The $4 Trillion paradox: Redirecting regional wealth toward regional growth |
ABU DHABI— Here’s a number worth sitting with: the Middle East and North Africa (MENA) region hosts over $4 trillion in sovereign wealth fund capital. And here’s the paradox that should keep us awake at night: most of that capital deploys outside the region. The money is here. The needs are here. Yet somehow, the two rarely meet.
This was the provocative framing that opened a workshop at the Milken Institute Middle East and Africa Summit in Abu Dhabi earlier this month. We gathered a diverse group—sovereign wealth funds, asset managers, development finance professionals, tech investors, infrastructure developers, and regional bankers—with a simple mandate: get specific. No more abstract discussions about “regional integration.” Name actual projects. Identify actual barriers. Commit to actual next steps.
There was broad widespread consensus that the time had come to move beyond the conflict, paralysis, and confusion about the recent present full of climate change, pandemics, wars, and roiling capital markets and work backwards from our not-too-distant future of how we can shape markets for sustained growth, job creation, and prosperity.
The conversation that followed was, by turns, sobering and hopeful—and ultimately persuaded me that we may be at an inflection point for regional infrastructure investment. In short, MENA’s best yields may be closer to home.
The Problem in Plain Terms
MENA sits in the bottom tier of world regions for intra-regional trade intensity—well below Europe, Asia, Latin America, and even Sub-Saharan Africa. The region is also a global laggard on job creation, with employment growth consistently too weak to absorb one of the fastest-growing labor forces in the world. The result: among the highest unemployment rates globally, with youth and women bearing the brunt.
What does infrastructure have to do with this? Everything. Cross-border energy grids, water systems, transportation corridors, and digital connectivity are the circulatory system of a functioning regional economy. Without them, trade remains expensive, jobs stay local, and the region’s remarkable human capital gets stranded.
The barriers our workshop identified were familiar but no less formidable: fragmented markets, inconsistent regulatory frameworks, inadequate financing structures for multi-country projects, and—perhaps most........