The International Finance Corporation (IFC), a member of the World Bank Group, is investing up to $18 million in Saudi dairy company Al Safi Danone’s Iraq-based subsidiary, to expand its operations in order to improve domestic food security, boost Iraq’s non-oil sector, and reduce its reliance on imported dairy products.
IFC’s long-term investment, which is structured as an Islamic Finance transaction, will help Al Safi Danone Iraq, a pioneer in the Iraqi food production industry, increase production of high-quality dairy products to meet rising demand, improve food distribution standards, and create more than 250 new jobs in the next two years.
The company’s new greenfield dairy processing facility in the Kurdistan Region has a target production capacity of around 59,000 tons per year, focusing initially on a range of spoonable and drinkable yogurt products, as well as cheese and UHT milk.
George Abi Najem, General Manager GCC, Iraq and Levant, of Al Safi Danone, said:
“This investment will help us establish a modern dairy enterprise with the latest processing and packaging equipment and train our employees to international standards.
“Thanks to this technology, the local market will enjoy higher quality dairy products at affordable prices. Al Safi Danone’s new factory in northern Iraq is just the first sign of the group’s commitment to Iraq, one of the most important markets in the region, despite its challenges.”
IFC’s investment is part of a broader World Bank Group strategy to encourage South-South investments, while supporting the diversification of Iraq’s economy and improved agricultural production to boost growth. Food production and distribution will play a key role in transitioning Iraq from an oil-based economy to a more diversified one.
Mouayed Makhlouf, IFC Director for the Middle East and North Africa, added:
“Our developmental role in Iraq is more important than ever, especially in providing funding to competitive companies in the non-oil sector and facilitating investments from other countries within the region into Iraq.
“We hope our commitment to this project will encourage other international and domestic investors to invest in Iraq.”
Over the next few years, IFC is planning to step up its investment and advisory services in Iraq, investing $100-130 million per year, depending on the security situation, in priority sectors such as infrastructure and financial markets.
Al Safi Danone Iraq is a joint venture of the Saudi dairy company Al Safi Danone, Saudi conglomerate Al Faisaliah Group, French-based multinational Danone Group, and Iraq based retailing, sales, and distribution company Al Yasra. Its mission is to provide healthy products to support the well-being of Iraqi families based on a balanced diet that includes dairy products. Al Safi Danone Iraq is working to serve the Iraqi market with a range of products of the highest international quality standards, such as Activia.