Funding The Future: Arab Banks Tackle Infrastructure Gaps Through PPPs

Amidst global and regional economic shifts, new trends have emerged for the Arab banking sector, particularly the Egyptian market.

Banks are now required to reshape their strategies by enhancing innovation, supporting digital transformation, expanding financial inclusion, and playing a pivotal role in promoting public-private partnerships (PPPs) as a fundamental means to drive sustainable development.

This serves the goals of comprehensive development and strengthens the future economies that the region’s governments seek to implement.

This direction comes against a backdrop of inflationary pressures, funding challenges, and a growing need for substantial investments in infrastructure, energy, public services, and digital transformation.

This necessitates effective participation from Arab banks to provide flexible and innovative financing solutions, as well as greater coordination between government entities and banks to ensure the success of projects that serve national strategies and plans.

The Union of Arab Banks, in its capacity as the entity that connects banks and financial institutions in Arab countries and discusses plans aimed at strengthening national economies, discussed yesterday, Monday, at a large conference titled “Public-Private Partnerships for Financing the Economy.”

The outcome was that Arab and Egyptian banks are confidently moving towards playing a larger role in driving economic growth by supporting public-private partnerships.

Innovative Financial Adoption
With the continued adoption of innovative financing policies and digital transformation, banks will be able to face challenges, enhance project sustainability, and support national economies in achieving their development goals by 2030.

This is especially true as public-private partnerships constitute one of the effective tools for accelerating the implementation of major projects without placing additional burdens on government budgets.

Participants in the conference activities unanimously agreed that Arab banks, led by Egyptian banks, have become key partners in financing partnership projects by providing credit facilities, arranging syndicated loans, and managing financial risks. Furthermore, they are moving towards developing financial products specifically designed to support partnership projects, with a focus on infrastructure, renewable energy, transportation, and healthcare sectors, in line with national development goals.

They explained that the strategies of Arab banks are based on several mechanisms to enhance their role in partnership projects, most notably the innovation of specialized financing tools such as green bonds, sukuk, and development loans.

They also aim to strengthen cooperation with international financial institutions to reduce the cost of financing and increase the ability of projects to access global markets, develop risk management capabilities to minimize risks associated with long-term projects, and adopt environmental, social, and governance (ESG) standards as a key condition in financing future projects.

Despite the significant opportunities mentioned by the conference participants, banks face some challenges, such as a lack of specialized expertise in financing complex partnership projects and higher long-term financing risks compared to traditional financing, especially with the diversification of economies and the entry of new sectors that require flexible financing mechanisms, such as technology and energy projects.

PPPs are Crucial
In this regard, Tarek ElKholy, Deputy Governor of the Central Bank of Egypt (CBE), stated that public-private partnerships contribute to a balanced risk sharing and help alleviate pressure on state budgets.

He added that experiences have proven the ability of public-private partnerships to bring about a qualitative shift in the fields of infrastructure, education, healthcare, transportation, small and medium-sized enterprises, which are considered the engine of growth and development.

He pointed out that the Arab banking sector plays an important role in supporting partnerships by innovating many tools that support these projects, especially green and climate finance, stressing the need to adopt an ambitious strategy to achieve sustainable development goals and provide innovative financial solutions.

He explained that emerging countries face challenges in attracting more foreign investments, and partnerships are among the most important tools to attract these investments, emphasizing the need to establish institutional and legal frameworks to support public-private partnerships.

Living in Shifting World
For his part, Mohamed Eletreby, Chairperson of the Union of Arab Banks and CEO of the National Bank of Egypt and the Federation of Egyptian Banks, said that the Arab region today lives in a turbulent world dominated by ambiguity and uncertainty.

This situation is reflected in most Arab countries, where countries and peoples are directly affected and are going through a critical period, especially as the rules of the international game are being played out on Arab lands, and the threat has become a strategic one, encompassing economic, social, and security aspects.

Eletreby added that in the midst of these exceptional circumstances, it is necessary to search for solutions that alleviate the suffering of our societies and address our economic and financial crises as a starting point for driving development and achieving economic and social goals.

He explained that the economic challenges we face require innovative solutions, and there is no doubt that public-private partnerships constitute a fundamental pillar for driving growth and achieving a balance between effective investment and high-quality services.

Eletreby also pointed out that this partnership is not merely an option but a necessity dictated by the need for sustainable funding resources and the deployment of expertise and competencies to ensure the efficient and effective implementation of major projects.

He noted that Arab countries have a golden opportunity to enhance the business environment and provide an attractive investment climate through clear legal and regulatory frameworks that incentivize private sector participation in infrastructure projects, basic services, and other vital sectors.

He emphasized that global experiences have proven that successful public-private partnerships contribute to achieving economic development, creating job opportunities, and improving living standards, noting that Arab experiences in general, and Egyptian experiences in particular, in adopting public-private partnerships have constituted a strategic tool for financing the economy through their contribution to financing infrastructure and public service projects.

These experiences have demonstrated the effectiveness of this partnership in financing and implementing major economic and development projects.

The Chairperson of the Union of Arab Banks said: “For example, the New Administrative Capital project in the Arab Republic of Egypt relies heavily on private sector investments in building infrastructure and vital facilities.

There is also the power stations project in Beni Suef, which was implemented in partnership with Siemens, greatly enhancing electricity production, as well as the monorail project that connects the Administrative Capital with Greater Cairo, implemented in partnership with international companies such as Alstom.”

He noted that this Egyptian model shows that public-private partnerships can be a powerful tool for achieving sustainable development if implemented correctly, especially as they are characterized by their ability to provide the necessary funding for infrastructure and public service projects without governments bearing the full financial burdens, thus reducing pressure on the public budget.

He also stated that they contribute to improving the quality of services by leveraging the expertise and efficiency of the private sector in implementing and operating projects more effectively, in addition to contributing to stimulating local and foreign investment, as this partnership provides an attractive and safe investment environment for investors, encouraging the flow of capital into the economy, according to El-Etreby.

At the conclusion of his speech, Eletreby announced the continuation of the Union’s efforts in cooperation with the Iraqi banking sector, represented by the Iraqi Private Banks League and the Central Bank of Iraq, where the Union will hold its conference on: Combating Money Laundering and Terrorism Financing – its second edition, on May 28 and 29, 2025, in Baghdad, Republic of Iraq.

In the same context, Ashraf El-Kady, CEO and Managing Director of the United Bank, stressed the importance of strengthening public-private partnerships to open new horizons for development finance in the Arab and regional area.

Arab Action Mechanisms are Needed
He added that Arab sustainable development issues are considered one of the main challenges in the region, which requires developing joint Arab action mechanisms and adopting the regional integration model, especially in light of the close link between economic development requirements and the need to implement giant regional projects in many fields, particularly those related to improving climatic conditions with the aim of implementing comprehensive development plans.

El-Kady praised the efforts of the Egyptian state, Arab countries, and the Central Bank of Egypt in coordination with Arab central banks to achieve sustainable development goals through the real development of human and scientific capacities, which necessitates focusing efforts in the fields of health and education and focusing on the transformation to a knowledge society and the development of scientific research and innovation fields.

In a different context, Mohamed Ali, CEO of Abu Dhabi Islamic Bank Egypt, touched on Islamic banking, praising the state’s enactment of a law to issue sovereign sukuk two years ago. The state issued its first sovereign sukuk worth $1.5 billion in 2023, and a new offering is expected in the near future.

He stressed the need to issue sukuk in local currency in the coming months to support the work of Islamic banks in the Egyptian market, which the Ministry of Finance is currently working on.

Mohamed Ali pointed out that Islamic banking enjoys increasing attention in Egypt, with four fully Islamic banks operating, noting that Abu Dhabi Islamic Bank currently has 73 branches, with a plan to reach 80 branches by the end of 2025.

He indicated that his bank focused on developing banking products and services both directly and through subsidiaries, with about 5 companies established in the non-banking financial sector serving large segments of citizens.

He confirmed that Abu Dhabi Islamic Bank became the largest Islamic bank in Egypt during 2024, in a market that includes about 300 Islamic branches.
He revealed that the return on equity at the bank reached 47% last year, noting that part of the bank’s profits was directed to establishing the Abu Dhabi Islamic Bank Charity Foundation.

He noted that Abu Dhabi Islamic Bank has become among the top 10 operating banks in the local market, pointing out that the bank has an integrated financial system that includes electronic payment solutions and consumer finance.