Baku: The annual infrastructure financing gap in member countries of the Organization of Islamic Cooperation (OIC) amounts to approximately $290 billion, Ahmed Rostom, Egypt's Minister of Planning and Economic Development, said during the session titled 'Public-Private Partnerships (PPP) for Cross-Border Infrastructure for Regional Connectivity,' held within the framework of the annual meetings of the Islamic Development Bank Group (IsDB) in Baku, APA reports.
According to Azeri-Press News Agency, the minister emphasized that regional integration and cross-border connectivity are essential: "It is only through joint action that we can achieve our goals of accelerating economic growth, strengthening resilience, expanding trade and increasing prosperity." Rostom noted that global infrastructure demand is estimated at approximately $6.9 trillion annually through 2030, with a global annual financing gap of $2.5-3 trillion. In OIC countries, this gap stands at approximately $290 billion, with 53% related to road infrastructure and 38% to telecommunications, electricity, and water sectors.
Rostom highlighted the need for innovative financing mechanisms to bridge this gap, stating, "Public-private partnership projects are more complex than national projects. Cross-border PPP projects involve different legal systems, political environments, and interests, which creates additional risks for their implementation." He identified the absence of unified PPP standards across different countries as a primary challenge, with issues such as the lack of standardized rules, lengthy negotiation processes, high transaction costs, and misaligned objectives complicating project implementation.
The minister stressed that multilateral development banks can address these challenges effectively. "The Islamic Development Bank Group and other multilateral financial institutions can help mitigate the risks of cross-border PPP projects through guarantee mechanisms, trade finance instruments, and advisory services," he said.
Rostom further added that Islamic finance and blended financing mechanisms offer ways to reduce risks at the initial stage and enhance the investment attractiveness of projects. He cited the Trans-Saharan Highway initiative and other regional transport and energy corridors as successful examples of enabling landlocked countries to integrate into global markets.
The minister urged session participants to enhance cooperation in harmonizing legal and regulatory frameworks for developing cross-border PPP projects. "These discussions must go beyond a theoretical exchange of views and be transformed into concrete projects," he emphasized.