IFC pledges $1 billion to boost Iraq’s private sector

Financing is for sectors including energy, infrastructure, agriculture, housing, finance and healthcare

The International Finance Corporation (IFC), part of the World Bank Group, has announced $1 billion in new investments and partnerships to strengthen Iraq’s private sector.

The new financing is for sectors including energy, infrastructure, agribusiness, housing, finance and healthcare, building on more than $2.5 billion that IFC has invested in Iraq since 2005, it said in a statement on Sunday.

“Iraq is ready to embrace Arab and foreign partnerships like these ones,” Iraqi Prime Minister Mohammed Shia Al Sudani said at an IFC event where the announcement was made.

Among the projects, IFC has been mandated by Basrah Gas to lead, arrange, and syndicate a second loan of up to $500 million, following a financing package in 2021. The new investment is aimed at supporting the gas flaring reduction project, capturing gas for energy use and significantly reducing emissions, it said.

It has also partnered with Aloreen Company for Investment to invest $120 million for new equipment to expand yard capacity in Iraq’s Umm Qasr Port.

IFC has also teamed up with Nomu Holding to invest $200 million to support Iraq’s construction materials industry. It will also provide $65 million towards a sustainable mixed-use real estate project in Sulaymaniyah in the Kurdistan Region of Iraq in partnership with Hiwa Rauf for Investment and Development.

Other initiatives include feasibility studies for modern farming and healthcare infrastructure, and trade finance lines to boost cross-border commerce.

“Iraq’s private sector is agile, resilient, and capable of driving sustainable growth,” said Aftab Ahmed, IFC's director for the Middle East, Pakistan and Afghanistan.

Iraqi Prime Minister Mohammed Shia Al Sudani joins officials and private sector leaders at IFC Partnerships Day in Baghdad. Photo: IFC

After years of instability and sluggish economic reforms, Iraq is now seeing increased global interest with more than $100 billion pledged for investment since early 2023, Haider Makiya, chairman of the National Investment Commission, told The National this month.

About $64 billion has come from foreign investors and $38.6 billion from domestic companies, he said. “Iraq is a fertile ground for investment projects,” Mr Makiya said. The government is planning to add a further $100 billion in investment projects in the next two years.

However, its economy is facing “considerable headwinds”, the International Monetary Fund said in July. After a sharp rebound in 2023, with non-oil growth reaching 13.8 per cent, expansion slowed to about 2.5 per cent in 2024, according to the IMF.

With more than 90 per cent of government revenue still derived from oil, the country remains highly vulnerable to global price swings. The IMF said fiscal deficits have widened because of lower oil receipts and rising public spending.

Meanwhile governance challenges, underinvestment in infrastructure and limited private sector development continue to constrain diversification, leaving unemployment, particularly among youth, at persistently high levels, the World Bank said.

The IFC, which is focused on the private sector in emerging markets, has committed $71.7 billion in the fiscal year 2025 to private companies and financial institutions globally.

Since 2005, IFC-backed projects have created more than 28,000 jobs in Iraq, including 5,000 for women. It has also advised on landmark projects such as Iraq’s first airport public-private partnership and supported small businesses through work with the Central Bank and local lenders.

As part of the new package, IFC will extend a $10 million trade finance line to the Bank of Baghdad and partner with First Finance Company to improve access to credit for micro, small and medium enterprises.