Proposed bank to provide financing Arab investments

Among the important proposals to be discussed by the Arab economic conference due in Cairo in November is establishing an Arab bank that would provide financing for Arab joint investments.

Economists and banking experts said that the present Arab financing institutions could not provide long-term financing noting that setting up the proposed bank would be a significant step on the way for achieving Arab economic integration.

Undersecretary of the Federation of Egyptian Chambers of Commerce, Mohammed el-Masri, said that there was a great need for such a bank that could provide long-term financing for the Arab investment projects. It will also help make the best use of the available Arab resources.

"The Arabs have not utilised their natural and human resources properly so far. If these resources are well used they would soon lead to Arab economic integration," he said.

Head of the Importers Section at the Federation, Moustafa Zaki, stressed the need for Arab economic integration especially in financial services.

"It is well known that most banks in the Arab world offer short-term loans at high interest rates which constitute a heavy burden on the project even before it starts, a matter which calls for introducing long-term financing with lower interest rates that could be offered by the proposed bank which will not seek making profits as its main target," Zaki said.

Businessmen in the Arab countries could contribute to the bank through deposits or shares, he added.

He said that the proposed bank should not be under any official control so as not to be affected by any political differences.

Secretary general of the Federation, Abdul-Sattar Ashra, who welcomed the proposal, said that in order to achieve the bank's objectives, it should offer loans at lower rates of interest.

He said that the proposed bank could not only depend on financing long-term projects, but it would have to finance medium and short-term projects covering all sectors.

"It has to be a giant bank with tremendous ability of financing and it will offer loans at low interest so as to secure success and continuity," he said.

Head of the Agricultural Council, Usama Khairi-Eddin, who is also a member of the Exporters Section, said that the would-be bank should contribute to preparing the feasibility studies for the Arab joint projects as done by the Islamic Bank for Development.

"The bank would take advantage of the experience of other banks."

"The investment trend in many Arab countries is that the private sector seek more profitable short-term projects to secure a fast circulation of capital, which creates the need for the complementary long-term projects," he said.

"The proposed bank has to avoid the faults made by other Arab financing institutions and banks whose role on the Arab investment and economic scene is so limited.

It has to rely mainly on the private sector with limited contributions from governments in order to be free of any governmental directives and not to be affected by political disputes," he added.

The proposal of a new Arab bank had to be studied in detail vis a vis the other banks in already in operation, professor of economics at Al-Azhar University, Shawki Donia, said.

The study proposed bank would contribute positively to the Arab financing services and policies and not to be a copy of the already working banks, he recommended.