The International Finance Corporation (IFC) has
expanded its Pakistan Operations by expanding its network from Islamabad
to Karachi in view of the growing role of the private sector in the
economic development of Pakistan. Since Karachi is the major center of
private sector investment, the IFC find it fit to open its Karachi
Branch to facilitate the private sector.
Inaugurating the Karachi Office, the Governor State
Bank Dr. Ishrat Hussain expressed the hope that the three areas
identified by the government i.e. Housing and Construction, SME and
Infrastructure development would open tremendous opportunities for
private sector investment. He said that under the situation the
international skill of the IFC can play a significant role by providing
professional and innovation financial guidelines to produce positive
The governor said that at least $3 billion are
required annually for public sector development which the government
cannot afford single handedly, hence the participation of the private
sector in the development activities becomes imperative to make the
development activity a success. In this connection, the IFC can support
the development project in collaboration with the private sector in this
On this occasion, Sami Haddad, the Regional Director
for South Asia said that the opening of IFC office in Karachi is with
the objective of being closer to the clients most of whom is based in
Karachi. Since 1958, IFC has been a key player in support private sector
development in Pakistan, Haddad said and added that Pakistan is IFC's
thirteenth largest portfolio with outstanding investment of over half a
Moving forward, IFC encouraged by the government's
commitment to housing finance, SME growth, infrastructure development
and manufacturing with continue to support the development of these
The Karachi office will be headed by Zunee Muhtashim.
The IFC is the private sector arm of the World Bank
group. IFC's mission is to promote private sector investment in
development countries, which will reduce poverty and improve people's
living standard. IFC, finances for investments with its own resources
and by mobilizing capital in the international financial markets. IFC
also provides technical assistance and advice to governments and
IFC is the world's largest multilateral source of
equity and loan financing for private enterprises in development
economies. Its financing is long term and market priced. IFC's share
capital is provided by its 175 member countries, which collectively
determine policies and approve investment. IFC committed 204 projects in
the financial year 2003, provided $3.9 billion of its own financing and
$1.1 billion from private firms through its loan syndication program in
IFC share project risk with sponsors and financial
partners but does not participate in project management. It finances
only a portion of the cost of any project. For every $1 of IFC
financing, other investors and lenders provide $5. Its charter requires
it to be a profitable project. The Corporation has made a profit every
year since its inception. IFC does not accept government guarantees.
IFC's investment in Pakistan since 1958, with
cumulative commitments including syndications to date, was close to $1.8
billion. As of march 31, 2004, IFC's held portfolio in Pakistan
consisted of investment in 31 companies, with a total committed exposure
of $428 million, of which $325 million was for IFC's own account.
Currently, IFC is focusing its activities on Housing
Finance, SME Development, Environmental development, Health. Power, Oil
and Gas sector and Repeat Business.
In the Housing Finance, it is planning to development
capacity of creditworthy banks for establishing a mortgage finance
business and provides credit enhancements for raising long term funding
through bonds for the identified banks.
In the development process of the Small and Medium
Enterprise, IFC is working with the financial intermediaries. IFC is
also structuring a SME Linkages program with the Dewan Group, an IFC
client and one of the major local business groups.
Since the Housing Finance is on top of the agenda of
the government for using it a tool for economic development, IFC is
likely to enhance its financial assistance to the financial sector of
Pakistan engaged with the housing finance and construction activities.
The analysts are of the view that the Housing and the
Construction industry is likely to become the center of economic
activity in view of the tremendous rate of return in this sector which
is second to none besides risk-free investment as compared to other
areas of investment.
Another area of interest is Power sector. In an
attempt to develop alternative clean technology, IFC is working on the
first Wind Power project for the country.
Another significant move on the part of IFC is its
assistance to some large scale manufacturing companies which at present
are in the process of establishing operations abroad. These projects, if
produced encouraging results, may give a new direction to the private
sector investment in Pakistan.