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IFC Committed to Expanding Access to Housing Finance in Saudi Arabia


In Saudi Arabia
Walid Al Murshed
Phone: 00966-50 560 7067
E-mail: walmurshed@ifc.org

In Cairo:
Riham Mustafa
Phone: 0020 2 461 9150 Ext. 306/314
E-mail: rmustafa@ifc.org


Jeddah/Riyadh, January 30, 2007—Lars Thunell, Executive Vice President and CEO of IFC, a member of the World Bank Group, has reaffirmed IFC’s commitment to helping expand housing finance in Saudi Arabia. He signed today a memorandum of understanding with three of the country’s leading savings institutions—the Public Investment Fund, the General Organization for Social Investment, and the Public Pension Agency—as a first step to establishing a housing finance facility.

šAccess to housing finance remains limited in the Middle East and North Africa. IFC will continue to work with partners in Saudi Arabia to improve the market. We are also helping our partners transfer expertise to markets across the region,” Thunell  remarked, during his first visit to Saudi Arabia since joining IFC in 2006.  

The facility to be formed by IFC and local public agencies will provide long-term funding to banks and housing finance institutions to help them provide affordable financing to lower- and middle-income people.  It will mobilize local currency funding and help create a vibrant local capital market.  

Developing the housing finance market is a key priority for IFC, which not only provides funding but also offers global expertise, experience in structuring transactions, and a wide range of partners.  IFC’s approach to market development helps build institutions, expand investment, and strengthen the regulatory and legal environment for business. IFC has helped develop housing finance markets in Africa, Asia, and Latin America as well as the Middle East.

There is strong demand for housing in Saudi Arabia: this is why IFC chose the country for this joint venture. The country has one of the fastest-growing populations in the region, with 56 percent of its people under age 25.  To help, IFC worked with the World Bank to prepare an assessment of Saudi Arabia’s housing sector. IFC also partnered with Euromoney to organize a housing finance conference, helping raise awareness of the market’s needs and mobilize the private and public sectors to action.  

IFC’s housing finance transactions in the country include an investment of $27 million alongside three leading Saudi companies to launch the Saudi Home Loans Company, which offers affordable, Sharia-compliant financing to middle- and lower-income borrowers.  IFC also arranged for India’s Housing Development Finance Corporation to train the Saudi Home Loans Company in credit risk management, operations, and management information systems.  IFC provided $25 million in credit enhancements for a mezzanine tranche issued by Kingdom Installment Company, in the first residential mortgage-backed securitization based on Islamic finance in the Gulf Cooperation Council countries.  In another Islamic finance deal, IFC provided a long-term Murabaha facility of $50 million to help Saudi British Bank expand its housing finance portfolio.

Thunell’s visit highlights IFC’s continuing commitment to its well-established partnership with Saudi Arabia, as well as the recognition of the country’s reforms toward developing the private sector.  Saudi Arabia has one of the most active private sectors in the Middle East and North Africa.  In FY07, more than 25 percent of IFC’s total commitments in the region were with Saudi businesses that are expanding in the region.  IFC has established a presence in Saudi Arabia and will continue to expand. So far, IFC has committed more than 500 million riyals ($130 million) in key sectors, including housing, insurance, and leasing.  

Thunell’s agenda includes meetings with government officials and discussions with representatives from the private sector. He will also sign a public-private partnership agreement with the General Authority of Civil Aviation to work closely with the government in developing three “airport cities” in the country.

About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit www.ifc.org.

About Saudi Arabian Partners in the New Facility
The Public Investment Fund was established by a royal decree to finance investments in productive projects of a commercial nature, in both the public and private sectors.  Its funding is handled through loans or guarantees, and in special cases, through allocations of public funds to specific projects.

The General Organization for Social Investment is a government arm that administers Saudi Arabia’s social insurance scheme for workers. It provides pensions for retired nationals and benefits under the occupational hazards scheme. GOSI is supported by payroll contributions from local and expatriate workers in Saudi Arabia.

Saudi Arabia’s Public Pension Agency, established in 1958, is responsible for implementing the government’s pension policies.  It receives and manages pension contributions and makes monthly benefit payments to government retirees.