WASHINGTON, D.C.
, 19 December 2003 – The International Finance Corporation, the private sector arm of the World Bank Group, approved plans on Thursday for an investment to establish an Iraq Small Business Finance Facility of up to $200 million.
The facility will seek to work with existing banks and new financial institutions that may be established in Iraq. It will consist of a technical assistance component of up to $30 million for capacity building and a micro and small business finance component of up to $170 million to provide financing through partner financial institutions.
“Conditions in Iraq are evolving quickly and IFC wants to be in a position to begin financing activities as soon as the environment permits”, said Peter Woicke, IFC’s executive vice president.
“We are hopeful that this project will support the overall reconstruction efforts underway in the country.”
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, in some cases, helping to create units with specialized 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.
“An urgent priority in Iraq is job creation, putting businesses back on their feet and creating opportunities in the private sector”, Woicke said. “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.”
The mission of IFC (
www.ifc.org
) 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, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
