WASHINGTON, (Reuters) – Global development banks said on Tuesday they were looking to raise up to $1 billion to leverage more funding for rail, road, electricity and other infrastructure projects in Arab countries under pressure to deliver better services to their people.
In a joint statement, the World Bank and Islamic Development Bank said they would mobilize support for a new Arab Financing Facility for Infrastructure to bolster economic growth and meet the needs of the region’s growing population.
Protests across the Middle East and North Africa against corrupt political systems that ignored the needs of the masses have prompted a new focus on public investments that create jobs and aid economies.
Shamshad Akhtar, vice president for the Middle East and North Africa at the World Bank, said government budgets were under pressure and the private sector perceives risk in the political upheavals so it is harder to finance the projects.
“The Arab spring has demonstrated that people want better public services and a cleaner urban environment and that means more efficient, better-designed infrastructure services,” Akhtar told a two-day conference in Jordan in remarks released on Tuesday.
“This is where the IFIs (international financial institutions) can step in to help with financing and mitigating the risks faced by private investors,” she added.
The development banks estimated that half the population across the Arab world does not have proper access to water. The region needs to invest somewhere between $75 billion to $100 billion a year to sustain current growth rates.
As the population grows, electricity consumption also is set to rise over the next few years and will require investments of $30 billion a year to meet demand, they said.
Birama Sidibe, vice president of operations at the Islamic Development Bank, said the financing facility would initially focus on a few projects that will act as a catalyst for further investments.
“Countries interested in supporting AFFI have started a dialogue with the World Bank and Islamic Development Bank to identify and develop priority projects for AFFI financing,” he said.
Sidibe said the banks are in the advanced stages of recruiting a fund manager to oversee the investment fund being created.