Delivering impactful infrastructure

3 April 2024

Commentary
Colin Foreman
Editor

Read the April 2024 issue of MEED Business Review

The Middle East has many examples of the positive impact of infrastructure development on economic growth.

The biggest and best example is arguably the Suez Canal. The waterway, which opened in 1869, connects Europe and Asia by sea without passing around Africa and the Cape of Good Hope.

Nationalised in 1956, the canal remains a key source of revenue for Egypt, earning $9.4bn in the 2022/2023 financial year.

The Suez Canal revenues have been threatened recently by Houthi attacks on ships passing through the Red Sea towards the Suez Canal. This has led shipping lines to avoid the Red Sea and take on the extra time and cost of sailing around Africa. 

The Houthi attacks have also exposed a key weakness in Saudi Arabia’s logistics ambitions and re-emphasised the need for the Saudi Landbridge rail link, allowing for the fast and efficient transfer of goods between the kingdom’s east and west coasts.

In Dubai, tourism and real estate infrastructure investment has also paid dividends. In March, local developer Emaar announced that Dubai Mall was the most visited place on earth in 2023, with 105 million visitors.

Smaller infrastructure projects can have a significant impact too. In Oman, plans to develop a year-round destination on top of the 2,500-metre-tall Jebel Akhdar will be supported by a new road to make the mountain easier to access from the heavily populated Batinah coastline and the UAE.

First, the project needs to be bankable, and second, it must be delivered efficiently

The Oman project is just a small part of a global infrastructure gap that consultancy firm McKinsey values at $15tn. There are many challenges ahead in delivering these projects, but they can be summarised in two clear points: First, the project needs to be bankable, and second, it must be delivered efficiently.

Experience has shown that identifying these challenges can be easier than resolving them. The region has its fair share of failed projects, but the Middle East has shown with projects such as the Suez Canal and Dubai Mall that world-class impactful infrastructure can be successfully delivered.


Bridging the infrastructure capacity gap

Investment, technology and governance must all come together to deliver the Mena region’s $2-2.5tn need for new infrastructure through to 2050

 

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Colin Foreman
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