Unlocking Potential, Building Confidence

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Unlocking Potential, Building Confidence

IFC in the Middle East and North Africa

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12 08

10

14 22 BY THE NUMBERS

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18 EMPOWERING ARAB YOUTH

COMBATING CLIMATE CHANGE

BOOSTING YOUTH EMPLOYABILITY

CONNECTING AFGHANISTAN

BOLSTERING EGYPT’S ECONOMY

HELPING SMALLER 06

BUSINESSES OUR WORK,

AT A GLANCE

04 SUPPORTING

INFRASTRUCTURE DEVELOPMENT

PROTECTING THE ENVIRONMENT

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MAKING A DIFFERENCE IN THE MIDDLE EAST AND NORTH AFRICA

04 OUR W ORK , A T A GL ANCE

More than two years after the Arab Spring, many countries in the Middle East and North Africa continue to grapple with political uncertainty, slow growth, unemployment, and a host of other economic challenges.

IFC is striving to address these economic issues by supporting the region's private sector, helping to create jobs and drive sustainable growth.

We work in countries from Morocco to Afghanistan to boost investor confidence, help small business owners, develop vital infrastructure projects, upgrade farming techniques, combat climate change, improve the investment climate, and help new governments cut red tape.

IFC does this through a combination of investments and advisory services. During the 2013 fiscal year, IFC committed almost $3 billion in MENA, a figure that includes $914 million mobilized from other investors. The organization also launched 34 advisory projects worth a total of $36.5 million.

A key component of IFC's work is making the region more appealing to both domestic and foreign investors, which is vital to stoking economic development. During the 2013 fiscal year, IFC made several large, confidence-boosting investments in the region. The institution is also helping governments in Egypt and Tunisia streamline their business regulations, making the countries more competitive, and advising several governments on how to overhaul their bankruptcy systems.

IFC is also driving economic integration across the region, helping leading MENA companies enter new markets, which creates jobs and raises local business standards. IFC has facilitated around $5.3 billion worth of these South-South investments in the last decade. That work has helped do everything from support smaller business in Africa to improve water treatment in Asia.

IFC committed almost $3 billion in MENA last year and launched 34 advisory projects, helping lift people out of poverty.

$3 billion

IFC's total commitments in MENA during the 2013 fiscal year.

34 Number of advisory

projects launched during the

2013 fiscal year.

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Small and medium enterprises (SMEs) form the backbone of most economies in the Middle East and North Africa. Studies show there are around 23 million of these businesses across the region and they account for up to 40 percent of all jobs. But two-thirds of SMEs are unable to get loans or other forms of financing, which means they have few opportunities to expand and generate employment.

IFC is committed to helping address that. The organization works with banks and microfiance lenders across MENA to extend credit to smaller businesses, which is key to stoking the sort of economic development that benefits everyone.

During the last fiscal year, IFC has:

• Spearheaded a multi-donor facility to increase access to finance for micro, small and medium enterprises across MENA. IFC provided $150 million in financing and mobilized over $230 million from other

international financial institutions;

• Invested almost $1.8 billion in financial markets in the region;

• Helped smaller businesses access finance through several large equity investments, including $204 million in Morocco’s Banque Centrale Populaire and

$48 million in Tunisia’s Amen Bank;

• Made its first microfinance investment in Lebanon

(Ameen) and continued support to the sector in Jordan with investments in Tamweelcom and the Middle East Micro Credit Company;

• Committed a little over $1 billion in trade financing, which helps SMEs - through banks - enter new markets and trade across borders. Iraq's UBI Bank was among several lenders to join IFC's global trade finance program last year;

• Offered advice to lenders from Morocco to Pakistan, allowing them to reach out to small business owners.

That includes an agreement with Pakistan's HBL, which is rolling out a plan to provide 25,000 loans for farmers;

• Worked closely with lenders across the region, including Lebanon' BLC Bank, to develop products tailored to SMEs, especially those owned by women;

• Promoted the underpinnings of a successful economy by advising on the creation of credit bureaus, secured lending systems, and leasing regimes. That includes advising the government of the United Arab Emirates on an important law that helps smaller businesses use assets like equipment or inventory as collateral for loans; and

• Worked with banks in Lebanon and Jordan to launch the SME Toolkit, an online platform designed to help small and medium enterprises (SMEs) grow their business and improve performance.

HELPING SM ALLER BUSINESSES

IFC is helping small business owners like Pakistan’s Muhammad Ilyas, who used

a loan from an IFC client to dramatically expand his scrap metal company.

IFC spearheaded a multi-donor

facility that will provide $380 million

in financing to smaller businesses.

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08 BOLSTERING EGY PT ’S EC ONOMY

Nabil al Jabari and his family have run a small grocery store in downtown Cairo for the last six decades. And while the shop has a cadre of devoted customers, al Jabari, a father of four, is always looking for ways to bring in new business.

So three years ago he installed an electronic payment system developed by Fawry, a pioneering Egyptian technology company and an IFC investment client.

The system lets customers use credit cards and pay their cell phone bills, among a host of other things. That suite of services has lured dozens of new customers to his store and al Jabari says revenues are up 15 percent.

"[The technology] has really helped" says Jabari.

Stories like that are why IFC invested

$6 million in Fawry earlier this year, an agreement designed to help the company expand its network of 20,000 payment terminals. The investment was part of IFC's wider efforts to support small and medium enterprises in Egypt and drive economic development across the country.

Over the past two years, IFC has invested

$777 million in the country to help restore investor confidence, create jobs, and raise education standards. It has also been providing advisory services to strengthen business regulations, increase access to finance, support the development of smaller enterprises, and assist in the creation of public-private partnerships in infrastructure.

The investment in Fawry is designed to support that. It will help extend modern financial services to scores of everyday Egyptians. That is crucial in a country where almost everyone relies on cash for transactions, a relatively inefficient way of doing business.

It's making a difference on the ground, especially for people like al Jabari.

He recommended the service to his brother and cousin, who also run shops. And since he began using the system, scores of other small retailers in his neighborhood have followed suit. Though, that has somewhat blunted his competitive advantage.

"Now everybody knows," he said, laughing.

Nabil al Jabari says an innovative electronic payment system developed by an IFC client has boosted business at his Cairo grocery store.

[The technology] has really helped.

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10 SUPPORTING INFR ASTR UC TURE DE VEL OP MENT

Across the Middle East and North Africa there is a lack of power plants, water treatment facilities, roads, hospitals, and schools. Problems related to this infrastructure shortfall, including power failures, act as a brake on business, preventing firms from expanding and creating jobs. The World Bank estimates that $100 billion needs to be spent annually to reverse the trend, but MENA has the lowest level of private infrastructure investment in the world.

IFC is helping to tackle those problems by investing in infrastructure projects and advising governments on pioneering public-private partnerships. During the 2013 fiscal year, IFC committed $647 million to infrastructure development, allowing a range of firms from cement makers to gas producers, to ramp up production and create jobs. During the last fiscal year, IFC:

• Provided $65 million in financing to telecom operator Roshan, helping the company expand cell phone and internet services in Afghanistan;

• Arranged a $65 million loan to the Iraqi subsidiary of cement maker Lafarge, an important boost for the local construction industry;

• Created a $500 million debt facility for natural gas producer Petroceltic, which will help the company ramp up work in Egypt and Algeria;

• Helped Jordan open a sparkling new airport terminal in Amman. IFC advised the Jordanian government on the pioneering public-private partnership that led to the terminal’s creation and arranged $280 million in financing;

• Provided a loan to TransGlobe Energy to help the company develop oil and gas assets in Egypt; and

• Arranged a $30 million loan to help logistics company Gulftainer build a shipping terminal in southern Iraq, helping stoke trade in the country.

10.7 million

Number of people IFC helped connect to power grids in MENA

3.5 million

People who gained access to healthcare thanks to IFC clients

IFC is ramping up its support for infrastructure development in the Middle East and North Africa.

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12 As we have seen in countless

places, the ability to communicate is vital for economic development.

This agreement will help bring the internet to the doorstep of Afghans, opening up a world of possibilities.

IFC is helping expand internet and cell phone services in Afghanistan with a $65 million investment in telecoms operator Roshan.

CONNEC TING AFGHANIST AN

Years of conflict have hobbled much of Afghanistan’s infrastructure. But one of the country’s leading telecoms providers, Roshan, is working to reverse that trend with support from IFC.

IFC recently provided the firm, known formally as Telecom Development Company, with a $65 million loan designed to help it roll out 3G and high-speed internet services across the country. Wireless connections are crucial in a nation with virtually no landlines – and no other way for people to get online.

The company is also planning to beef up its 2G network, which reaches hundreds of cities.

"As we have seen in countless places, the ability to communicate is vital for economic development," said Mouayed Makhlouf, IFC Director for the Middle East and North Africa.

"This agreement will help bring the internet to the doorstep of Afghans, opening up a world of possibilities."

The investment is part of IFC’s wide- ranging strategy in Afghanistan to improve infrastructure, support agribusiness, help small businesses, and promote the development of the financial and telecommunications sectors. In 2009, IFC approved $75 million worth of loans and equity investments in MTN, another mobile operator.

Just a decade ago, less than 100,000 Afghans had access to mobile communications. But Roshan has invested more than $550 million in infrastructure to create a state-of-the-art network that provides coverage to over 6 million subscribers. The company reaches 230 cities and towns in all of Afghanistan’s 34 provinces.

“The ability to speak to one another is a basic human need and over 10 years, Roshan has played an integral role in achieving this milestone,” said Karim Khoja, Roshan’s Chief Executive Officer. “Now we are ready to lead the broadband revolution for Afghanistan’s next generation.”

IFC’s investment comes as Roshan is

expanding its mobile banking service, giving more people access to crucial financial services. It is also engaged in several innovative social programs, including one that provides video links between Afghan hospitals and international medical facilities.

Roshan is owned by the Aga Khan Fund for Economic Development, Monaco Telecom International, and TeliaSonera. It directly employs more than 1,200 people and provides indirect employment to more than 40,000 people.

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14 BOOSTING Y OUTH EMPL O YABILIT Y

Across the Middle East and North Africa there is an epidemic of youth unemployment. One quarter of the region’s young people do not work, one of the highest regional rates in the world. That costs MENA economies up to

$50 billion a year, a number that is set to grow with tens of millions of young people poised to enter the workforce in the coming decade.

To address this issue, IFC in 2012 launched the E4E Initiative for Arab Youth, which uses both investment and advisory services to address the youth employability challenge across MENA. The initiative supports education and training programs that provide students will the skills in high demand among employers. It does this by tapping into the power of the private sector, which can play a more direct role as a provider of training relevant, high-quality education and training programs.

At the same time, IFC is supporting training efforts through its Business Edge program. It gives students a grounding in the fundamentals of business, including soft skills like teamwork, thereby improving their employability.

During the last fiscal year, IFC has:

• Invested $6 million in PLATO, a Turkish vocational training entity with plans to expand operations into Egypt;

• Launched an advisory project in Morocco to develop quality assurance frameworks for the tourism and logistics sectors, in co-ordination with the World Bank. The initiative is expected to improve the employability of 10,000 Moroccan youth within five years;

• Invested $7 million in Morocco’s Hautes Etudes de Management business school, helping the institution expand and, giving more youth in remote areas access to quality education; and

• Partnered with Jordan’s national business association, Int@j, to decrease the skills gap in the information and communication technology (ICT) sector.

Youth unemployment costs the region

$50 billion

a year

IFC’s is helping to tackle the youth employability challenge across MENA.

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16 EMPO WERING AR AB YOUTH

With youth unemployment in the Middle East and North Africa above 25 percent, IFC is ramping up its efforts to equip the region's young people with the skills and education in demand by employers.

It is doing this through the E4E Initiative for Arab Youth. A joint investment and advisory effort, it supports programs that prepare students for work in booming fields like tourism, healthcare, information technology, retail, and construction.

As part of the initiative, IFC recently held a conference in Marrakech, Morocco that brought together a range of international stakeholders, including government officials, private education providers, and corporate executives from companies like Microsoft.

They discussed ways to boost private investment in employment-driven education programs, and combat the stigma that surrounds vocational education and training.

"Right now, many youth across the Middle East and North Africa have degrees and diplomas, but they are often not the type that lead to jobs," said Dahlia Khalifa, head of the E4E Initiative. "Employers are increasingly

demanding a new set of skills, so it's important to prepare young people for that work

environment."

The Morocco conference, dubbed the E4E Solutions Marketplace, served as a launch pad for partnerships in the employment-driven education field. It followed a similar event in Dubai last year.

The conference resulted in IFC’s first education sector project in Morocco, a $7 million equity investment in Institut des Hates Etudes de Management. The support is designed to help the higher education institute double its student intake by 2020 and accept more middle-and lower-income pupils.

The effort comes amid a region-wide epidemic of youth unemployment. In MENA, labor force participation rates are among the world’s lowest at around 35 percent. (The global average is 52 percent.) Regionally, youth unemployment results in annual losses of up

$50 billion, equivalent to the GDP of Tunisia.

The E4E Initiative for Arab Youth, launched in 2011, is active in four countries: Morocco, Tunisia, Jordan, and Egypt.

Employers are increasingly

demanding a new set of skills, so it's important to prepare young people for that work environment.

IFC’s E4E Initiative for Arab Youth supports programs that prepare students for work in booming fields like tourism, healthcare, information technology, retail, and construction.

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18 COMB ATING CLIM ATE CHANGE

The Middle East and North Africa is one of the world’s driest regions, making it especially vulnerable to climate change. Droughts and shifting weather patterns have the potential to devastate key industries like agriculture and tourism, making environmentally-friendly economic growth crucial.

Faced with those challenges, IFC is ramping up its fledgling climate business through a combination of investments and advisory services. Our teams help businesses become more energy efficient, support firms as they cut greenhouse gas emissions, and work with the private sector to develop renewable sources of power.

During the last fiscal year, IFC:

• As part of its public-private partnership program, advised officials in the West Bank on the creation of a state-of-the-art landfill that will serve more than 750,000 people;

• Worked with Banque Libano-Francaise to help the lender launch a program offering energy-efficiency financing. Based on IFC's advice, the Lebanese bank made $27 million worth of energy-efficiency loans last year;

• Supported Jordanian micro-lender Tamweelcom as it offered loans to customers looking to purchase solar heaters, chipping away at greenhouse gas emissions;

• Provided an $11 million loan to support the construction of an energy efficient, 30-floor office tower in Karachi, Pakistan. It would be the first LEED certified building in the country;

• Signed an agreement with Abu Dhabi’s Masdar, a leading renewable energy company, to explore ventures in areas like carbon capture, solar desalination, and wind power;

• Encouraged companies to conserve resources and embrace energy-efficient construction projects, reducing greenhouse gas emissions by 32,500 metric tonnes and saving firms $4 million;

• Showed Moroccan firms how they can save water, reduce waste, limit greenhouse gas emissions, and increase their energy efficiency;

• Advised Pakistan’s Karachi Organic Electric Company on the construction of a pioneering biogas plant that will turn animal waste into power;

• Provided $50 million in loans to Metito, a UAE- based utilities company, allowing it to fund water treatment projects in MENA, Africa, and Asia; and

• As part of its public-private partnership program, advised officials on the construction of an airport in Saudi Arabia that uses state-of-the-art technology to conserve water, save energy, and reduce greenhouse gas emissions. It’s expected to be a model for the rest of the region.

IFC is helping businesses become more energy efficient, supporting firms as they cut greenhouse gas emissions, and working with the private sector to develop renewable sources of power.

IFC is helping businesses save energy,

cut greenhouse gas emissions, and

develop renewable sources of power.

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20 PR O TEC TING THE ENVIR ONMENT

IFC is ramping up its efforts to protect the environment and combat climate change by helping a leading Lebanese bank dramatically increase lending to eco-minded businesses and homeowners.

IFC helped Banque Libano-Française (BLF) develop capabilities and expertise to expand its loan offerings for corporations, schools, and home owners that want to invest in renewables and energy-efficient projects.

BLF has now provided 10 such loans to Lebanese businesses, totaling almost $30 million. In the retail sector, the bank has financed more than 2,000 solar water heaters in private homes, among a host of other initiatives.

One company that benefitted from the program was Arab Printing Press, a Beirut print house with 130 workers.

“The (BLF initiative) gave us great insights into our operational activities, showing us how to reduce our energy bill by implementing energy saving measures that are good for us and good for the environment,” said CEO Elie Raphael.

BLF’s activities in energy efficiency and renewables are expected to lead to a sizeable reduction of greenhouse gas emissions and preserve several thousand trees, all while providing Lebanese businesses and homeowners with a sustainable advantage.

“BLF has a clear environmental sustainability strategy based on engaging with key stakeholders, raising awareness of green issues, developing the green lending business, and promoting a sustainable energy finance model for the bank and its clients, reflecting our commitment to the environment and the economy,” said Maurice Iskandar, Head of the International Division at BLF. “The program allowed us to boost the implementation of BLF’s sustainability strategy and to better serve our clients”

Climate change is a particular concern in the arid and increasingly water- scarce Middle East, where heavily-subsidized fossil fuels have made energy saving investments unattractive. However, many businesses are realizing that subsidized electricity is unsustainable, particularly in Lebanon where demand has outstripped supply and businesses are often forced to turn to generators.

BLF was the first commercial bank in the MENA region to participate in IFC’s sustainable energy finance program. The IFC team provided comprehensive advice including technical expertise, detailed market assessment, exclusive tools adapted to the local context, and training to allow BLF to develop ways to reach out to entrepreneurs who want to switch to modern technologies and improve their operations.

The program also raised awareness about energy efficiency and renewable energy opportunities among corporate and small business clients. It was made possible with financial support from the Ministry of Foreign Affairs of Finland.

The initiative gave us great insights into

our operational activities, showing us

how to reduce our energy bill.

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Investment Services Number of new projects: 60 Total commitments: $2.95 billion Mobilization: $914.5 million

IFC’s clients have:

• Facilitated 1.9 million MSME loans worth

$13.2 billion;

• Supported power generation to 3.4 million customers;

• Extended power distribution to 10.7 million customers;

• Supplied water to 1.1 million customers;

• Provided healthcare to 3.5 million patients;

• Supported 200,000 farmers and 4,300 students;

• Created 244,000 jobs;

Advisory Services

Number of new projects: 34 Value of new projects: $36.5 million

IFC’s clients have:

• Facilitated 630,000 loans to micro, small, and medium enterprises (MSMEs);

• Provided $2.6 billion in financing to MSMEs;

• Provided 216,000 loans to women;

• Opened 128,000 new bank accounts for customers;

IFC’s work has:

• Saved the private sector $104.1 million by supporting regulatory reforms;

• Helped settle 1,466 cases through alternative dispute resolution, releasing

$62.6 million in funds;

• Supported 476 businesses as they improved their performance;

BY THE NUMBERS

Joining Forces to Maximize Our Impact

During the 2013 fiscal year, IFC MENA stepped up the integration of its investment and advisory services in an effort to offer a more comprehensive set of solutions to clients and maximize IFC’s development impact. IFC has also collaborated closely with the rest of the World Bank Group to address some of the region’s most pressing economic challenges. Highlights include:

• A joint advisory and investment project to build the institutional capacity of Iraq’s United Bank for Investment;

• An advisory and investment initiative with Tunisia’s Amen Bank that is designed to expand access to finance for smaller businesses;

• A joint advisory-investment project with Karachi Organic Energy to build a pioneering biogas plant in Pakistan’s biggest city;

• Four advisory projects in Tunisia, in conjunction with the World Bank, focused on reforming the investment code, simplifying regulations, and improving bankruptcy laws; and

• An initiative with the International Bank for Reconstruction and Development to advise the Jordan Loan Guarantee Corporation as it scales up its lending operations to micro, small, and medium enterprises (MSMEs), part of the MSME Facility.

During the last fiscal year, IFC clients helped support 200,000 farmers.

A look at how IFC made a difference

on the ground during the 2013 fiscal year.

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24 IFC's investments facilitated nearly 2 million

loans to smaller business worth $13 billion,

and our advisory work supported almost

630,000 loans worth over $2.5 billion.

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About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity.

In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org

/IFCmena

@IFC_mena /IFCvideocasts

www.ifc.org/SocialMediaIndex

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Mouayed Makhlouf

Director, Middle East and North Africa Nile City Towers, North Tower, 24th Floor 2005C Cornich El Nil, Ramlet Boulac, Cairo, Egypt

Tel: + 20 (2) 2461-9140 / 45 / 50 Fax: + 20 (2) 2461-9130 / 60 Luke Haggarty

IFC Advisory Services Senior Manager

Tel: + 20 (2) 2461-9140 / 45 / 50 Fax: + 20 (2) 2461-9130 / 60 Nada Shousha

Country Manager

Tel: + 20 (2) 2461-9140 / 45 / 50 Fax: + 20 (2) 2461-9130 / 60 E-mail: [email protected]

REGIONAL HUB: CAIRO, EGYPT

January 2014 ^ifc.org