Gaining inroads into Iraq (By IFN)

Gaining inroads into Iraq

Daily Cover

GLOBAL: A Gulf-based paper reported today that Al Baraka Islamic Bank, Bahrain, will be collaborating with the Iraqi Islamic Bank for Investment and Development (IIB) to launch an Iraq-focused food fund, to be marketed to foreign investors and regulated outside the country. According to reports, the fund has already elicited positive response from European and Gulf investors, prompting a US$25 million increase in the fund’s size; to US$75 million from US$50 million. According to the local daily, Al Baraka will act as the deal’s fund manager, while IIB will act as the issuer. The funds will be used to provide financial support to an affiliate company of IIB which acts as a sugar stockpile supplier to the Ministry of Trade. The fund is due to be marketed via Al Baraka’s Algeria and Sudan subsidiaries. Iraq, with its 31 million Muslim population is said to have a flourishing Islamic banking and finance market, with the number of financial institutions providing Shariah compliant products growing over the last few years. Partner and head of Al Tamimi & Co.’s Iraq and Jordan offices Khaled Saqqaf, mentioned in Vol.10, issue 13 of Islamic Finance news that demand for Islamic banking products and services have soared among individual and institutional investors; particularly in the city of Erbil, the country’s fourth largest city. He also added that the permitted Shariah compliant banking activities in the country include: “Financing commercial and trade activities, both domestic and foreign, as well as contributing to projects for the development of agricultural, industrial, construction and housing sectors or any other projects with economic and social benefits.” Gulf interest in Iraq is said to be increasing as political and trade relationships improve; particularly in the sectors of telecommunications, housing and development, and energy. UAE trade with Iraq reached US$5.1 billion in the first half of 2012, while non-oil trade between the two reached US$6.8 billion in 2011; a 40% hike from the year before, according to Abdullah Ahmed Al Saleh, UAE’s undersecretary of the Ministry of Foreign Trade. Compared to its Gulf neighbors which are ranked in the double-digit range, Iraq is currently ranked at 165 in terms of Ease of Doing Business, by the World Bank. Perhaps increasing cross-border investments between the highly rated and relatively stable Gulf states will provide a boost to the Iraqi Islamic finance market and encourage further foreign investments into the country.