The World Bank in the Middle East

Sources: FINANCE

Due to the World Bank’s private sector, the Middle East has became the fastest growing region for investments. The Middle East traditionally draws attention for its political instability. However, the region is now developing a different reputation with 1.2 billion dollars in investments last year. This investment amount is almost double its investment in 2005. The World Bank and the International Finance Corporation’s (IFC) investments reflect a change in the global financing trend.

The trend may have begun with the flood of petrodollars into the Middle East and North African regions. The increase in investments has sparked additional need for local banks to recycle the liquidity in the region. This is an opportunity for the Middle East to provide more financial market services, insurance, and traditional sectors (oil and gas). The IFC's investments may have more significance than it appears. Investments tend to signify a greater international private flow.

Egypt received most of the loans over the past five years. Other countries following Egypt include Oman, Algeria and Iraq. Egypt happens to be the most populous Arab country. It is rumored that the IFC is making new investment opportunity tied to the World Bank and International Monetary Fund. Some of these new investments projects include banking, electricity and telecommunication sectors.

The Middle East region has always only received a small proportion of the international finance investments worldwide. However, it has grown considerably in recent years. The World Bank, for example, has increased its lending three times more in the last five years.

Question: Will Egypt’s greater share of investments add to the political tension in the Middle East? How will the increase in investments affect poverty, inequality, and unemployment in the region?