Iraq, a country which has undergone the malicious effects of war and US-led evasion almost around decades ago, is now trying to ramp up its economy significantly through some investments. With 1 trillion USD, Citi Group has recently declared to venture Iraqi market. The forthcoming office from Baghdad will be the first by any American over there.
According to ValueWalk report, the nation’s upcoming investments in rebuilding infrastructure and development mainly based on oil sector. Citi has found that oil enriched Iraq has every potential to become an economically strong nation.
It has to be noted that the Citi Group is the third-largest U.S. lender based on assets. The company will open its first office at Baghdad and then offices or branches will be opened in several other destinations.
Interestingly, the move comes as Citi is scaling back on its international expansion into places like Turkey, Pakistan, and Uruguay; clearly, Citi has chosen instead to focus on Iraq’s future growth.
Mayank Malik, Citi’s chief executive officer for Jordan, Iraq, Syria, and the Palestinian territories, stated: “Iraq is a giant that’s waking up and the opportunities are immense,” Malik said from Amman, Jordan. “The most significant opportunities are twofold -- oil revenue generation and infrastructure creation. We estimate this to be $1 trillion initiative over time.”
If things go in a swift manner, Iraq can be proved as the best experiment that has been done by the Citi Group. IMF said that Iraqi economy is blooming and according to its estimation, Iraq will reach a growth point of 9 percent by this year. Moreover, it has been established that Iraq has the proven fifth largest oil reserve in the world.
Judging recent event and development projects, as well as government’s vision to build a new Iraq, Citi has found enough opportunities and openings in Iraq. The whole infrastructure of the country is more or less damaged and the rehabilitation processes have started. Some swift actions have been taken place though miles to go for the country. Road, electricity and water supply – these are the three major concerns for now.
Back in February of this year, the mobile company Asiacell Communications PJSC became the Middle East’s largest IPO since 2008, with a $1.3 billion share sale on the Iraqi Stock Exchange. Zai Iraq and Kotek Telecom are the two other companies which have participated in Iraqi developments too.
After the US-led invasion in Iraq, participation of the foreign banks in the Iraqi businesses was barred initially. But, now 15 international banks are operating there, along with 7 state-run banks. Also 9 banks are there under Islamic law and some private lenders are also present.
Oil exports are on the rise, the prime lending rate is down to 6 percent (from 17 percent in 2008), and Iraq’s status as OPEC’s second-biggest producer appears to become more and more prominent in the international eye.
Bumping International Investments
Not only the Citi Group, but foreign banks, like Standard Chartered has also planned to invest in Iraq. Standard Chartered will soon open a branch in Baghdad, as reported by the media sources. Iraq’s real GDP for 2013 is up 14.7 percent, while nominal GDP has gone up to $154.3 billion this year from 2012’s $130.57 billion. As of May, Iraq was exporting 2.484 million barrels of oil a day, and that figure is expected to keep going up.
A number of international major companies have shown their keenness to join Iraqi business market, whereas in the oil sector, Iraq has already bagged the big names, like – BP, Exxon, PetroChina, Chevron, Total, etc. BP is likely to invest around $2.85 billion in the Rumaila oilfields sometime this year, which is higher than it projected last year. Moreover, Khor Al-Zubair will see a brand-new export terminal built.
Rotyal Dutch Sheel, another major oil company, is looking forward to begin working in the Majnoon oilfield of Iraq. Exxon is keen with northern Iraqi oilfields and on the other hand, France’s Alstom is working in a new power facility project in Diyala province.
The array of investments, along with forth-coming investments, it can be estimated that Iraq is heading towards a strong future. For Citi Group such a huge investment can be pointed as a meticulous move, judging the present growth of the country. Those who are looking for new investment avenues, Iraq is certainly a good choice for them.