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 critically—insufficient capacity to structure bankable regional deals and bring them to scale. 

Where the Energy Comes From

What surprised me was the depth of innovation already happening at the sectoral level. In water security—either through drip irrigation, desalination, or wastewater treatment and recycling, we heard about “water as a service” models—think of it as buying an airline ticket rather than building an airport—that are making large-scale irrigation investment viable across borders. In energy transition, we learned about distributed energy resources (including energy and carbon storage) infrastructure now serving tens of millions of people across fifteen African countries blending on-grid, off-grid, and mini-grid technology solutions, built through cross-regional partnerships that would have seemed impossible a decade ago.

Perhaps most striking was the discussion of ocean acidification and environmental infrastructure. One approach being piloted in the Eastern Mediterranean identifies parties at risk from environmental project failure—insurers, for instance, facing billions in future liability—and converts that risk into concessional capital layers. The insight is elegant: proactive institutional investment by insurance companies is cheaper than paying future claims.

Tourism infrastructure presents a distinctive opportunity for joint development. Unlike energy or water projects that require complex technical coordination, heritage tourism builds on assets that already span borders—Abraham’s journey (and subsequent faith tradition paths of Jesus and the Prophet Mohammed), shared sacred (and also adjacent to ecotourismand recreational) sites, archaeological corridors tracing Paleolithic and Neolithic human migration. With cultural heritage comprising 40% of global tourism and generating multiplier effects throughout local economies, cooperation among national tourism authorities and the hospitality industry offers both immediate employment and longer-term dividends in regional understanding.

The Jordan Gateway Project presented a pivotal node in MENA’s emerging connectivity architecture. Operating both as a Free Zone and Qualified Industrial Zone and with the first cross-border bridge built since the British Mandate, it will allow goods to move freely and ultimately reduce transit times by 40% and logistics costs by 30% for supply chains from Mumbai to Marseille.

On transportation and trade, the India-Middle East-Europe Corridor loomed large in our discussions. The opportunity is immense, but the critical missing links are smaller than you’d think—border crossing expansions, multimodal connectivity, digital customs harmonization. These aren’t always glamorous investments, but they’re the difference between a corridor on paper and one that really moves goods, services, and people throughout the region.

The Capital Conversation Has Changed

Here’s what gave me real hope: the capital conversation has fundamentally shifted. We heard from major asset managers that there is effectively insatiable demand for investment-grade private credit in energy transition and infrastructure. One firm has already exceeded its multi-year commitments and is on track to double them. The constraint, they emphasized, is not capital—it’s investible deals at the right risk-adjusted return.

This framing matters because it changes the work. If capital is abundant but deals are scarce, the priority becomes project acceleration and structuring, not capital mobilization per se. Development finance professionals at the workshop offered candid self-criticism: mobilization ratios across bi-lateral and multilateral development finance institutions are roughly one-to-one, falling far short of the “billions to trillions” ambitions that have animated the field. But there’s new precision emerging in blended finance and structured credit—specifically, the ability to triangulate to exact credit ratings that match specific investor pools, rather than hoping generic blended structures will attract generic capital.

The Guarantee structures being developed are becoming more sophisticated too. Triple-B rated guarantees, we learned, can provide ten times leverage against capital, and—critically—investors remain engaged with underlying projects rather than adopting a “set it and forget it” mentality. Taking a page out of the corporate finance revolution of the 80s and 90s playbook that became the fastest accelerator for aggregate growth in the advanced economies led to platforms in this century that could work for MENA regional economies enabling more adequate macroeconomic growth that could be shared more equally.

The Work Ahead

The workshop surfaced a crucial methodological insight: start from capital allocator requirements—rating, tenor, return—and work backward to project structure. Don’t design projects and hope capital will materialize. Reverse-engineer from what investors actually need to meet their long-term liabilities that align them with project development requirements.

Scale matters in this equation. De-risking mechanisms of ten or fifty million dollars won’t move large institutional capital seeking hundred-million-dollar tickets. Structures must be proportionate to the pools they’re targeting. This argues for project aggregation around standardized key performance metrics that can support structured credit solutions.

No one in the room was naive about political prerequisites but agreed that they should not be used as excuses not to advance with regional capital market cooperation.  Multiple participants emphasized that project viability ultimately depends on political stability, aligned sovereign, semi-sovereign, and sub-sovereign issuer interests, and governance frameworks that transcend bilateral arrangements. But here’s the thing: the causality may run both ways. Projects that create jobs and build constituencies for regional cooperation can themselves become sources of political stability—assets that no one can afford to undermine because too many livelihoods depend on them.

A Credible Pathway

We left Abu Dhabi with commitments to reconvene action groups focused on specific projects, regulatory reform advocacy, and capacity building for project acceleration. A Financial Innovation Lab planned for 2026 will work to operationalize project acceleration financing structures that emerged from our discussions.

I’ve been doing this work in this region for two decades, and I’ve learned to be skeptical of summit optimism. But something felt different in that room. The convergence of serious capital appetite, more sophisticated development finance instruments, innovative guarantee structures, and genuine regional sovereign commitment now points to a credible pathway—from concept to lab to market to scale.

The $4 trillion paradox doesn’t have to be permanent. By building long-term finance for integrative cross boundary infrastructure, trade, business formation, and technology, we can create durable assets grounded in shared economic interests—the kind of assets that transform regional neighbors from competitors and enemies into partners and friends, and transform capital from a number in a sovereign wealth fund’s portfolio into prosperity that people can actually feel.