DUBAI - International Finance Corporation (IFC) is planning to venture into Iraq by June this year. The transaction is reported to be in the form of an equity or loan in small and medium enterprise, this was confirmed yesterday by Mr Assaad J Jabre, Vice-President Operations, IFC (The World Bank Group).
Out of the total funds of $ 200 million, technical assistance component of up to $30 million is earmarked for capacity building of other sectors and $170 million is been scheduled to use for small and medium enterprise, provide financing through partner financial institutions. The facility will seek to work with existing banks and new financial institutions that may be established in Iraq.
In the post war scenario, Iraq's economical recovery would be very crucial and in the process IFC will identify Finance Intermediaries (FI) in few months, added Mr Jabre.
Further, Iraq is now showing signs of huge investment potential and this may increase funding in few months time. The idea of developing the nation is also to sustain the development in small and medium enterprise. The maiden transaction is sequel to the initial study conducted by IFC assessing the investment opportunities in Iraq. The IFC had sent a team, which studied the situation and identified, needs of private sector and investment opportunities in various sectors of the economy.
Mr Jabre further said, "we are open to investing in any sectors of the economy in Iraq, provided they are viable projects. At this point of time Iraq has huge investment potential however good governance is equally important factor in development of Iraq."
The technical assistance component of the facility will help participating financial institutions develop capacity for micro and small business financing by providing training, systems and helping to create units with specialised expertise. IFC expects to work with other donors, bilateral agencies, and commercial investors for both funding and technical support.
Other institutions in the World Bank Group, namely, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) have assisted in the preparation of a needs assessment for Iraq's reconstruction, which formed a basis for the new IFC facility.
IBRD and IDA continue to carry out required preparatory work and plan to begin operations in Iraq contingent upon improved security and a number of factors - such as debt sustainability, settlement of arrears, and governance - that do not apply to IFC in light of its private sector focus. This will be achieved by supporting micro and small businesses. These enterprises are an important part of Iraq's economy and have an important role to play in its economic revival, opines IFC.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilises capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.
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