Financing Development Projects in Developing Countries: An Interview with Abdulwahab Al-Bader of Kuwait Fund

Interview with Abdulwahab Al-Bader, Director General of the Kuwait Fund for Arab Economic Development

The Coronavirus has been a sort of accelerator for many companies to improve things internally and even change the philosophy and the strategy of the institution. Have you seen these sorts of changes internally within the Fund as well? How have you adapted?

What is happening is so sad and it is not planned by anybody. But you have to rethink things now. In December last year, we started feeling that the effects were imminent and in February, March everybody started panicking. And it so happened that we were preparing to present our new strategy to our Board. And so, we had to rewrite some of its contents to take into consideration what had happened. It is not a major change, because our strategy was made for 2035. But we had to make some alterations to what we presented to take care of issues that had arisen from the damage of the COVID pandemic specifically. Every country in the world has been affected. Kuwait is one of them. But there are some countries that can breathe because they have some securities that allow them to do business and make some corrections. As a country as a whole, Kuwait will certainly overcome most of the problems that have faced us through the pandemic. When we speak about the Kuwait Fund, we always pride ourselves that we are an independent agency and we have over the years built up our resources and we certainly will not be affected by a one year hitch or two year hitch. The most important thing for me, as a director and as a manager, is that I fulfill my obligation. Unfortunately, I could not fulfill the 2019-2020 goal. Our fiscal year ends at the end of March. Most of my commitments were to be signed in early March, but with the restrictions, I could not visit countries and we did not reach our target. Nevertheless, the plan is to cover that within the 2021 fiscal year. That is why we even extended our plan for commitments this year by an amount that allows us to include some of the commitments that we could not meet last year. With Corona, the issue of health was communicated to countries that we deal with, our willingness to give mandates to some of the issues countries need to cover that are affected by COVID-19. We attended virtually the G20 meeting in March where commitments were made from the Kuwait Fund to postpone repayments for least developed countries during this year. So, most of those payments were postponed to over the next four years, with an extra one year grace period. We have made some commitments to the World Health Organization. We are making arrangements to work with Gavi, which is working with vaccination, especially in the least developed countries. Of course, at the same time, we are open minded in our communication with those countries affected. We will give such assistance on very concessional terms that will help those countries. So, the thought is there, the work is there. We have revised some of our earlier loans, assistance, and commitments toward countries to help with some of the issues of COVID-19. Because of traveling restrictions, supervision is mostly virtual. We are doing a virtual appraisal right now with some of the countries that we deal with because we do not want to postpone our plan for this year. The plan for this year is to commit around 400 million Kuwaiti dinar and to do that we have only five or six months left of the year, but we have already made some progress. We have signed a number of loans with a number of countries, some of them are virtual signing with of course the president or ambassadors here in Kuwait just to cover for the legal work. So, we do not want to stop that. But the aim is at this time and in this situation not to hold our assistance. Everybody is affected around the world, not only us. And to ease any burden in the future we need to continue our work and that is what we are doing.

What are some of the specific projects you are working on or countries that you are working with?

The object of Kuwait Fund for Arab Economic Development is to assist Arab and other developing countries in developing their economies by financing development projects.

Most of the requests that we are considering have no relation to COVID-19. Requests and priorities of countries are mostly for projects that help their economies and progress their economies. For example, we have signed with Egypt for two projects mostly in the Sinai Peninsula. This project started three years ago to finance the first two loans on that and this is the third loan for a water resources project that helped the Sinai Peninsula through usage of used water and water that comes from leftovers. We are going to use that with some of the residuals that are coming from irrigated areas from the Nile through a siphon to the Sinai Peninsula and use that water for future irrigation. We also have given some assistance to them through introducing some desalination plants in different areas for the Sinai Peninsula. This area is very important to Egypt. It is an area that has been affected by different problems over the years and the issue right now is which projects can help the economy and that region and really change the lives of the people there. We are also doing some projects in a number of countries in Africa. We have just signed in Tanzania and we are going to sign with Chad in the next few days. These projects deal with roads and water conservation. We also have some projects in Asia. They are not all infrastructure issue related. With COVID, mostly we have a grant which we are finalizing soon. It will be assisting with the COVID vaccination in a number of countries. We have a grant that we have submitted here in Kuwait to the Ministry of Health to assist them in their efforts towards the pandemic efforts in country here as well.

What makes the Fund unique compared to what exists abroad? What are the main points of differentiation?

We established Kuwait Fund in 1961. Kuwait was blessed with oil and wealth at that time compared to other countries. The idea was to establish a long lasting institution that was available to assist, especially through grants in different areas. That is what is unique about the Fund. Over the years, we have built up the Fund to be able to work even through the darkest and the worst days. We have worked during the occupation of Kuwait. We managed to work outside of Kuwait and disperse our commitments to many projects and many countries. At that time, this was very unique. We have worked and committed and even increased our commitments during times when even within Kuwait there were financial problems. In the 80s, when the price of oil dropped to $11, $9 at one time, and there was no allocation to our capital, Kuwait Fund was working and never stopped or reduced its commitments. Our commitments have continued increasing over the years to the current level. We are an institution with adequate resources and we have good administration of our resources to enable good utilization for lending and working outside, which leaves us in a position to work and recipient countries who deal with us know that their resources will not be affected or stopped for any reason. That is why we have good relations at the same time with our counterparts and with our recipient countries. And we have their trust, first of all, of continuing cooperation, continuing commitments, and not only that, good advice and utilization of our second resources, not just financial resources but personnel resources. Over the years, we have built this good base staff that can help countries even in Africa and Asia with their efforts, because some of them depend on our advice even in their relations with contractors and others, especially with different difficult projects.

What are the challenges of the Kuwait Fund?

I am comfortable with our situation, with our staffing, and with our reputation. Reputation is not as much outside as much as it is within. However, I am always worried about the unknown. Because if there is something that I can plan for, I will work and work with others and plan as much as possible. But normally, what I am always afraid of is the unknown, something close to you like what happened with COVID. Everybody panicked in the first few months and a lot of people are still panicking. Especially after what happened last year, what we should be afraid of is the unknown. We always say that we have to plan differently, but there is a limitation of our thinking sometimes. Otherwise, we are doing well and we could be doing better as long as the intention is there.

What are your current projects and to close out the year?

Our plan this year is to reach 400 million KD (1.35 B$). Our mandate is 350 million, but we are going to go over our mandate this year just to cover for some countries that we could not reach last year and to cover for some commitments that were made and of course with the knowledge that that some countries will need extra help with COVID-19 issues. We work on average with about 27 countries per year. We are going to see whether we can increase that depending on the project and project size. About 50% of that goes to Arab countries, about 22% to Africa, 20% to Asia, and the rest. The averages change up and down, of course.

What do you want to achieve in the next three to five years’ time?

I just finished my five-year plan. The intention is to increase our commitment. It was 300 and now it will be 350 million Kuwaiti dinar for the five-year plan, which is about $1.15 billion. The intention, of course, is to reach that target, which is not easy. It is not that we have the money as much as dealing with a number of countries, a number of projects, then the availability. Most of the projects do not depend on the availability of money by the developer. They have money from other sources, because most of the projects that we do are co-financed with others, in cooperation with different institutions and different funds, of course, plus the recipient government. So now, the plan is to continue with that as well as to give to the health sector a more thorough look, especially after the pandemic and for the next five years. The health sector and the education sector were both given very important consideration by the Kuwait Fund, but often, recipient countries neglect going into those sectors, which we try not to interfere but to attract them to those two sectors. We are going to give more concessional terms, just to attract countries to them. It is not as straightforward as it used to be. Before when we looked into health, we looked into building hospitals. But now, we have to also look into immunization. We were financing immunization through grants earlier, but it was small grants of 5 to 10 million to institutions for different areas, not for specific countries. Now, maybe in the future, we will have to reconsider that. We will be overseeing the changes for these countries, but that has not happened yet. In most of our contacts we did not see very big changes. My expectation is that over the next year, we will see some changes especially in projects that will encourage small businesses, maybe through developmental banks and others within the regions or within the countries that can assist small industries, small farmers, etc., because that is an area where there are many affected individuals. Right now, we are only thinking of the health solution, but we have to look also to the financial and economic solution.

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