The President of the Islamic Development Bank (IsDB), Dr. Muhammad Al Jasser, has stated that the global economy will require $15 trillion to finance long-term solutions and sustainable infrastructure projects.
Al Jasser stated that the world needs long-term solutions, and sustainable infrastructure projects, stressing that financing these projects requires a paradigm shift.
He also stated that estimates suggest a staggering $15 trillion infrastructure financing gap by 2040.
Speaking at a side event with the theme: “Leveraging Islamic Finance for Developing Sustainable and Resilient Infrastructure at the 2024 IsDB Group Annual Meetings,” Al Jasser, noted that the traditional public financing mechanisms fall short of meeting the growing demand for infrastructure projects.
He revealed that to address these challenges and mobilise sufficient funding for long-term investments, there is a need for a fresh approach, adding that this is where Islamic finance emerges as a ray of light.
He averred that the bank’s asset-based and risk-sharing principles perfectly align with the needs of least-developed countries for long-term infrastructure projects.
Al Jasser further explained that Islamic finance, with its emphasis on environmental responsibility, is perfectly positioned to support these endeavours.
He added that in the last five decades, the Islamic Development Bank has championed Islamic finance, noting that their strategy revolves around forging strong partnerships, fostering financial markets, and empowering the private sector.
“Robust governance is crucial to ensure effective risk mitigation within this system,” he added.
According to him, “Asset-based and risk-sharing financial products for infrastructure financing remain a niche area within the overall financial system. Multilateral development banks can play a vital role in developing the necessary financial infrastructure to attract private capital flows toward developing countries. A collective effort by MDBs can significantly boost investor confidence.”
“The Islamic Development Bank Group stands ready to lead the charge. Together, let us unlock the potential of Islamic finance and bridge the infrastructure financing gap. Let us build a future that is not only prosperous but also sustainable and equitable for all.
“We stand at a crossroads. COVID-19 exposed vulnerabilities in infrastructure, draining public resources and reversing development progress. One-third of least-developed countries are now worse off than pre-pandemic. Without immediate action, their development outlook could further deteriorate.
“Least-developed countries hold tremendous economic potential waiting to be unleashed. Boosting investments in social and physical infrastructure is key to reducing poverty, enhancing health and education, and creating jobs. It also strengthens resilience against future shocks, such as pandemics and climate change.”
In another development, the IsDB has approved approximately $418 million to fund new development projects in member countries, the bank said in a statement issued yesterday.
The board approved four projects during its 355th meeting that focus on socio-economic development and sustainability.
