Traditional public financing mechanisms fall short of meeting growing demand for infrastructure projects, Muhammad Al Jasser says
The world needs long-term solutions and sustainable infrastructure projects, as global infrastructure financing gap is estimated to be around $15 trillion by 2040, the head of the Islamic Development Bank (IsDB) Group said.
Financing these sustainable infrastructure projects requires a paradigm shift, Muhammad Al Jasser said at the bank’s annual meeting and golden jubilee event in Saudi Arabia’s capital Riyadh on Saturday.
“Traditional public financing mechanisms fall short of meeting the growing demand for infrastructure projects,” he said, adding that to address these challenges and mobilize sufficient funding for long-term investments, the world needs a fresh approach.
“This is where Islamic finance emerges as a ray of light. Its asset-based and risk-sharing principles perfectly align with the needs of least-developed countries for long-term infrastructure projects,” Al Jasser said.
“Furthermore, Islamic finance,with its emphasis on environmental responsibility, is perfectly positioned to support these endeavors,” he added.
He recalled that for the last five decades, the IsDB has championed Islamic finance. “Our strategy revolves around forging strong partnerships, fostering financial markets, and empowering the private sector.”
He said that the world stands at a crossroads; the COVID-19 pandemic 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,” Al Jasser said.
He added that 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,” he said, adding: “It also strengthens resilience against future shocks, such as pandemics and climate change.”
Source: aa