THE WAY FORWARD
TBY talks to Mouayed Makhlouf, MENA Regional Director of the International Finance Corporation, World Bank Group, on the role of the office in the region, developments in the housing finance market, and the potential of green financing in the Emirates.

BIOGRAPHY
Mouayed Makhlouf joined the IFC in 1998 in the Central Asia, Middle East, and Northern Africa Department based in Washington, DC. He then joined the Central Asia, Eastern, and Southern department as an Investment Officer where he was part of the Central Asia transaction team and oversaw its growing portfolio in Kazakhstan, Uzbekistan, and Tajikistan. In 2001, he relocated to Istanbul, where he processed transactions in different sectors for Turkey and Central Asia. In 2005, he relocated to the Dubai office as a senior business developer responsible for the Gulf Cooperation Council and Levant region. Mouayed holds a Master’s of Science in Finance from George Washington University in Washington, DC.The IFC opened its base here in Dubai in 2006. Why did the IFC choose Dubai?
Dubai is our second largest office in the MENA region—our largest office, which is also our regional hub, is in Cairo. We opened our office here in 2005 with the goal of building relationships and encouraging investors from the GCC who had outgrown their home markets to invest in the less developed countries of the MENA and Africa regions and beyond. Our role is to identify potential clients, build relationships with them, and invest alongside them in those less developed economies. Many of these investors have never invested outside of the GCC before, and they need a partner who can take the risk and invest alongside them in these riskier markets. The whole idea has worked extremely well. Over the past nine years, we have mobilized about $3.5 billion in the form of South-South investment from the GCC. We also do some small interventions in the GCC—mainly in projects that are highly developmental. We also aim to make it easier for SMEs to access credit. To borrow money, you need to pledge assets as collateral. Unfortunately, in the UAE, there is no asset registry, which means that only fixed assets such as buildings or property can be used. An asset registry—something that exists already in most developed countries—would allow SMEs to use moveable assets, like equipment, as collateral. If we can develop this system and make it easier for SMEs to access credit, then SMEs will be able to grow and create more jobs.
What recent strides have been made in the development of the housing finance market?
The housing finance market is still very underdeveloped compared to other regions, but it has made progress. Mortgage finance has two main parts. The first part is just banks lending to consumers to buy a home. This part of the market has really begun to develop in the UAE—much more than other places in the GCC. However, banks cannot lend money this way indefinitely. After a while, they reach capacity and they need to sell off these loans so they can continue to expand their mortgage portfolios. This is the second part of mortgage finance, the secondary mortgage market, and it has yet to fully develop in the UAE, which limits the ability of banks to continue lending. We worked on a transaction to jumpstart the secondary mortgage market with a company called Emirates National Securitization Company (ENSeC). In 2007, we invested in the first Islamic securitization, providing $20 million in financing. Unfortunately, this happened right before the financial crisis, so the whole idea of mortgage-backed securities never took off. It is a market that still needs to be developed if we want to increase home ownership in the GCC.
What are the main hurdles facing the development of the local capital markets?
Local capital markets in the UAE are very underdeveloped. Most companies still depend on banks for financing, but banks usually cannot provide long-term finance, which means that companies are often forced to take short-term loans when they really need long-term loans. Companies with no experience in the capital markets are reluctant to enter on their own. This hinders growth in the region.
Do you think the UAE has the potential to become a hub for green financing?
I think Dubai certainly has the capacity to become a hub in the region for green financing. At one point, there was an initiative in Abu Dhabi to move in that direction, which proved that it can be done, but the whole green financing initiative has been progressing more slowly than everyone would like. Dubai has the geographical base, the legal structure, and the presence of international organizations to make it happen. I can't think of any other place in the region with that capacity. We are extremely supportive of this, and whenever we lend, we always try to include an element of sustainability. In Lebanon we developed a system to “score" buildings on sustainability and encourage our clients their to include “green renovations" as part of their investments. We are always interested in projects that will contribute to energy efficiency, waste management, and other sustainability issues in the GCC. If there is a transaction that includes those elements, we will take part directly or indirectly.

TABLE OF CONTENTS
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