Consultancy says Iraq needs $30 billion in FDI per year for stabilisation

22 February 2018 3 min. read

As an element of political stability returns to Iraq, the consulting firm Frost & Sullivan has said that the country will require $30 billion per year in foreign direct investment if its stabilisation goals are to be met within the next ten years.

Frost & Sullivan, a US-based market research and growth consultancy which has regional offices in Saudi Arabia and the UAE among its 45 globally, has undertaken an assessment of the high-priority development sectors in Iraq as the nation emerges from multiple conflicts over recent generations, concluding that a $30 billion per annum sum of foreign direct investment (FDI ) is required for the country to achieve its redevelopment aims within a decade.

The consulting firm’s report notes the enormous economic potential of the country as to its strategic location straddling three continents and immense wealth of natural resources, including the world’s fifth largest proven oil reserves, as well as its relatively educated population of nearly 40 million representing a potential consumer market worth upwards of $40 billion.Consultancy says Iraq needs $30 billion in FDI per year for stabilisation

Following the latest ISIS conflict, however, which according to the firm has amounted to $150 billion in battle losses, most of the country’s primary sectors are in a state of disarray and require massive redevelopment, with, says Ali Mirmohammad, a senior consultant with Frost & Sullivan, an injection of sustained investment of as much as over $900 billion in the next ten years.

As the initiation of national redevelopment plans and reform initiatives gets underway, the report notes that, while the focus will be on oil, the government is looking to diversify the economy away from its reliance on the commodity, in line as such with the other initiatives from states in the region such as Saudi Arabia, the UAE and Oman.

Investment priorities

Mirmohammad said, “Iraq plans to focus on the Oil & Gas downstream value chain as well as minerals value chain, construction and infrastructure industries, healthcare, energy, tourism and financial services sectors to move the GDP growth rate by 10 per cent annually within the next decade." As a breakdown, Oil & Gas (21%), industry and minerals (16%), housing and infrastructure (14%) and the services sector (14%) will account for 65% of the investment over the next ten years, with ICT, transportation, healthcare, water and electricity, renewables and tourism attracting the remainder.

Other than the obvious potential that comes with the need for widespread infrastructural redevelopment, the firm cites further factors which could contribute to the country becoming an attractive centre for foreign investors, such as opportunities in local manufacturing due to a current heavy reliance on imports, a non-crowded market, and a national legal framework which offers extra protection and incentives for new investors.

Highlighting the enormous potential the country “holds to establish itself as an economy to reckon in the next decade,” the consulting firm concludes; “Iraq is just emerging from the destruction and strategising the rebuilding of the country to position as a regional super power... This opens up significant opportunities for investors to address.”