$375 million Including mobilization in Suli power plant

 Iraq Open For Business
Investment opportunities: Why Iraq? Why Now?
 Iraq Liberated and United: After almost 30 years of war, Iraq has liberated all its territories from ISIS control, and is
united under a strong central government, with a strong army capable of keeping peace

 Committed Government: The Iraqi government is committed to an ambitious reform program focusing on
improving the investment climate, supporting the private sector, and attracting foreign investments

 Stable Macroeconomic Framework: Iraq has a stable Macroeconomic framework, with an International Monetary
Fund program supported by the World Bank Group

 No restrictions on transfer of funds: Iraq has a healthy foreign international reserve, stable exchange rate regime
pegged to the US dollar, with no restrictions on transfers of funds across borders.

 Investment Opportunities in all sectors: With the 2nd largest oil reserves and huge reconstruction needs, Iraq
provides investment opportunities in almost all sectors

 High Risk, High returns: Investments in Iraq provide among the highest rate of rate, as the risk increases so will
the return

6
 SOME POTENTIAL NON-OIL DRIVERS OF FUTURE GROWTH
RECONSTRUCTION
Critical non-oil infrastructure needs
to be rebuilt, including the energy
sector, transport, housing and ICT
Reconstruction can be a catalyst for
private sector growth; private
sector involvement would maximize
economic inclusion and jobs impacts
Needs are significant everywhere,
particularly in post-Daesh areas.
Construction materials and services
are examples of opportunities for
local investment
Investment Enabled by Prospects of Greater Stability and Security
7
SERVICES INDUSTRIES AND LIGHT
MANUFACTURING
Religious and cultural tourism
attracts millions of visitors each year
to Najaf, Karbala, and other areas.
Microfinance institutions served
nearly 100,000 low-income
entrepreneurs prior to Daesh conflict
and may hold promise
High food imports indicate potential
in agribusiness (e.g. horticulture)
and light manufacturing, such as
food processing. Chemicals,
particularly petrochemicals, have
attracted FDI and domestic
investment (8% of total)
GREATER INTERNAL INTEGRATION
& INTERNATIONAL CONNECTIVITY
Iraq enjoys a privileged geo-
strategic location.
Investments in transport and
logistics
can boost domestic and foreign
trade: connecting Asia to Europe
via Basra with link to Turkey.
After oil, ICT is largest private-
sector-led contributor to GDP. Much
room for growth in telecoms market
as Iraq has one of lowest rates of
mobile and fixed broadband
adoption in MENA
 NEW POTENTIALS IN THE OIL & GAS SECTORS

GAS FLARING REFINERIES PIPELINES

Investment needs and opportunities

in gas infrastructure and in
expanding gas‐to‐power
generation to reduce
environmentally damaging and
costly gas flaring. Iraq projects expanding its crude
production from a capacity of
Iraq is 2nd largest gas flaring about 4.5 billion barrels per day
country in the world. Flaring Iraq plans to triple refining today to 6 billion barrels in 2020.
represents annual economic loss of capacity by 2021 to reduce
about US$2.5 billion; sufficient to reliance on refined-product imports. An Iraq-Jordan pipeline is
meet most of Iraq’s unmet needs for Processing capacity today is just envisaged to eventually connect
gas‐based power generation. over 500,000 barrels a day. Basra with Jordan’s Red Sea port of
Need to increase processing Aqaba, with plans for another
capacity around the Basra Northern pipeline project.
petroleum hub. The additional gas
captured and processed needs to
be effectively commercialized and
allocated to serve its power
generation needs.

Investment Enabled by Prospects of Greater Stability and Security