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What Effect has the Arab Spring had on Investors?

Egyptian protesters stand on a fence by the Nile River during a protest near Tahrir Square on February 1, 2013 in Cairo, Egypt.
Ed Giles | Getty Images
Egyptian protesters stand on a fence by the Nile River during a protest near Tahrir Square on February 1, 2013 in Cairo, Egypt.

The Arab Spring has made the Middle East and Africa less attractive to certain investors, but there is still plenty on offer in the battle for capital, panelists said during a CNBC debate at the World Economic Forum in Jordan.

The International Institute of Finance (IIF) estimated private capital inflows into emerging markets at around $1.181 trillion in 2012, of which a modest $73 billion went into the Middle East and Africa. But that number is forecast to rise to $82 billion by 2013, and $84 billion in 2014.

"Domestic political developments and geopolitical uncertainties have more of an impact on flows to non-oil exporting countries in the MENA region (Egypt, Lebanon, and Morocco)," the IIF said.

Salem Nasser Al-Ismaily, chairman of Oman's Public Authority for Investment Promotion and Export Development (PAIPED), said stability was key to investors.

(Read More: How the Arab Spring Has Affected Egypt's Tourism)

"My main concern,of course, if I were to put myself in the investor's shoes, is to make sure there is stability," he said. Earlier this year, PAIPED won an UNCTAD award for excellence in promoting export-oriented foreign direct investment.

An important lender in the region is the European Investment Bank (EIB), despite 90 percent of its loan book allocated to projects within the European Union. Philippe De Fontaine Vive Curtaz, vice president at the EIB, said more needed to be done to instil confidence.

"Let's be frank, we have to reassure more investors now than in the past. We have to be there to provide some political guarantee, so that we really ensure investors and local banks, that we will provide some kind of umbrella," he said.

There has also been growing concern about economic expansion not being inclusive enough to be sustainable in the long-term.

(Read More: Egypt's Currency Crisis Causes Poor Wheat Trade)

"When growth comes, that growth is an inclusive growth - it creates jobs,it provides benefits for the full range of people… that's the way you'll attract a large amount of money," U.S. Assistant Secretary of International Finance, Charles Collyns, said.

Martin Senn, CEO of Zurich Insurance Group, had a similar view. The global insurer has a strong presence in the oil-exporting nations of the Gulf, which have largely escaped the wave of political change since 2011.

"What needs to happen is that there is a push to diversify the economy more. I think there is a need to set a foundation for sustainable growth in the labor force and to create more employment," he said.

Growth Sectors

Turkey is the world's seventh largest agricultural producer in the world, according to the OECD, and the country has ambitious plans to bring foreign investors on board.

"We've been investing very heavily in the Southeast and Eastern Turkey. And the biggest issue in the future is food supply security for part of this region. It's likely to offer a huge opportunity," Mehmet Simsek, the country's finance minister, explained.

(Read More: Africa Is Our 'Top Focus': Old Mutual )

Collyns also said he saw significant potential – but that it could only be realized once macroeconomic stability was provided.

"There are plenty of opportunities in tourism, agro-business, business services... investors will come when you have established the right environment," he said.

Despite the polarizing political discord, there are countries investing aggressively in the region. Turkey is a prominent example, driven in part by necessity rather than choice.

"Europe has been a big drag on Turkish economy. The way we dealt with that was to rediscover our neighborhood – Middle East and North Africa region, Central Asia," Simsek added.

Turkey has managed to reduce its exports to Europe - its most important trade partner - from 56.4% in 2000, to 38.2% in 2012. That compares with an increase in exports to the MENA region from just 13.2% to 35.3% in the same period, according to Turkstat.

"Right now, in the MENA region with the Arab awakening, there is fair bit of disruption, but that's a short term," he said.

This week on "Access: Middle East":A CNBC debate on creating a dynamic emerging market from the World Economic Forum on the Middle East.

Featured panelists include Mehmet Simsek, Turkish Minister of Finance; Philippe De Fontaine Vive Curtaz, Vice-President at the European Investment Bank (EIB); Salem Nasser Al-Ismaily, Chairman of Oman's Public Authority for Investment Promotion and Export Development (PAIPED); Charles Collyns, U.S. Assistant Secretary, International Finance; and Martin Senn, CEO, Zurich Insurance Group.

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