Published: October 12, 2010
World Bank and IDB to tackle project finance shortfall.
The World Bank is looking to raise US$1bn through an initiative with the Islamic Development Bank (IDB) to close the Middle East and North Africa’s infrastructure gap.
The region needs up to US$100bn a year to sustain recent growth rates but private sector investment in the region’s infrastructure has been limited, especially outside the Gulf.
The initiative aims to address the shortfall by bringing together the World Bank, through its International Finance Corporation (IFC) subsidiary, and the IDB to attract private investors. The organisations will also work together on ways of providing project finance in conventional and Shariah-compliant products.
World Bank president Robert B. Zoellick says the initiative will direct private investment into countries such as Egypt, Morocco, Jordan and Tunisia, which are eager to push ahead with critical infrastructure projects.
It will also provide technical assistance to help governments tackle legal, policy and institutional constraints to public-private-partnerships and develop cross-border infrastructure projects.
IDB’s president, Dr Ahmad Mohamed Ali, adds that there is a pipeline of viable infrastructure projects in the region and that through this initiative they will attract “untapped, alternative sources of financing”.
IFC chief executive Lars Thunell says large infrastructure investment is one of MENA’s most important priorities and this initiative will demonstrate the viability of those projects for the private sector and governments, which in turn will help increase investments in this sector.
More than US$1bn has been invested in MENA’s infrastructure, including electricity, transport and water, by IFC during the past four years. Its support has included advising governments in structuring public-private partnerships but this new initiative will encourage cross border infrastructure projects.