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MENA’s infrastructure development faces a funding gap of $993 billion, says new report

Turkey and Egypt are the top OIC countries that face funding gaps.

MENA’s infrastructure development faces a funding gap of $993 billion, says new report
[Source photo: Anvita Gupta/Fast Company Middle East]

According to a recent report, the Middle East and North Africa region faces a significant infrastructure gap, estimated to be around $993.9 billion between 2016 and 2040. 

The ICD-Refinitiv OIC Infrastructure Outlook 2023 report highlighted that the largest infrastructure funding gaps among the Organization of Islamic Cooperation countries are in Turkey with $405 billion, Egypt with $240 billion, Nigeria with $221 billion, Bangladesh with $192 billion, and Iran with $153 billion. 

“As Islamic markets grow in global importance and their potential expands as markets for consumption and investment, it is becoming increasingly vital that the gaps are filled,” said Mustafa Adil, Head of Islamic Finance, Refinitiv, in the report. 

It noted that the region faced a funding gap of $684.9 billion in the development of roads, $110.8 billion in water, $47.3 billion in rail, $33.6 billion in ports, and $24.7 million in airports during the 25 years. 

Roads were the most significant funding gap across the OIC, making up 53%. 

Telecommunications, electricity, and water were attributed to 38% of the overall gap, followed by rail, ports, and airports with a combined 9%. 

In the MENA region, electricity infrastructure holds a surplus of $27.4 billion. 

Among the key challenges facing OIC countries in developing the infrastructure are lack of funding, limited institutional capacity, vulnerability to political risk, weak legal and regulatory frameworks, and the environmental and social implications of any infrastructure projects. It also raised potential opportunities to support economic growth, trade, and overall prosperity, tighten countries’ energy security and strengthen resilience to climate change. 

It said that public-private partnerships are increasingly used to source funding for infrastructure projects. Islamic finance is also a growing source of funding in OIC countries. 

To address infrastructure financing strategies, the report recommends that OIC governments consider conducting country-specific needs assessments and business case appraisals incorporating cost-benefit analysis and financing options such as PPPs, loans, grants, bonds/sukuk, and blended finance. 

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