WASHINGTON, OCTOBER 10, 2010 –
The World Bank Group, in cooperation with the Islamic Development Bank,
is setting up a regional initiative that could raise up to $1 billion to
close the infrastructure gap in the Middle East and North Africa, which
will undermine the region’s growth if not urgently addressed.
The Middle East and North Africa (MENA)
region needs to invest between $75 billion and $100 billion a year to sustain
the growth rates that have been achieved in recent years and to boost economic
competitiveness. That said, private sector investment in infrastructure
in MENA countries is limited, especially outside the Gulf countries despite
huge unmet demand for infrastructure services.
Today’s announcement aims at addressing
this shortfall and brings together the World Bank Group with the Islamic
Development Bank as potential anchor investors in a regional investment
vehicle to support both conventional and Shariah-compliant investment in
“This regional initiative will unlock
new flows of private sector investment to help countries like Egypt, Morocco,
Jordan or Tunisia eager to push ahead with critical infrastructure projects
that will drive competitiveness and boost much needed job creation,”
said Robert B. Zoellick, World Bank Group President.
He added that the proposed regional
initiative would include technical assistance to help governments tackle
legal, policy and institutional constraints to public-private-partnerships
and develop cross-border infrastructure projects vital to regional integration
“The Islamic Development Bank
is excited to be part of this initiative as we know there is a pipeline
of viable infrastructure projects out there and unmet demand,” said
Dr Ahmad Mohamed Ali, President of the institution headquartered
in Jeddah. “The facility will have the flexibility to structure investments
in accordance with Shariah principles which will attract untapped, alternative
sources of financing.”
Both the Islamic Development Bank and
the International Finance Corporation (IFC), the private sector arm of
the World Bank Group, will work together to explore ways of providing project
finance in both conventional and Shariah-compliant products, which would
seek to attract private investors, especially from Gulf countries.
"Infrastructure is one of our
most important priorities in the Middle East and North Africa,” said
Lars Thunell, Executive Vice President and CEO of IFC. “Large
investments in infrastructure are needed across the region. This facility
will demonstrate the viability of infrastructure investments for both the
private sector and governments, which in turn will help increase investments
in this sector and improve services for a rapidly growing population."
IFC's approach to infrastructure projects
includes advising governments in structuring innovative public-private
partnerships and financing precedent-setting transactions. In particular,
IFC supports cross-border projects from Gulf countries into emerging markets
that commercial banks would consider too risky without IFC’s involvement.
Over the past four years, IFC has invested more than $1 billion in infrastructure
projects in MENA.