Iraq does not lack attention from investors; they have been attracted to its energy resources, and to a lesser extent, to the potential of its property market, for decades. Last year the UAE made commitments of more than $37 billion to Iraq. As we reported yesterday, an Abu Dhabi-based firm, National Holding, now seeks to complement these investments with plans to develop $45 billion worth of property projects in the country.
The hope is that such ambitious plans for development will compel many of the millions of Iraqis who fled the country to return home. The talents that they will bring back to Iraq, coupled with the increased flow of investment, could bolster the confidence of other investors, and not just in the development of the country’s energy sector. Indeed, investment must also find its way to the many parts of the country that are without oil and gas.
But in order for these plans to succeed, infrastructure must keep apace with investment. National Holding’s plan to build 300,000 low-to-middle income housing units, and to have them online within two years, is a tall order. These units will require a predictable supply of electricity, which most of Iraq still lacks. A network of roads to transport building materials and connect new developments to more established parts of the country will also be essential.
As we report today, the country’s banking system is also in need of urgent improvements. Most of those who wish to purchase properties require loans. Currently, an Iraqi national who wishes to buy one of the low-to-middle income housing units that National Holding plans to build has few ways to finance that purchase. Iraq’s banks do not have enough capital to provide enough financing to those in the property market and regulations that govern these transactions remain underdeveloped.
It is true that trade and investment will be the driver of growth in Iraq, not aid. But only the government can muster the will and resolve to support an infrastructure that will allow such investments to bear fruit. It is this infrastructure, buttressed by strong institutions, that will ultimately be the foundation of Iraq’s economic growth and lay the foundation for the country’s stability after decades of conflict.