The Middle East and Africa have been embroiled in zero-sum conflicts exhausting most development resources and scaring investment funds away from the region.  The area has faced – and is still facing - the following difficult challenges: 

• The youth bubble that exploded in 2007-2009 simultaneously with the advent of the global financial crisis was a major driver for conflict and unrest in many countries, and it will be recurring again in 2030-2035. 

• Most countries in the region (even those not engaged in conflict) had to divert their resources away from sustainable development and use them for security, stabilization, and short-term appeasement of their young populations. 

• Many countries had to increasingly depend on debt to resolve their short-term and long-term financial woes. 

• FDI and intra-regional trade suffered and public investment in urban infrastructure was reduced to a minimum. 

Cities are at the heart of the struggle.  Here is why:

• War and conflict have destroyed many cities and disrupted value chains and economic flows. 

• Refugees and migrants – who have made the region the largest single recipient and source of migrants in the world - have moved to urban areas within and without their national borders adding additional pressure on already under-serviced and overcrowded cities. 

• Cities are being transformed and their centralized governance systems are no longer able to cope with their problems (economic, social, and ecologic). 

• Cities are no longer operating as singular administrative units. They are physically expanding and transforming into continuous urban corridors and conurbations. 

• Their residents are no longer coherent culturally the ability of national institutions to manage them is being challenged. 

Below is a short list for some of the critical limitations for any serious efforts to intervene and engage in urban scale development projects, be it in cities devastated by conflict or those struggling to keep up with the risks of the new urban realities of the next decade.

• The issue of reconstruction in the region is not one of physical renewal and upgrading of devastated and obsolete physical assets alone. A regional approach to reconstruction and development in the region will have to undertake challenges of different kind than anything that the region has witnessed so far.

• The challenges of tomorrow have to be addressed on city level.  Such as: 

  • Accommodating an increasingly radicalized and disenfranchised youth.

  • Dealing with the break-down of traditional governance systems.

  • Investing the very limited local resources strategically.

  • Overcoming the inability of formal economic systems to absorb labor. 

  • Regulating the increasing informalization of the economy and the urban space. 

• These challenges are taking place asymmetrically even within the same country creating great disparities.

• Public and private investments into the new urban realities of the region still suffer from a complete disconnect between top down public investments and bottom up private investments. 

• Data and knowledge used by public authorities is not informed by the needs of the private sector, and private sector operators have difficulty accessing public information and knowledge to assess their project and explore their feasibility. 

• Most classical feasibility studies for public and private investments in the urban environment are lacking critical data and deep understanding of the context in which they are planning to operate. 

• Even when local data is available, the broader impacts and competitive advantages on a regional level are hard to assess. 

• The ability to assess risks and model scenarios is extremely scarce. Opportunity costs are especially hard to assess properly.

There is a real threat coming up within 10-15 years as the next youth bulge is expected to bring about 20-25 year old young people to the streets again in a replication of the 2010 scenarios only on a much larger scale since the ability of the cities and states to absorb that wave has not been sufficiently replenished after the Arab Spring of 2011. 

Over the last 10 years conflicts have consumed about 9% yearly of the region’s GDP, and it is likely to take a higher toll over the next few years. To reverse the trend, the region will have to generate additional investments of about USD 1 trillion per year over the next ten years to usher real prospects for peace, prosperity and reconstruction. This roughly means doubling the current rates of investments.  Assuring that these investments are well positioned to leverage real multipliers in the local and regional economy, creating development synergies and ensuring scalability require an innovative transformation of the relationship between public and private investments. Communities need to be brought on board into the PPP formulas, as a half of that additional investment package can only be leveraged by individual and communal resources.