OBG talks to Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development (KFAED)

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Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development (KFAED)

Interview: Abdulwahab Al Bader

Why was KFAED established, how does it oper-ate and what does it seek to achieve?

ABDULWAHAB AL BADER: Since its independence in 1961, the state of Kuwait has been participating in economic development efforts, motivated by its firm belief in the principles of cooperation and humanities. To this end, Kuwait proceeded to establish KFAED, the first institution in the Middle East to take an active role in international developmental efforts.

The fund extends loans on concessionary terms to finance development projects in developing coun-tries. It also provides technical assistance to finance the costs of the feasibility studies of projects, as well as the training of nationals of the recipient countries. In addition, KFAED contributes to the financial resources of international and regional agencies and institutions.

What are some key considerations regarding the current investment climate in Jordan?

AL BADER: While Jordan has limited agricultural land and fresh water supplies, it is a large exporter of phos-phate and potash. The service sector accounts for more than 70% of GDP, and employs the majority of the country's total labour force.

Jordan has an open economy, and can therefore be vulnerable to the fluctuations of external mar-kets and global crises, such as the food and financial crises of recent years. The government is facing certain developmental challenges and operating under a strict debt ceiling, which limits borrowing capacity. The current influx of funds from the GCC has certainly helped to overcome these limits, but they will only be available for five years. In this peri-od Jordan will receive $1bn annually, which should enable some projects to get off the ground.

In light of some recent hardships, the government needs to clearly demonstrate that Jordan is a good place to invest and create incentives to facilitate the influx of additional foreign direct investment. KFAED’s development assistance and that of other Arab national and regional development institutions, plays a significant role in assisting the country in its devel-opment efforts, but the government still has many important actions to take. One important factor to keep in mind is that Jordan, similar to many other Arab countries, has a large number of young peo-ple in the labour market. This presents an issue for the government as it attempts to deal with unem-ployment, however it also presents a number of opportunities at the same time.

Jordan is renowned for its highly educated and skilled workforce, and these young workers will be an asset as local and international companies look to invest in new projects in the years ahead.

How will KFAED investments create opportuni-ties for Jordanian private sector entities?

AL BADER: KFAED funds will create a lot of oppor-tunities for private companies in Jordan. This depends, however, on the number of projects that are imple-mented as a result of the funds.

There are problems in the utilities sector, trans-portation and infrastructure, but each of these issues also creates opportunities for the private sector to flourish. Developing nations have realised the ben-efits of the private sector when it comes to capital-intensive projects. Ultimately, aid to Jordan acts as an enabler not only to develop the nation, but also to promote economic growth. Jordan benefits from the experience of neighbouring countries that have had similar economic challenges not too long ago.

With the proper balance of foreign investment and sound fiscal practices, Jordan could soon be another great success story. Kuwait is the largest investor in Jordan, which in itself is an acknowledge-ment of the stability and potential of the country.

We understand the hardships that the country and the people are currently facing, and through mutual cooperation we can create new possibilities.

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The Report: Jordan 2013

Economy chapter from The Report: Jordan 2013

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The Report

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