Thursday, May 21, 2009

DFID Blogger - Encouraging foreign investment to Iraq

DFID Representative, Iraq

I'm the lead DFID representative in Basra, Iraq. Here we're focussed on developing the Iraqi provincial government and the local economy. I lead the local programme work and provide development advice to UK and international civilian and military colleagues.

It’s been a hectic couple of months in Basra (you may have noticed I’ve not posted recently). The big story has been the drawdown of the British military from the province. I’ll write about that in a future post. For this post I wanted to write about DFID’s work to encourage inward foreign investment to Basra (and Iraq more generally). This has unsurprisingly had a lower profile but has been an interesting, atypical – for DFID - but very successful part of our programme. It also hit a recent high with the Invest Iraq event DFID held on the 30th April in London.

So why have we been working to encourage companies to come to Basra. Because, as I wrote in an earlier blog, unemployment is one of, if not the, major issues facing the province. One way of creating jobs and also of raising living standards and providing goods and services is through encouraging foreign companies to invest and set up operations in the province. It’s not the only answer – Basra’s still going to need huge amounts of government and domestic investment – but it is likely to be part of the answer.

To date our work has taken two approaches. Firstly, we’ve actively gone out to potential overseas investors to sell them the idea of investing in Basra. And I should add here that we’ve not focused on UK companies but on any companies worldwide that might potentially and credibly be prepared to invest significantly. For those that were interested we brought them in to Basra and Baghdad to see the opportunities for themselves and to meet with key people.

In just over a year we’ve brought in twenty different companies to Iraq. Often these visits have included trips into downtown Basra city or to other key sites, for example the port at Umm Qasr. And for these trips we’ve often drawn on the support of the military, for example using military helicopters to move people around or military escorts to provide security; support that’s been both invaluable and has reflected the military’s enlightened approach to supporting the development effort (and interestingly the Iraqi military here in Basra have also expressed a desire to help visiting investors coming to the province).

Secondly we’ve been working with the provincial investment agency, the Basra Investment Commission (BIC), to develop their capacity so that they can generate inward investment without our help. The BIC’s the official legal investment promotion agency for the province. DFID’s Secretary of State Douglas Alexander attended the launch of the BIC in Basra in November last year. Since then, and with our active support, the BIC’s come on apace and it’s now supporting visits from investors without our direct involvement.

As part of both strands we’ve supported investment events, held in conjunction with the BIC and the National Investment Commission (NIC) to promote Basra and Iraq to interested companies. Last year we supported events in Kuwait, London and Istanbul. This year one of the high points in Basra was a visit by Lord Mandelson along with a twenty four person delegation of high ranking British businessmen. On the 6th April we, together with the British Consulate and the BIC, hosted an event at Basra airport attended by two hundred Basrawi businessmen, politicians and local government officials.

The latest milestone was the Invest Iraq event in London on the 30th April. DFID co-hosted this along with the Iraqi NIC. This had a focus on encouraging investment to Iraq as a whole rather than just Basra. Iraqi Prime Minister Maliki led a delegation of over 100 which included just about the entire Iraqi cabinet plus government officials and Iraqi business people. From the investor side over 250 of the world’s biggest companies attended, including most of the UK’s leading firms from the oil and gas sector and financial sectors and numerous other household names. Interest was such that we had to turn away a further 200 companies in the days before the conference. I attended on behalf of DFID Basra. As the military would say the ‘atmospherics’ were terrific with a definite buzz to the event.

So what success have we had in getting companies setting up here in Iraq? Well it’s clear that there’s a lot of serious interest. The trick of course will be to turn this interest in to actual investment, operations and jobs on the ground. In truth for this it’s still early days – foreign companies are instinctively cautious and decisions on investment can take months if not years – so it’ll be some time before we see the full fruits of our labours. The Iraqi Government will also have to seize any opportunities that are presented. I am however very hopeful. Recently the BIC approved its first Investment Licence for a $100m tourism project funded by a Kuwaiti firm. There are also a number of other companies on the brink of setting up operations here in Basra.

And where do we go next with this line of work? Well we, DFID, are moving away from the direct investment promotion game and London was our last major event. Increasingly the Government of Iraq can and should do this for themselves. We will however be continuing our support to help them to do this - we’ll be continuing to work with the NIC in Baghdad and the BIC in Basra – and we’ll also be working with the Government of Iraq to make Basra an easier place for companies to do business.

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