Arabs launch $2bn development fund

KUWAIT: Arab finance ministers yesterday officially launched a two-billion-dollar development fund that will provide loans to small and medium-size projects across Arab countries. The Arab Development Fund, which was approved by the first Arab economic summit in January last year, was first proposed by Kuwait Amir HH Sheikh Sabah Al-Ahmad Al-Sabah. Speaking to reporters after the launch ceremony, Kuwaiti Finance Minister Mustafa Al-Shamali said the fund has so far received pledges of $1.18 billion from 11
Arab nations and more contributions are expected.Shamali said that this fund will establish a foundation for the implementation of one of the most important decisions of the Kuwait summit. “We are all optimistically looking forward to seeing the impact that this fund will have on supporting productivity and raising income in Arab countries,” Shamali said during his opening remarks. “I hope this fund will reflect positively on the level of cooperation, coordination and development of joint Arab projects.” Shamali said that the Arab Development Fund willonly finance small and medium investments in Arab countries that have pledged contributions to the fund. “Other countries can benefit from this fund if they wish to join and the membership is open to any other Arab country interested in joining later,” he said.

The original proposal envisaged a two-billion-dollar fund, a figure that was repeatedly mentioned by ministers yesterday. Oil-heavyweights Saudi Arabia and Kuwait have each pledged $500 million and the Kuwait-based Arab Fund for Economic and Social Development (AFESD) pledged $100 million. The rest came from nine Arab countries. The new fund will be run by the AFESD.

The head of AFESD, Abdullatif Al-Hamad, announced that AFSED will approve the contribution of $100 million at their meeting tomorrow. He added that AFESD wrote the draft for the organizational procedures and regulations of the fund. “In this draft we have included all the directions from the Arab summit, taking into account AFESD’s experience when it comes to managing private sector projects,” he said. “AFESD also prepared the general policies that will rule funding operations based on the private sector p
rojects that AFESD funds. These policies will be viewed by the committee for approval before being adopted,” he said.

The secretary general of the Arab League, Amr Moussa, said that small and medium size projects are becoming a strategic choice. “Small and medium size projects have the potential to confront the negative implications of the international financial crisis on economies by creating financial activity and ending depression,” he said. Moussa added that the implementation of this initiative is an indication that the days of the Arab League’s inability to follow through on their decrees is gradually ending.

At the same time, he pointed out that the second financial, developmental and social summit will be held in Egypt in Jan 2011 and will assess the implementation of the decisions made during the summit in Kuwait. “It will be a chance for us to discuss, in a transparent way, what is preventing us from making progress on the decisions that were made during the first summit,” Moussa added said He said that even though it took a long time for the fund to be launched it is still a positive indication. “I am hap
py we were able to launch this fund because otherwise the next summit would not have taken place.

The aim of the fund is to improve the living standards in the Arab world which has 140 million people living below the poverty line, according to a joint report by the United Nations Development Programme and Arab League. The report, issued in Dec 2009, said overall poverty remains high, reaching up to 40 percent on average. The main challenge for Arab countries was to provide 51 million new jobs over the next 10 years which, while not actually reducing unemployment, would contribute to preventing its incr
ease and maintaining it at current levels until 2020, said the report.The conference was attended by the ministers of finance and the governors of central banks from Kuwait, Syria, Sudan, Saudi Arabia, Oman, Yemen, Egypt, Djibouti, Palestine, Algeria and Tunisia – Kuwaittimes