The Japan International Cooperation Agency (JICA) has signed an agreement for equity participation in the IFC Middle East and North Africa Fund, which targets equity investment in private enterprises in the Middle East and North Africa (MENA) region.

JICA will invest up to $30m to the fund, in addition to participation by the IFC and other financial institutions.

The Fund is managed by IFC Asset Management Company (AMC), a wholly owned subsidiary of the International Finance Corporation (IFC), and a member of the World Bank Group.

This is the first project to be carried out by JICA’s Private Sector Investment Finance (PSIF) targeting the MENA region since its resumption in October 2012.

This project aims to support, through this fund equity participation, private companies and projects with a focus on developing countries and regions in MENA.

The main sectors of investment by the fund include financial services, infrastructure, and manufacturing.

The MENA region has faced socioeconomic instability since the democratization movement known as the Arab Spring spread in the beginning of 2011.

One of the factors of that instability is a high unemployment rate in the region, especially among the younger demographic, and expanding employment opportunities through economic revitalization is a priority.

JICA said: "The amount of foreign direct investment in the region has not yet recovered to the level before the Arab Spring, and this project is expected to encourage further private investment in MENA."

"By encouraging private investment in MENA through equity participation in the fund, JICA aims to support job creation and economic growth, and to contribute to socioeconomic stability in the region," the Agency said in a statement.

JICA is also reviewing the possibility of providing information about the investment environment in the region to Japanese companies with an interest in pursuing business activities there.

Going forward, JICA will proactively utilize the PSIF and provide a wide range of support while strengthening partnerships with the IFC and other international development financial institutions.