World Bank says Arab infrastructure investment threatened by unrest
Bridging a funding gap of up to US$40 billion (Dh146.92bn) a year in infrastructure investment in the Arab world will become more challenging because of the fallout from the recent unrest, says a World Bank official.
The bank and other institutions are close to finalising a fund intended to raise up to $1bn for much-needed investment in infrastructure projects in the Middle East and North Africa (Mena), said Raymond Bourdeaux, the lead infrastructure specialist for the region at the World Bank.
Investment in hospitals, schools, roads and other public services is viewed by the World Bank as a way of easing social tensions and laying foundations for economic growth. But infrastructure spending in some countries hit by unrest has been squeezed.
Dwindling foreign investment and pressure for government spending on subsidies and other social initiatives risk directing money away from improving public services.
“By default there’s less public-sector infrastructure investment available coupled with the significantly increased perception of political risk,” Mr Bourdeaux said yesterday on the sidelines of a Dubai International Financial Centre economics workshop.
Unhappiness with poor public services played its part in fuelling recent social unrest in the region, he said. “You have strong demand [for infrastructure] and less means for developing it. That’s a problem that’s not going to go away as populations increase.”
In those countries affected by turmoil, there was likely to be a rethinking of where to direct infrastructure funding, said Mr Bourdeaux.
“From a political perspective there’s likely to be a focus on projects that have more immediate demonstration of social benefit,” he said. “Taking a choice between pursuing a hospital or road as a project, the government would probably choose the hospital as you can link it to the needs of the people in a much more direct way.” Continue Reading
