Arabian Gulf-based companies have received a financial boost from the Islamic Development Bank (IDB) to expand in Asia and Africa as they gear up in solidifying their presence and developing stronger regional economic ties.
The new infrastructure fund would jump-start sluggish levels of trade across these markets, helping the IDB in its efforts to reach a target of 20 percent of intra-member trade by 2015, from about 17 percent now.
Both Gulf and Asian-based companies could build substantial market share in these new markets, said Khan, adding that the fund was looking for opportunities in Nigeria, Egypt, Pakistan and Bangladesh.
The fund has $750 million in commitments from shareholders in Saudi Arabia, Bahrain and Brunei, with plans to reach $2 billion in size by next year, surpassing the original $730 million fund launched in 2001.
IDB is keen to grow trade among its 56 member countries and fill a void left by other multilateral and private-sector financial institutions that have been slow to support such regional strategies.
Exports among IDB-member countries reached $343.7 billion as of 2011, representing only 15.3 percent of total exports and a drop from the 17.3 percent recorded in 2009, the latest IDB data showed.
Three-quarters of those exports came from only 10 member countries such as Indonesia, the United Arab Emirates, and Turkey. Nigeria, Egypt and Bangladesh ranked far lower, despite the significant opportunities in those markets.
IDB, which promotes economic development in Muslim countries and communities, has ramped up its development efforts after it more than tripled its authorised capital in 2012.
Building regional links would allow some Gulf-focused companies to reach a far broader customer base, said Mumtaz Khan, the chief executive of Bahrain-based ASMA Capital Partners, which is managing the IDB fund.
“There are not that many institutions that have a footprint across these regions. Some companies are confined to a country or region. We are talking about taking them further afield,” said Khan.
