CAIRO: To sustain their economic growth prospects at around 5-6 percent in the next five years, Middle East and North Africa countries need to increase investments in infrastructure, according to David Craig, World Bank Country Director for Egypt.
Craig was speaking at the first technical meeting of the MENA region’s Infrastructure Regulatory Forum that was held in Cairo on Sunday.
The goal for the meeting was to enable regulators to share information and best practices, and discuss the recent infrastructure developments and challenges in the region.
Organized by the Public Private Partnerships Infrastructure facility PPIAF and the World Bank, in cooperation with the Egyptian Electric Utility and Consumer Protection Agency (EGYPTERA), the meeting brought together a group of infrastructure regulators from every country in the MENA region. It followed up on last year’s MENA conference on infrastructure reform, held in Amman.
According to the findings of the Amman conference, high public investments in infrastructure during the past three decades have allowed most MENA countries to achieve universal access to basic infrastructure.
The conference report indicates that the connection rate to the electricity grid by households is around 90 percent or more; and access to drinking water and sanitation services is above 70 percent. The penetration of mobile telephony has reached the level of industrialized countries. Paved roads represent between 60 to 70 percent of the total road network.
“MENA countries do not face the classic infrastructure access gap observed in other developing countries. However, strong demography and rapid urbanization combined with structural transformation of the economies have resulted in strong demands for infrastructure services that most governments in the region struggle to cope with,” said Craig.
“A good illustration of the inability of governments to cope with growing infrastructure demands is the electricity sector, whereby the installed generation capacity is estimated to be 20 percent below the aggregate demand for electricity across countries in MENA,” he added.
Craig referred to the series of infrastructural shortages that had occurred in Egypt over the summer, as a challenge faced by many governments and a call for “well thought through” and “transparent” infrastructure planning.
Gas, electricity and water shortages over the past year have raised concerns about Egypt’s infrastructural weaknesses and planning challenges.
“While MENA countries need to increase investments in infrastructure, said Craig, the World Bank stands ready to work with governments in the region, through its lending and non-lending activities, to address their infrastructure challenges.”
A World Bank study found that middle income countries in MENA will need to channel 9.2 percent of their yearly GDP towards infrastructure investments over the period from 2008 to 2015 in order to sustain their economic growth prospects.
The report finds that this represents a total investment effort between $75 to 100 billion a year, of which 33 percent is for the maintenance of the existing stock of infrastructure. To date about half of this amount is mobilized by countries across the region.
The conference acknowledged that there are some considerable challenges for MENA in moving the infrastructure agenda forward, calling for robust and transparent legal and regulatory frameworks that would be necessary to deliver policy programs and new institutions and the capacity required to implement them.
“Cooperation among infrastructure regulators, dialogue and the experience exchange can promote the adoption of common rules, norms and standards leading to a more harmonized regulatory frameworks, the development of common models of private sector participation and strengthen trade links and regional integration,” said Paul Noumba Um, Lead Economist at the Sustainable Development Department of the WB MENA region.