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The 15-02-2017 : Trends in development finance for water resources in MENA region

15/02/2017

 

Trends in development finance
for water resources in MENA region

Considering how water is scarce the MENA/Arab region, one would believe that water resources in the region would be the focus of development finance in the region.

Based on the OECD’s definition, development finance refers to official development assistance (ODA) (i.e. concessional grants and loans) and other official flows (OOF) that mostly include non-concessional loans.

The Overseas Development Institute (ODI) has developed in December 2016 a policy brief that assessed the trends of development finance for water resources in the MENA region.
A key policy recommendation was formulated to the donor governments in order to improve the effectiveness of finance for water resources.
The key policy recommendation concerns maintaining support for water resources to sustain development gains in the future.
 

Between 2002 and 2006, the share of development finance (ODA) directed to water resources was higher in the MENA region (1.8%) than any other region in Africa or Asia. That is largely due to the reconstruction of Iraqi water infrastructure.

However, in 2013, it had fallen to 1.2% in the MENA region while it has doubled in Sub-Saharan Africa (SSA), South Central Asia (SCA) and Far East Asia (FEA).


 

By contrast of ODA’s decline in the MENA region, the OOF have surprisingly increased in volume and significance between 2003 and 2013, which is mainly the product of increased World Bank lending to Morocco. Besides, it has been clearly noticed that development finance for water resources has diminished relative to other sectors.

Across MENA countries, the funding is highly concentrated. In 2010-2014, 80% of funding was concentrated in five countries: Morocco (39%), Tunisia (11%), Jordan (11%), Egypt (10%) and Iraq (9%). Although 80% of the funding is allocated to these 5 countries, 4 of them have seen their water resources decline in the 2002-2014 period.

The figure below shows the total disbursements for water resources in some MENA countries between 2002-2014.


 

As for the sources of finance of water resources in the region, the United States have been the largest donor from 2002 to 2014. Nonetheless, other donors disbursed relatively small but significant amounts (World Bank, African Development Band, Germany and the EU). New sources of financing have also emerged such as Korea and the UAE, including the Arab Fund for Economic and Social Development (AFESD) and the OPEC Fund for International Development (OFID).

 
 

« Development finance for water resources, Trends in the Middle East and North Africa, Overseas Development Institute (ODI) Report, Guy Jobbins, Sherine El Taraboulsi-McCarthy and Florence Pichon, December 2016 »

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