World Bank to set up Arab infrastructure fund

* World Bank moves to set up Arab infrastructure fund

* Initial investment of $1 billion sought

* Unrest dampens investor appetite to fund projects

WASHINGTON, April 5 (Reuters) – Global development banks
said on Tuesday they were looking to raise up to $1 billion to
leverage more funding for rail, road, electricity and other
infrastructure projects in Arab countries under pressure to
deliver better services to their people.

In a joint statement, the World Bank and Islamic
Development Bank said they would mobilize support for a new
Arab Financing Facility for Infrastructure to bolster economic
growth and meet the needs of the region’s growing population.

Protests across the Middle East and North Africa against
corrupt political systems that ignored the needs of the masses
have prompted a new focus on public investments that create
jobs and aid economies.

Shamshad Akhtar, vice president for the Middle East and
North Africa at the World Bank, said government budgets were
under pressure and the private sector perceives risk in the
political upheavals so it is harder to finance the projects.

“The Arab spring has demonstrated that people want better
public services and a cleaner urban environment and that means
more efficient, better-designed infrastructure services,”
Akhtar told a two-day conference in Jordan in remarks released
on Tuesday.

“This is where the IFIs (international financial
institutions) can step in to help with financing and mitigating
the risks faced by private investors,” she added.

The development banks estimated that half the population
across the Arab world does not have proper access to water. The
region needs to invest somewhere between $75 billion to $100
billion a year to sustain current growth rates.

As the population grows, electricity consumption also is
set to rise over the next few years and will require
investments of $30 billion a year to meet demand, they said.

Birama Sidibe, vice president of operations at the Islamic
Development Bank, said the financing facility would initially
focus on a few projects that will act as a catalyst for further
investments.

“Countries interested in supporting AFFI have started a
dialogue with the World Bank and Islamic Development Bank to
identify and develop priority projects for AFFI financing,” he
said.

Sidibe said the banks are in the advanced stages of
recruiting a fund manager to oversee the investment fund being
created.
(Reporting by Lesley Wroughton; editing by Carol Bishopric)

World Bank to set up Arab infrastructure fund