World Bank's IFC reaches out to Gulf investors

The World Bank's private sector lending arm said on Sunday it wanted to help deepen Gulf Arab financial markets and back private sector firms eager to replace their governments as the prime investors in the region. Assaad Jabre, International Finance Corp (IFC) vice president responsible for new investment and advisory activities globally, also said the IFC wanted to support Gulf Arab companies invest in other developing markets world-wide.
"With high oil prices, governments have been able to replenish reserves ... But they still feel the needs are huge and there is a (private) segment in the market that can play a role," Jabre told Reuters in Dubai, where the IFC's opened its new regional office on Sunday.
Diversifying the region's oil dependent economies and funnelling investment into job-creating enterprises was crucial as unemployment rates rise, he said.
"This has become an absolute priority," Jabre said.
The IFC is seeking to spur private sector involvement in state-dominated sectors such as power and utilities and develop a housing finance market in Gulf Arab states, he said.
Egypt set up a joint venture company last year with US mortgage finance firm Fannie Mae and the IFC to securitise home loans in a bid to help recycle funds in the mortgage market and encourage secondary trading.
"We are very much engaged in this in Saudi Arabia and we are looking at this in Oman," Jabre said.
SECURITISATION: The IFC was discussing with several partners in Saudi Arabia how to create access to local currency funding via the issuance of mortgage-backed bonds, he said.
This securitisation would allow financial institutions selling these bonds to extend longer term loans at fixed rates to prospective homebuyers, he said.
There would be no impediment for Islamic banks prohibited from charging or paying interest from issuing Islamic bonds or sukuks backed by Islamic mortgages, he added.
The IFC was also eager to help regional companies invest in developing or transitional markets, Jabre said.
"We need partners that are interested in coming in with us to more difficult places, like Africa and Central Asia," he said.
The IFC has itself used its own money to take a stake in ventures alongside private investors.
The IFC announced on Friday it would buy a minority stake in a bank in Iraq in partnership with Kuwait's biggest bank, the National Bank of Kuwait.
The IFC, which has $18 billion invested in private sector projects in developing countries, has $2.5 billion invested in the Middle East.