UK steps up hunt for Mena projects with £50bn budget

Reuters/Molly Darlington

• UK commits $63bn to Mena
• £11bn invested since 2018
• Financing supports UK jobs

The UK’s export credit agency is stepping up its search for “transformational” projects to finance across the Middle East and North Africa and has a potential war chest of about £50 billion ($63 billion).

Since 2018, UK Export Finance has completed £11 billion worth of business and delivered thousands of jobs for UK businesses related to projects in the region, which it describes as an “important growth area”.

Joanna Mobed, co-head of global origination at UKEF, told AGBI she is committed to being involved in Mena’s most important projects, adding that there is a “great deal of headroom” for financing deals.

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That includes a capacity of £15 billion in the UAE, Dubai and Saudi Arabia alone, plus billions more available in other GCC countries, including up to £2 billion in Qatar, where UKEF is chasing projects related to the Qatar Vision 2030 programme.

Globally, UKEF works with more than 100 private credit insurers and lenders to help UK companies access export finance – the loans, insurance policies or bank guarantees that enable international trade to take place.

Last year, its project financing efforts supported 55,000 jobs in the UK.

“2024 is looking really exciting in Mena with plenty of opportunity for growth, so we are looking forward to delivering more market firsts across a range of sectors,” said Mobed.

“The regional growth is a great catalyst for UKEF… We have the ability to support really transformational infrastructure projects,” she added.

Most recently, UKEF has helped to finance a high-speed railway in Turkey, a 350km drainage network in Iraq and a Six Flags theme park at Qiddiya in Saudi Arabia.

UKEF ensured that the government of Iraq could access £226 million in financing to fund the drainage project, which is expected to support more than £100 million in UK export contracts.

Upon completion, it is expected to bring clean water to more than 25,000 households and improved sanitation to hundreds of thousands.

The Saudi deal is particularly significant, said Mobed, because the $700 million financing facility was the UKEF’s largest Murabaha financing to date and the first in the region. Murabaha, also known as cost-plus financing, is an Islamic financing structure in which the seller and buyer agree to the cost and markup of an asset.

UKEF

Mobed explained: “We tailor our products so they are fit for purpose for the region so UK exporters can capitalise … Islamic financing is definitely an area we are keen to engage in.”

UKEF was previously the first export credit agency to issue a sukuk certificate for an Emirates-Airbus transaction.

While infrastructure projects have historically made up about a quarter of all project financing in Mena for UKEF, new sectors such as energy transition and technology are also increasingly on the radar.

UKEF is also looking to work more with top local banks on loan guarantees while also offering local currency financing across the GCC and Jordan.

Mobed said UKEF has representatives in Jordan, Egypt and Morocco, as well as the UAE, Saudi Arabia and Qatar. They hunt for the most important deals and also advise sovereign and corporate investors from the region who are looking for deals in the UK.

She said that the ongoing negotiations to strike a free trade deal between the UK and the GCC offered an “exciting opportunity”, adding: “UKEF will play an important role in unlocking the opportunities that come out of it.”