The Middle East has been one of the slowest regions to respond to privatisation, despite the rapid progress of programmes elsewhere in the developing world during the 1990s, according to the International Finance Corporation (IFC). The IFC’s experience in assisting privatisation programmes is catalogued in its study, Privatisation: Principles & Practice, published on 28 September. The study says developing country revenues from privatisation peaked at $29,000 million in 1992, fell slightly in 1993 to $24,500 million, but says they are forecast to have picked up in 1994. ‘Sub-Saharan Africa and the Middle East and North Africa had only a minimal share of the total,’ the study says.

The IFC has been involved in about 15 privatisation projects or proposals in the Middle East and North Africa, including Egypt, Morocco, Tunisia, Turkey, Pakistan and Jordan. ‘The relative underdevelopment of programmes in Africa and CAMENA (Central Asia, the Middle East and North Africa)…offers potential for the full panoply of IFC advisory, investment and mobilisation activities related to privatisation,’ the study says. However, most countries in the CAMENA region have yet to demonstrate a serious commitment to privatisation, it adds.

‘It is true to say that in any country, Britain or Russia, privatisation is politically charged,’ David Donaldson, one of the co-authors of the study, said in London at the launch. However, he said privatisation leads to improved corporate profitability, adding that in two-thirds of the privatisations in which the IFC was involved profits had increased. He also said that privatisation plays an important role in developing local capital markets.

The sale of Commercial International Bank (Egypt – CIB), in which the IFC provided advice and equity participation, is cited as an example of the benefits of privatisation. While CIB was profitable before the sale, its profitability since then has improved greatly, the study says.

The IFC annual report, published at the same time as the privatisation study, shows commitments to the CAMENA region rising 33 per cent to $1,203 million in the financial year ending 30 June 1995. Total financing approved during the year was $614 million and

covered investments in 34 projects in 9 countries. ‘One of the major achievements in the region during the year was the large volume of syndications that (the IFC) placed,’ the annual report says. The value of loan syndications mobilised rose 17 per cent to $227 million during the year.

The annual report also cited its efforts during the year to develop local capital markets in the Middle East and North Africa, including backing a leasing company in Lebanon, a factoring company in Morocco and a private equity fund in Tunisia. The IFC also

supported two regional equity funds, the New York-listed Foreign & Colonial Emerging Middle East Fund and

the Framlington Maghreb Fund, as well as a project to set up a network of Arab ratings agencies, called the InterArab Rating Company.