The managing director of the International Finance Corporation, Makhtar Diop, has said that the UAE “has very strong dynamics” to play a vital investment role in several regions of the world.
There is approximately $2 billion of commitment with the IFC and UAE companies in Africa, Central Asia, the Balkans and now Latin America. At the same time, the IFC is increasing its activities in the Arab world, including looking into Syria.
Speaking to The National during the World Governments Summit in Dubai, Mr Diop said that despite turbulence in global markets and foreign trade, there are ample opportunities for global growth.
He is confident that his organisation can weather the storm of volatility the world is witnessing, from geopolitics to AI.
“We are navigating rather well, because there is one thing that is constant, which is that people need the private sector," he said. In addition to the private sector being in demand, Mr Diop said, “we need growth … investment will come from the private sector”.
While he acknowledged that there is a high level of volatility, this is being mitigated through “instruments” such as “using our balance sheet much more to guarantee investment from the private sector, taking more and more junior tranches; it means that we are the last one to be paid if there is a problem”.
Another tool the IFC is using is local currency lending, as some economies slow down or struggle to maintain optimal levels of reserves. Global trade is facing challenges, with tariffs and protectionist measures. Mr Diop sees that different countries have had to deal with issues of protectionism as some of their own populations have suffered from unequal opportunities and job losses.
“These people have really been feeling they have been excluded from society and that is important to take care of,” Mr Diop said. “That is something for each country to do and I will not judge it.”
However, he believes it is leading to more regional supply chains being developed, adding that “countries are thinking more and more in developing the regional supply chain, and you will see more and more of that”.
Regional supply chains are addressing some of these issues, however, “as we go, the situation will stabilise and once it does, it will reduce uncertainty”, he added.
The stabilisation will be through bilateral and regional deals, he said. As for opportunities for growth, Mr Diop focused on investments in energy, saying “energy is number one everywhere you go, be it in more advanced economies, less advanced, some because of AI, others because they just need fundamentally more electricity to be able to develop their economy”.
The UAE “has been showing a lot of leadership in sustainability since Cop28. We are working closely with Alterra”, Mr Diop said, referring to the world’s largest private climate investment fund.
He added there are opportunities in specific sectors such as tourism and health, and in particular regions like Africa.
However, he warned that there is a challenge in the increasing levels of indebtedness on the continent – stating “some countries are reaching a level of unsustainable debt”.
He is, however, quite optimistic about Egypt. Cairo represents a “good example” where the IFC is expanding its partnerships.
“Egypt is a country we have been investing a lot and with companies from the UAE,” Mr Diop said. Deals have included sectors from renewable energy to battery storage, and AD Ports signing a transaction over one of the country’s main terminals.
The IFC chief lauded the UAE’s strong investment posture, saying it was “ahead of the curve” in a number of ways, including appointing a minister of AI in 2017, being “at the frontier”.
He expects that investments in health, genomics and precision medicine, in which the Emirates is a leader, will be vital for the future.
“The UAE is at the heart of the conversation” of AI, which positions it ahead of many other countries, he added.
Mr Diop sounded upbeat about the UAE’s growing role in Africa.
“I am very impressed to see that today, globally, the UAE is becoming one of the largest investors in Africa ahead of some countries that used to be traditional partners of the continent,” he said. The IFC has been working towards greater “South-South” investment, and Mr Diop sees the UAE as an ideal partner.
“The UAE is Wall Street meeting Silicon Valley in the East," he said, adding that the Emirates is able to move quickly, has digitalised at a high level and provides “very practical solutions to countries”.
This is in addition to “cultural affinities” between the UAE and African countries, Mr Diop said, adding that “this is a place we see as a hub, not only on logistics but for investment and connecting routes”.
Latin America is another region of prominence for the IFC. It has close to $15 billion on annual commitment in Latin America, where Mr Diop said “things are moving fast”. He said there is “strong traction” in agriculture, greening agriculture and energy.
The organisation co-hosted a Latin America and Caribbean forum during the World Governments Summit with the UAE. Mr Diop said new links are being developed, “trying to help these two regions familiarise with each other. We need to start monitoring the deal flow”.
With the change of leadership in Venezuela, there are opportunities being explored, however Mr Diop did not comment on whether the IFC will go back to the country where it was active in the 1960s and 1970s.
He simply said “the situation is not easy but things are evolving. And depending on what is decided on the political level, we [will] see if there is a condition for us to work”.
Mr Diop also said that the IFC is studying Syria and “the negotiations are ongoing”.
Other countries in post-conflict phases are also being studied, but no final decision has been made on involvement in Gaza, he said. However, the World Bank is studying it.
