The Iraq Opportunity

With vast untapped resources and substantial reconstruction requirements, Iraq offers a unique investment opportunity with unparalleled return prospects. The story of Iraq is one of renewal, regeneration and unrivalled opportunities.
Rarely has there been an investment opportunity that combines what Iraq has on offer today.

The country has vast, untapped natural resources. A major player in today’s international energy markets, Iraq has the fifth-largest global oil reserves, with proven reserves of 150 billion barrels. Some industry sources estimate that unproven reserves could be equally large. Proven gas deposits are at 126 trillion cubic feet, which ranks the country at 11 on a global scale. At current production levels, Iraq has already become the second producer in OPIC after Saudi Arabia and the world’s 9th producer. According to Iraqi Government sources, oil production will exceed 6 million barrels per day within 10 years, compared to present levels of 3 million barrels per day.

Amongst other mineral resources, Iraq has the largest global reserve of native sulphur in addition to 10 billion tons of phosphate, the second largest in the MENA region.

The Iraq story is about more than just its mineral resources. Historically, the country has had the most diversified economy amongst other oil rich countries. During decades of UN sanctions, Iraq was self-sufficient, relying on a resourceful industrial sector that benefitted from access to quality raw material, abundant energy supply and a highly skilled labour force. With two rivers and a fertile land, Iraq had a thriving agricultural sector.

Iraq is also a centre of religious pilgrimage. The number of religious visitors has increased to 3 million per year since the end of the war. These target the religious shrines in the Holy cities of Najaf and Karbala. As the Cradle of Civilisation, Iraq offers a rich heritage of ancient sites. The government is targeting a threefold increase in tourism as it restores its ancient treasures.

With decades of destruction and negligence as a result of war, conflict and sanctions, Iraq is undergoing what could possibly be one of the most significant reconstruction programmes in recent history. It is estimated that the country will require more than USD 600 billion of investment to rebuild its damaged infrastructure and revive its once thriving economic sectors. Oil production remains at a fraction of capacity while a number of non-oil sectors are unproductive. According to official figures, Iraq has been one of the highest recipients of Foreign Direct Investments (FDI) since 2009.

Unlike other post war and frontier economies, Iraq has sufficient resources to finance its reconstruction efforts. The influx of oil revenues provides for foreign reserves at USD 70 billion and a balanced budget. Inflation is relatively low at 3% while the pegged currency has been stable since 2007. The external balances are in surplus while debt levels at 40% of GDP are low compared to the size of the economy and other developing countries. According to Central Bank statistics, nominal Gross Domestic Product (GDP) grew from USD 29.5 billion in 2003 to USD 211.3 billion at the end of 2011. The World Bank is forecasting real GDP growth at over 10% for the next five years, placing Iraq as one of the fastest growing economies in the world.

An interesting dimension to the growth story of Iraq is economic decentralisation and reforms. The country operated under a central economic policy prior to 2003. Since then, there has been a radical shift in economic policy towards one that is market-based. Further economic reforms are planned including a pipeline of privatisation issues. Today, Iraq has a thriving private sector that is working hand in hand with the government to rebuild Iraq and resume its position as an economic powerhouse.