meed-logo

line1 line2 line3
SIGN IN / REGISTER

Bridging the infrastructure capacity gap

2 April 2024

 

The Middle East and North Africa (Mena) region faces a massive infrastructure gap, with estimates of the shortfall ranging from $75bn to $100bn annually. 

This translates to a cumulative need for $2-2.5tn in infrastructure investment alone by 2050. Bridging this funding gap will require a drastic increase in the level of investment.

In 2020, the World Bank stated that Mena countries needed to spend at least 8.2% of GDP to meet their infrastructure goals through to 2030. However, it had been averaging a spend of just 3% over the prior decade – mostly from public sector funds, alongside multilateral and bilateral debt financing. 

In the intervening years, the additional fiscal constraints imposed by the pandemic and global economic shocks, such as food price inflation, have further hindered regional public spending on infrastructure.

In 2023, the ICD-Refinitiv OIC Infrastructure Outlook valued the region’s outstanding funding gap for infrastructure development at $994bn. The gaps included a $685bn shortfall in investment in road infrastructure; a $111bn funding gap in the water sector; a $65bn gap in telecoms; $47bn in rail; $34bn in port infrastructure; $27bn in electricity network investment; and $25bn in airport infrastructure investment.

This funding gap has real, material impacts on economic prosperity and the prospects for economic growth. The shortfall in investment in road infrastructure, for example, is estimated to cost the Mena region a staggering 5.5% in GDP a year due to inefficiency and accidents, according to the World Bank.

A 2020 study in the Review of Middle East Economics and Finance found that manufacturing firms in the Mena region faced the most severe durations of power outages a month of any region, at 64 hours a month. The perceived value of the business losses due to these power outages was estimated to be around 4.8% of total sales.

Meeting the region’s annual investment needs could generate about 2 million direct jobs and 2.5 million direct, indirect and induced infrastructure-related jobs, according to the OECD. 

This is critical when half of the region’s population is under 24 years old, and 29% are not in employment, education or training, as per the OECD figures. 

Another very tangible infrastructure gap is water capacity. The current annual water shortage in the Mena region is about 42 cubic kilometres, but by 2050, this is projected to grow fivefold to 199 cubic kilometres a year under average climate scenarios and potentially up to 283 cubic kilometres a year under drier conditions. 

These examples highlight the need for substantial investments to bridge the infrastructure deficiencies, ensure the conditions for economic growth, and enhance overall sustainability in the Mena region.

To address the challenges, a comprehensive and multi-faceted approach is needed to incentivise the private sector to support regional infrastructure investments. This includes governments establishing clear policy directions and regulatory frameworks to attract private capital mobilisation.

This funding gap has real, material impacts on economic prosperity and the prospects for economic growth

Technological adaptation

In parallel with the need for governments to proactively improve the conditions for investment, the delivery of future infrastructure requirements also anticipates the adoption of emerging technology.

The goal of many countries to achieve net zero by 2050 also layers further complexity onto existing infrastructure challenges. Regional efforts such as the Middle East Green Initiative and the Circular Carbon Economy framework nevertheless demonstrate the region’s commitment to achieving its net-zero targets.

Reaching net zero will entail building infrastructure that is not just bigger and better, but smarter. At the Global Infrastructure Initiative Summit hosted by McKinsey in Dubai in February, disruptive thinking and technology were identified as vital to the industry’s evolution to meet the needs of a net-zero future. 

Industry leaders called for a nuts-and-bolts overhaul of the industry from the bottom up, with more sustainable alternatives to even centuries-old staples such as Portland cement and rebar. The digitalisation of the industry and the advent of machine-learning and AI also hold huge potential for cutting waste and designing more organic, efficient structures.

The summit highlighted that solving future infrastructure requirements will also likely necessitate overcoming technology hurdles and bringing costs down through research and development, much like the costs of solar power or reverse osmosis desalination have come down in the region. 

Alistair Green, a senior partner in McKinsey’s global infrastructure practice, pointed to the technologies that “are not at conviction, yet: the technology hasn’t even really been proven outside of the lab – like flow batteries, which are an alternative to lithium-ion batteries that can be used for grid-scale storage of long duration, energy storage. This is a technology problem that we’re actively investing in researching in order to bring the costs down.”

Strategy& and engineering consultancy Dar recently reported that sustainable construction technologies can potentially reduce lifecycle emissions from the Mena region’s $2tn construction pipeline through to 2035 by 50%-60% for planned projects. Simple changes can be highly effective, such as incorporating dynamic facades into building designs, which can deliver energy savings of up to 55% in hot countries.

The key is the level of innovation, not the level of technology. In the right application, a low-tech solution may be more efficient. If a low-tech solution is scalable, it is also likely to be more cost-efficient.

In the arid Ait Baamrane region of Morocco, a 2015 project by the NGO Dar Si Hmad has created the world’s largest operational fog-harvesting system, providing potable water using a system of shore-side nets that capture and condense the fog rolling in off the ocean. Launched after a decade of research, the system yields approximately 22 litres of water a day for each square metre of net. It demonstrates that infrastructure does not need to be expensive or complex to have a positive sustainability outcome.

The most pressing need for the Mena region is to improve the attractiveness of its infrastructure investment opportunities

Accessing finance

Without sufficient finance, the effectiveness of infrastructure development, including technological innovation within the sector, will be throttled. The most pressing need for the Mena region is to improve the attractiveness of its infrastructure investment opportunities.

Many governments, especially in the Gulf, have been focused on encouraging the private sector through better and wider public-private partnership (PPP) arrangements, with mixed results. Some countries have struggled to deliver PPP frameworks with sufficient commercial appeal and bankability, a problem usually linked to unattractive risk allocations on the private sector side.

Nevertheless, the mobilisation of PPPs and the creation of more transparent and efficient regulatory frameworks around them are routinely identified as vital for attracting and mobilising private capital.

The delivery of more sustainable infrastructure with a view to net-zero targets also brings the potential to tap into green finance, including green bonds and sharia-compliant sukuk. Projects targeted towards carbon neutrality open themselves up to more diverse avenues of potential finance, including international climate mitigation and adaptation funds.

Multilateral development banks, such as the Asian Infrastructure Investment Bank, support initiatives like the Catalyst Mena Climate Fund 2, which works to mobilise private capital for infrastructure projects focused on renewable energy, sustainable utility schemes and green hydrogen capacity.

Governments in the region are also taking steps to mobilise climate finance by issuing green sovereign bonds and sukuk to fund clean transportation, waste management and green building schemes.

The UAE’s infrastructure development is guided by the Green Agenda 2030 policy framework. Under this aegis, UAE banks, including Mashreq Bank and First Abu Dhabi Bank, have pledged to mobilise $270bn in green financing by 2030 for environmentally impactful projects.

Infrastructure financing schemes are an important step towards drawing more private sector liquidity into the infrastructure industry, but it is also just a start compared to what will be required to deliver the region’s infrastructure needs.

Deep regional inequality also needs to be addressed. While countries such as Saudi Arabia and the UAE may currently be meeting the World Bank’s 8.2% of GDP infrastructure spending targets, the region’s hydrocarbon importers will likely need far more outside assistance.

For the region as a whole to thrive, countries will also need to work together and synergistically to deliver holistic infrastructure roadmaps. Just as the GCC is working together to deliver the Gulf Railway, the Levant and North Africa must work together to develop their shared infrastructure.

Only through cooperation and joint initiatives will the Mena region stand to bridge its infrastructure gap.

Gulf construction holds huge emissions savings potential 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11650914/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Risk accelerates Saudi spending shift

    27 March 2026

    Commentary
    John Bambridge
    Analysis editor

    The headline story of Saudi Arabia’s project economy in 2026 is what is no longer being built: The Line deferred. The Mukaab suspended. Trojena stripped of its marquee event. Saudi Arabia’s construction sector is in a period of readjustment, pivoting away from prestige-driven capital expenditure towards deliverable priorities.

    Operation Epic Fury changes none of this. The pivot was already under way following the Public Investment Fund’s board review in late 2024, which cut budgets across more than 100 investee companies by up to 60%. However, the Iran war has helped accelerate and clarify the shift.

    Grasping the full picture of this pivot, it is less austere than it might appear. Project awards declined in 2025, but remained above historical averages, resulting in a net gain for the sector.

    Activity generally remains strong. Saudi Arabia’s rail network is expanding on multiple fronts: the Jeddah Metro Blue Line has returned to procurement, while high-speed and national rail projects are advancing. Desalination capacity is forecast to nearly double by 2031, and wind power contract values surged by 175% in 2025. Saudi Aramco is maintaining high capital expenditure in 2026, focused on offshore projects and gas production.

    These programmes may not attract the global attention of a 170-kilometre mirrored city, but they share something gigaprojects often lacked: a clear functional return. Water security, energy diversification, transport connectivity and domestic gas supply are the load-bearing infrastructure of a modern economy. The kingdom is now building that infrastructure again in earnest.

    The closure of the Strait of Hormuz has made the strategic logic of this reorientation even harder to ignore. Glitzy projects do not secure borders. By contrast, a country that cannot guarantee the security of its export corridors is strongly incentivised to invest in infrastructure that supports its domestic economic base and strengthens resilience. Every desalination plant, rail link and gigawatt of renewable capacity reduces Saudi Arabia’s exposure to external shocks.

    The medium-term direction was already clear: capital was being redeployed from speculative projects towards infrastructure with bankable returns. That rationale has now gained additional strategic weight.

    As Saudi Arabia’s project economy matures, what is emerging is less photogenic but far more defensible: the infrastructure backbone that Vision 2030 always required, and that the kingdom’s exposure to regional instability now demands. The Iran war did not create this shift, but it has removed any remaining argument for reversing it.

     

    MEED’s April 2026 report on Saudi Arabia includes:

    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16163037/main.gif
    John Bambridge
  • Remaking construction in Saudi Arabia

    27 March 2026

     

    As the Public Investment Fund (PIF) took a leading role in developing projects following the launch of Vision 2030, it quickly realised that Saudi Arabia’s construction sector needed support if the kingdom was to achieve its broader economic ambitions.

    The PIF’s National Development Division (NDD) is the entity tasked with building capacity and capability in the construction sector to support PIF projects and other strategically important schemes in the kingdom. 

    “Our job is to facilitate the development of the local value chains, which are essential to support the development and operations of PIF portfolio companies,” says Leyla Abdimomunova, head of real estate and construction, National Development Division, PIF.

    The scale of this undertaking requires a multi-front strategy, targeting everything from consultancy services and contracting capacity to raw materials and advanced technologies. 

    “The focus is on design and construction services, building materials, construction equipment and the value chain for all things in construction technology. This work requires engagements with stakeholders within the PIF portfolio: development and contracting companies where PIF has a share,” says Abdimomunova. “We also work closely with governmental stakeholders – including the Ministry of Municipalities & Housing, the Ministry of Investment and the Ministry of Industry & Mineral Resources – alongside our private sector partners, to ensure alignment across the ecosystem. 

    “This collaboration approach is essential to addressing market challenges holistically and creating an environment where businesses can invest, grow and participate more effectively in Saudi Arabia’s development,” she notes.

    Unified strategy 

    The integrated approach was born out of necessity. 

    “When we started this work five years ago, the initial challenge we dealt with was the shortage of the local supply of construction services and materials,” says Abdimomunova.

    To bridge the gap, the NDD looked to both support local players and attract international firms. 

    “The focus was on the localisation of the supply chain, bringing the manufacturing capacity into the kingdom by either expanding the existing capacities of local players or installing new capacity together with local players, but also bringing foreign investments into the country to set up factories,” she says.

    On the services side, the challenge was reputational. Riyadh had to convince the world’s best builders that the Saudi market had fundamentally changed. While courting global giants, the NDD also had to address the fragmentation of the domestic market. 

    “We found that there were two primary obstacles in our portfolio: a high concentration of contractors on one hand, and underutilised capabilities of the local contractors on the other hand.”

    The challenge was moving the large number of small and medium-sized enterprises (SMEs) from the periphery to the core of the PIF’s portfolio of projects. 

    “In order to overcome these obstacles, a lot of focus was on attracting international contractors – those that were not working in the kingdom at the time – in order to expand and diversify the pool of contractors, while also putting a lot of effort into building up the capabilities within the local market,” Abdimomunova notes. 

    “The local contracting market is very fragmented. A large proportion of contractors are SMEs, and only the large Saudi contractors are predominantly known inside the kingdom. 

    “We put in place programmes to support the development of the medium-sized contractors and increase their visibility to our development companies,” she says.

    A lot of effort went into making sure contractors have access to financing
    Leyla Abdimomunova, National Development Division, PIF

    The NDD has also introduced practical upskilling and financial tools. “We put in place a few tools, working together with ecosystem partners. For example, the Prequalification Platform, which was launched and is being operated with the Saudi Contractors Authority, [and] contractor upskilling bootcamps that have been delivered by our development companies to provide contractors with the basic understanding needed to be able to bid for projects.

    “A lot of effort went into making sure contractors have access to financing,” Abdimomunova adds.

    Indeed, addressing the finances of the construction sector was another critical area for the NDD. 

    By moving beyond traditional methods and practices, it has introduced more flexible liquidity options for the industry. 

    “We launched the Contractor Financing Programme to expand access to financing and strengthen liquidity for contactors supporting Saudi Arabia’s development pipeline. 

    “In partnership with the National Infrastructure Fund, we introduced guarantee mechanisms to unlock additional bank lending capacity, alongside a new product for the region: surety bonds – as an insurance alternative to traditional bank guarantees,” says Abdimomunova. 

    “Since receiving regulatory approval last year, 34 surety bonds have already been issued, helping contractors participate more effectively in large-scale projects.”

    Adjusting priorities

    With the foundational work established, the NDD is now shifting its focus towards streamlining the experience for international companies and tackling the sector’s long-standing structural hurdles. 

    Looking ahead, the NDD intends to tackle the perennial problems of the industry – payment delays and productivity – to ensure that the transformation of the sector is permanent.

    “Going forwards, our work will go one level deeper, focusing on resolving structural challenges and strengthening the underlying enablers that support private sector participation. 

    “We are working closely with our partners across Saudi Arabia to ensure these improvements are sustainable, scalable and embedded not only within the PIF’s ecosystem, but across the broader national economy,” Abdimomunova concludes. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16160974/main.gif
    Colin Foreman
  • Contractor appointed for Morocco grand stadium rail station

    27 March 2026

    Moroccan construction firm Jet Contractors has won a contract to build a railway station at the Grand Stade Hassan II stadium in Benslimane, as part of the Kenitra-Marrakech high-speed rail project.

    The estimated $45m deal was awarded by the Moroccan National Railways Office (ONCF).

    The new station will serve the 115,000-seat Grand Stade Hassan II and will allow passengers to travel from Casablanca and Rabat in 20 minutes using the high-speed rail network.

    It is expected to handle around 12 million passengers a year. Construction of the station is scheduled for completion in 2028.

    Construction work on the main stadium started in June last year, when a joint venture of local contractors Travaux Generaux de Construction de Casablanca and Societe Generale des Travaux du Maroc was awarded a $320m contract for the next stage of works on the stadium. The venue will be one of the hosts for the 2030 Fifa World Cup.

    The stadium is being built on a 100-hectare site in the El-Mansouria area of Benslimane Province, 38 kilometres north of Casablanca.

    Morocco has been investing heavily in upgrading its infrastructure for the football World Cup, which it is co-hosting with Spain and Portugal.

    Morocco was effectively confirmed as a host country alongside Spain and Portugal in October 2023, after the group emerged as the sole bidder for the event. The official selection was announced in December last year.

    Along with building a stadium in Benslimane, the Moroccan government plans to revamp six existing stadiums in Agadir, Casablanca, Fez, Marrakech, Rabat and Tangier, and upgrade air, road and rail projects.

    Last year, Morocco’s transport and logistics minister unveiled a MD96bn ($9.5bn) investment plan to transform the country’s rail infrastructure by 2030.

    The announcement followed the award of about MD20bn-worth of contracts in November 2024 – mostly to local and Chinese firms – for civil works packages on the Marrakech-Kenitra high-speed rail line.

    The link will extend the Al-Boraq railway, a high-speed rail line between Tangier, Rabat and Casablanca. The line started operating in 2018 and was Africa’s first high-speed railway system.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16159882/main.jpg
    Yasir Iqbal
  • March 2026: Data drives regional projects

    27 March 2026

    Click here to download the PDF

    Includes: Commodity tracker | Top 10 global contractors | Brent spot price | Construction output

    MEED’s April 2026 report on Saudi Arabia includes:

    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16146608/main.gif
    MEED Editorial
  • Redefining the region’s arbitration landscape

    27 March 2026

     

    In the midst of increasing international investments and commercial transactions in the Middle East, arbitration remains a key component for the resolution of complex commercial disputes. Its effectiveness, however, depends not only on arbitral tribunals, but also on how national courts define their roles in oversight and enforcement.

    Recent trends in the Middle East have shown a more disciplined judicial approach with a clearer delineation of roles between courts and arbitral tribunals.

    Enforcement: a narrower approach

    Enforcement of foreign awards has been a key area of development.

    In the UAE, the Committee for the Unification of Federal and Local Judicial Principles ruled in Petition No. 1 of 2025 that an award shall be valid and enforceable provided the arbitrators sign only the final page. Referring to earlier Dubai Court of Cassation decisions (1), the Committee noted that procedural rules should not be used to defeat substantive rights and that legal procedures are meant to serve justice, not to create technical barriers. 

    The Dubai Court of Cassation adopted the same approach, confirming that arbitrators are not required to sign every page of the award and that issues already examined during arbitration, including signatory capacity, cannot be reopened at the enforcement stage. (2) 

    A similar emphasis on clarity can be seen in Saudi Arabia, where the Arbitration Law is currently under review, with the aim of modernising the legislative framework and enhancing predictability. The draft reform includes clearer provisions regarding court–tribunal interaction, permits courts to stay annulment proceedings or enforcement challenges for up to 60 days to enable tribunals to cure defects, and confirms that partial and interim awards have the authority of a final judgment and are directly enforceable.

    The ADGM and Dubai Courts have also introduced a system of reciprocal enforcement of ratified arbitral awards without the need to re-examine the underlying award.

    These developments therefore suggest a narrower approach and a reduced scope for expansive review at the enforcement stage.

    Recent trends have shown a more disciplined judicial approach with a clearer delineation of roles between courts and arbitral tribunals

    Judicial intervention: limits of review

    Courts have also refined the scope of annulment and supervisory review.

    The Abu Dhabi Court of Cassation clarified that annulment is not an appeal on the merits. Courts may not reweigh evidence or revisit a tribunal’s interpretation of the law. The grounds of annulment remain limited to the statutory grounds set out in the Federal Arbitration Law. (3)

    Egyptian courts likewise limit grounds for annulment to exhaustively listed statutory grounds, excluding reassessment of the merits.

    In the wider regional landscape, Morocco’s arbitration reform demonstrates a similar trajectory. The updated framework modernises the regime and clarifies the supportive role of domestic courts, reinforcing a structured balance between oversight and arbitral autonomy.

    Across these jurisdictions, review powers are increasingly exercised within defined legal parameters rather than through re-examination of arbitral reasoning.

    Public policy: a limited exception

    Public policy continues to be a ground for refusing enforcement, but recent decisions suggest it is applied with greater restraint. For instance, in the UAE, the imposition of compound interest is not considered to be in contravention of public policy. (4) At the DIFC level, the Court specified that the refusal on public policy grounds is subject to a high standard and is only justified where enforcement would “violate the forum state’s most basic notions of morality and justice”. (5)

    Saudi Arabia recognises sharia compliance and public policy as potential grounds for refusal. While rooted in the foundations of its legal system, they operate within defined statutory boundaries.

    Public policy therefore functions as a defined safeguard rather than a vehicle for broad review.

    Implications for cross-border activity

    Where enforcement review is confined to the grounds set out in the New York Convention and annulment remains limited to statutory bases, the interaction between tribunals and courts becomes more predictable. In disputes involving assets across multiple states, this delineation contributes to greater certainty at the post-award stage.

    The complementary role of the ICC

    Institutional practice operates alongside these developments.

    The ICC Court and its Secretariat ensure proceedings are conducted with care, independence, impartiality and integrity, in strict compliance with the Court’s obligations and duties under its rules. In doing so, the Court and the Secretariat monitor cases to safeguard due process and procedural fairness.

    One of the distinctive features of ICC arbitration and a cornerstone of the Rules is the Court’s scrutiny of all draft awards. Such a process serves to enhance the quality of the award, improve its general accuracy and persuasiveness; and maximise its legal effectiveness by identifying any defects that could be used in an attempt to have it set aside at the place of arbitration or resist its enforcement elsewhere. 

    In complex, multi-contract and multi-jurisdictional disputes, this scrutiny plays an important role in safeguarding enforceability across different jurisdictions. 

    As courts continue to define the limits of intervention, institutional discipline and judicial oversight increasingly operate side by side, reinforcing confidence in arbitration across the Middle East.

    1. Dubai Court of Cassation – Cases No. 109/2022 and No. 403/2020  2. Dubai Court of Cassation – Appeals Nos. 778 and 887 of 2025  3. Abu Dhabi Court of Cassation – Cases Nos. 1115/2024 and No. 166/2024  4. Dubai Court of Cassation – Appeals Nos. 778 and 887 of 2025  5. DIFC Court of Appeal’s decision dated 9 January 2025

    About the author
    Laetitia Rabbat is deputy counsel, ICC International Court of Arbitration, Abu Dhabi

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16145450/main.gif