CAIRO: As organizations like the World Bank and International Monetary Fund take center stage in third world development efforts, the International Finance Corporation (IFC) has managed to maintain a lower profile while undertaking wide ranging projects across the region.
Unlike the World Bank, which focuses on providing loans to governments to facilitate development and reform, its private sector arm, the IFC, focuses on providing advising and investment to regional enterprises to promote private sector development and growth. “We’ve committed $60 million and are working with donors to reach $150 million for investment in the region over the next five years, Jesper Kjaer, IFC’s general manager of advisory services for the MENA region, told Daily News Egypt.
“We expect our investment capital to reach $1.5 billion and are looking forward to more success, he added.
From its Cairo offices, the IFC oversees projects for the MENA region, including Pakistan and Afghanistan. Drawing upon both internal resources and donor funding from countries like Canada, France, the United States and Kuwait, the IFC has worked to provide a variety of financial instruments to large private sector enterprises.
In recent years, IFC has expanded its investment activities into new sectors and made new partners regionally.
“Before, we invested mostly in outside companies, but we have been changing that strategy and trying to develop a network of South-South partnerships were regional players invest in local enterprise, Kjaer said.
“We’ve also expanded from our traditional activity in the financial sector, which was based mostly in Egypt and Pakistan, to investments in almost every country in the region in a variety of sectors, he added.
At the same time, the IFC offers advisory services to a range of clients. In Egypt, they have worked to develop the country’s first credit bureau, i-Score, as well as on the privatization of Bank of Alexandria. The IFC has also worked with Mobinil to train small business owners that sell their products.
As consultants to the Egyptian government, the IFC has helped to facilitate the growth of small businesses by cutting the time it takes to register a new company by 50 percent in an Alexandria pilot program set to be implemented in the rest of the country as well.
“In some of the countries in MENA we do get involved in mainstream projects, but in Egypt we aim to work on ground breaking projects that promise large-scale development. Our ultimate aim, though, is to create employment in the region so we choose projects with the greatest potential to help do that. said Kjaer.
Though the IFC has achieved what Kjaer called “massive success in the region over the past five years – expanding capital from $230 million per annum five years ago to $1.4 billion last year – the financial crisis has brought a new set of challenges to their dealings with local partners.
“The crisis has shattered a lot of myths about world finance, and made everyone question our approach. After looking at how the crisis has impacted locally, we haven’t changed our strategy, but we’ve had to change how we interact with clients, said James Gohary, senior operations manager for advisory services at IFC.
Across the MENA region, the financial crisis has impacted different countries in different ways.
“The crisis has three stages. The region on the whole was not impacted by the toxic asset phase, which hit the US first and later Europe. The next phase, a drop in liquidity and a reduction in the efficacy of financial instruments, hit some countries in MENA harder than others. But the last phase – recession – is going to impact everyone, we are just waiting to see how, explained Gohary.
The sectors expected to be hit the hardest in the region include tourism, commodities, remittances and real estate, as well as an inevitable drop in foreign investment that will have far reaching consequences.
Despite this, Kjaer has a positive outlook for the next five-year development cycle, set to begin July 1, 2009.
