MIGA and IFC Boost Foreign Direct Investment into Jordan, Iraq
MIGA has the largest investment exposure within the Mashreq region in Jordan
MIGA and IFC are exploring expanding their engagements in infrastructure, agriculture, and renewable energy sectors in the region
Government representatives stressed the need for continued support from MIGA
Jordan and Iraq face complex challenges, but they have shown remarkable resilience for continued growth. They will need to mobilize private capital to lay the foundations for shared prosperity.
The Multilateral Investment Guarantee Agency (MIGA) is involved in several projects in Jordan and Iraq, boasting one of the most diversified portfolios and the largest investment exposure within the Mashreq region is in Jordan. The agency has provided guarantees to multiple projects in the region. One successful example is the Queen Alia International Airport, Jordan’s first public-private sector engagement. MIGA’s guarantee supported optimizing the commercial activities of Jordan’s principal airport (e.g., duty-free shopping, specialty retail, food, and beverages), which is expected to lead to higher non-aeronautical revenues, generating additional revenues for Jordan and enhancing the passengers’ travel and retail shopping experience. The airport is an important infrastructure asset for Jordan, used by over 7 million passengers annually, supporting the country’s economic growth and development. and IFC’s portfolio in Iraq are also growing.
MIGA, through its guarantee products, de-risks, and crowds in private sector investment to developing countries. It provides political risk insurance (PRI) against expropriation risk, transfer risk (e.g., currency non-convertibility), war and civil disturbance, and breach of contract; and non-honoring of financial obligations, which offers insurance to international banks and lenders against non-payment of sovereign and sub-sovereigns.
To promote foreign direct investment (FDI) into Jordan and Iraq, MIGA and IFC, in partnership with the Hashemite Kingdom of Jordan, hosted a roundtable in September 2023 in Amman. The gathering brought together cabinet-level officials from the two governments and international private executives from the Middle East and North Africa and across the world. The meeting aimed to understand the private sector’s process for evaluating projects, the issues they encounter, and their suggestions for making favorable investment conditions.
“The roundtable dialogue provided an opportunity for a frank conversation to gain a better understanding from the Jordanian and Iraqi governments about their countries’ respective investment priorities, and concerns and constraints from the private sector in making investments. We are ready to intensify our engagement in the region and facilitate more private sector investment,” said Ethiopis Tafara, MIGA’s Vice President and Chief Risk, Legal & Sustainability Officer and Partnerships.
MIGA also closely works with IFC to unlock existing bottlenecks for private sector investment. “Jordan and Iraq share a long history of bilateral trade and economic cooperation. They also both have ambitious plans for economic development. We are committed to helping both countries achieve their visions and, at IFC, we have already made a stride by establishing our office in Amman as a regional hub. We have also doubled our staff and are increasing our strategic investments in both countries,” said Khawaja Aftab Ahmed, IFC’s Regional Director for the Middle East, Pakistan, and Afghanistan.
The government representatives from Jordan and Iraq stressed the need for continued support from MIGA, IFC, and the World Bank to attract foreign direct investment into their countries.
“Jordan has a long-standing relationship with both IFC and MIGA, and the World Bank at large. As we move forward with the implementation of the economic vision, we see an expanded role of the two entities in supporting the delivery of the vision, especially PPPs and strategic national and regional projects,” said Zeina Toukan, Jordan’s Minister of Planning and International Cooperation.
Similarly, a government representative from Iraq highlighted a vision for shared prosperity and the role of FDI. “We are certain about the importance of attracting FDI and facilitating entry of private sector companies constitute an important goal to achieving progress and prosperity for countries,” said Bareen Al Khafaf, General Director of the Iraqi Fund for External Development.
The private sector attendees discussed the vital role of risk-mitigation support from MIGA. “The key value addition that MIGA brings to these projects is really the ability to bring in at scale institutional investors by providing in a way a risk framework and a backstop to the investments that we make in the region,” said Matthieu Muzumdar, Deputy CEO of Meridiam, one of MIGA’s long-standing partners.
MIGA is exploring providing guarantee opportunities in infrastructure, agriculture, and renewable energy sectors in the region. It is in conversation with several banks in Jordan to expand their footprints in Iraq and elsewhere in the region.
“When we're talking about fragile economies, it is very important to have partners like MIGA. For us, the presence of MIGA with Nafith in Iraq has given us a lot of stability. It has increased our appetite to make investment. We have been able to go back to MIGA whenever we've been having any issues in our investment,” said Nourah Mehyar, CEO of Nafith Logistics, another MIGA partner in the MENA region.
Enabling knowledge exchange and learning is essential to MIGA’s commitment to facilitate FDI in emerging markets. “We have received several queries from private sector investors interested in collaborating with MIGA in their future projects in the MENA region,” said Layali Abdeen, Senior Underwriter and MIGA’s Head of Middle East and North Africa. “We are eager to continue our support, especially of infrastructure sector projects delivering vital services to the people of the region.”
MIGA has been expanding its collaboration across the World Bank, emphasizing its effectiveness, and impactful results on the ground. The MIGA-IFC partnership highlighted the power of leveraging two important wings of the World Bank Group dedicated to exclusively working with the private sector.
As MIGA expands its business, it expects to develop a deeper engagement with the private sector and governments worldwide for sustainable and impactful development. This was MIGA’s third roundtable, following events in Tanzania and Togo in 2022. The agency plans to organize additional roundtables in other member countries soon, with one scheduled for March 2024 in Ethiopia.