Kuwait city: The Arab Investment and Export Credit Guarantee Corporation (Dhaman) has urged Arab governments to move swiftly in implementing a package of reforms aimed at enhancing the investment climate across the region.
According to Jordan News Agency, the recommendations target infrastructure, institutional structures, economic policy, legislation, and administrative procedures, and come in response to the growing pressures of political instability and economic headwinds facing the Arab world.
The call was made during the launch of Dhaman's 40th Annual Report on the Investment Climate in Arab Countries, released Sunday from its headquarters in Kuwait. The report, which evaluates 21 Arab countries using a composite index of 217 sub-indicators drawn from 35 international institutions, showed that the average Arab ranking remained steady at 103rd out of 158 countries globally, 24 places below the global average.
The region's average standing held due to a mix of gains and setbacks across four core areas that define the investment environment. Economic performance indicators registered a decline, with the regional ranking dropping five places to 100th globally. This was largely attributed to worsening internal performance metrics and external engagement indicators. However, some improvement was noted in the levels of gross investments and public debt ratios relative to GDP.
The report also showed a decline in the Arab average for political and security indicators, slipping five spots to 112th globally. This was mainly driven by deteriorating scores on investment risk and commercial risk metrics, although the sovereign ratings of six countries, including Jordan, Qatar, and Kuwait, registered gains. Ratings remained stable in the UAE, Saudi Arabia, Morocco, Bahrain, and Iraq, while Lebanon saw further deterioration.
In terms of the legislative and regulatory environment, the Arab average held steady at 112th. There were improvements in governance, digital services, economic freedom, and corruption perception indicators, despite a setback in bilateral investment treaties. The average ranking for production-related elements was also maintained at 103rd globally, reflecting progress in areas such as logistics, digital competitiveness, AI readiness, and talent development, even as the region lagged in sustainable energy and innovation performance.
Among Arab countries, the Gulf Cooperation Council (GCC) states and Morocco continued to dominate the regional rankings. The United Arab Emirates led the Arab world and ranked 16th globally. Qatar, Saudi Arabia, Kuwait, Oman, and Bahrain followed, with Morocco in seventh place at the regional level and 73rd worldwide. Jordan and Algeria both scored above the Arab average, ranking 83rd and 94th, respectively. Meanwhile, 12 Arab countries, including Egypt, Iraq, Lebanon, Syria, and Sudan, fell into the lower third of the index, occupying global rankings between 104 and 158.
While the investment climate index saw improvement in several countries, the region experienced contrasting trends in foreign direct investment (FDI) flows and project activity. The total value of newly established FDI projects in Arab countries fell by 38% to $119 billion in 2024, largely reflecting investor caution and broader geopolitical risks. Conversely, FDI inflows into the region rose significantly, increasing by 53% to reach $123 billion, according to estimates by the United Nations Conference on Trade and Development (UNCTAD).
Egypt emerged as the largest FDI recipient in the Arab world, attracting $46.6 billion and accounting for 38% of the regional total. The UAE followed closely with $45.6 billion, or 37%, while Saudi Arabia received $15.7 billion, representing 13% of the total. The Arab region's share of global FDI climbed to 8.1%, and its portion of FDI to developing economies rose to 14.2%.
Despite this, intra-Arab investment showed a marked slowdown in 2024. The number of projects declined by 17% to 260, and capital expenditure dropped by 35% to $45.5 billion. Dhaman warned that the downturn is likely to persist into 2025, based on first-quarter data and prevailing economic trends.
In light of these findings, Dhaman announced plans to expand its suite of specialized services, including investment insurance, market research, and policy advisory, as part of its efforts to support Arab economies in attracting foreign capital and opening export markets.
The Corporation, which celebrates its 50th anniversary this year, has insured cumulative operations exceeding $32 billion and remains the world's first multilateral investment insurer. It is owned by all Arab League member states along with four regional financial institutions and maintains an A+ rating with a stable outlook from S and P.