“We have already achieved an intra-trade rate of 17 percent, which is close to the 20 percent target set by the extraordinary Islamic summit held in Makkah in 2005 at the initiative of Custodian of the Two Holy Mosques King Abdullah,” the IDB chief said.
Addressing a donors’ meeting hosted by the IDB to discuss the program for regional cross border trade facilitation and infrastructure projects for Mashreq countries, Ali highlighted the bank’s role in boosting trade between the OIC member countries.
He said the IDB was targeting an intra-trade rate of 30 percent for the 57 member countries. “The Standing Committee for Economic and Commercial Cooperation (COMCEC) will set a new goal to raise the level of intra-trade to 30 percent,” he added.
Since 1975 the IDB has allocated more than $42 billion to finance trade deals between OIC countries. “This was done through intensive programs set by the bank to finance exports and imports through the International Islamic Trade Finance Corporation (ITFC) to increase the size of trade between member states as well as with other countries,” he pointed out.
Shamshad Akhtar, vice president of World Bank for Middle East and North Africa Region, said persistent unemployment among the youth, low competitiveness and productivity, and low quality of education and skills were affecting Arab economies.
The meeting looked into prospects of financing specific projects over the next five years as part of a broader 15-year program based on the recommendations of a recent World Bank study. The Mashreq region covers Egypt, Syria, Jordan, Lebanon and Palestine.
“The target projects are designed to reduce trade impediments and address major transport infrastructure constraints (both physical and non-physical barriers),” the IDB said. The World Bank has estimated that, if fully implemented, by 2020 the program could increase the total non-oil international trade of Mashreq countries by up to $4 billion annually, and bring intra-Mashreq trade up to 22 percent of the total (compared to the current 17 percent).
It is estimated that the proposed projects during the next five years would cost about $300 million per year, and that the overall program would cost about $6 billion over 15 years. These amounts are beyond the capacity of any single country or investment institution and will need to be addressed collectively.
The program will create a pipeline of projects suitable for investment under the new Arab Financing Facility for Infrastructure that was recently launched by the World Bank Group and the Islamic Development Bank. The facility will also provide a suitable framework for coordinating investments in this area.
