The Construction Sector in the Arab World: Strategic Vision and Union Efforts in Reconstruction Projects

The construction sector is one of the most vital and key sectors in the national economies of Arab countries. It is considered one of the most important sectors that directly and indirectly supports economic growth. It is also a labor-intensive sector and acts as a primary driver for the growth of other economic sectors, influencing more than 90 industries such as cement, steel, gypsum, paints, ceramics, wood industries, and more. It has strong linkages with economic sectors both as input and output.

Additionally, it significantly contributes to the Gross Domestic Product (GDP) of Arab countries. For instance, it contributes up to 8% of Egypt’s GDP, equivalent to approximately 600 billion Egyptian pounds.

Therefore, investing in and promoting the Arab construction sector would greatly contribute to achieving economic growth, developing other economic sectors, and providing job opportunities. This highlights the importance of prioritizing this sector and exploring available opportunities to maximize its potential, especially since Arab countries are rich in major projects and reconstruction efforts.

Supporting Arab Contractors and Their Role in Reconstruction

Supporting and empowering Arab contractors, granting them preferential treatment, and enhancing their competitiveness and skills at all levels—especially in reconstruction projects in Arab countries affected by internal conflicts—are among the top priorities and core objectives of the Arab Contractors Union. Reconstruction projects are major initiatives worth billions of dollars.

Winning such projects for Arab contractors would help safeguard the national, social, and economic security of Arab nations, create job opportunities across various specializations, eliminate unemployment amid rapid population growth, increase local production rates, boost liquidity, and retain dollar resources within Arab countries instead of spending them on foreign companies. This also revitalizes the local construction materials industries. Ultimately, it strengthens Arab contractors’ competitiveness against well-funded foreign companies, and maximizes the use of local technical and human resources to efficiently handle development and reconstruction tasks.

Due to the magnitude of reconstruction projects in conflict-affected Arab countries, which attract foreign firms, the Union has taken the following steps:

1. Preferential Treatment Proposal

On December 24, 2019, the Union proposed granting preferential treatment to Arab contractors for projects funded by Arab governments and financing institutions. The proposal was approved by the Arab Housing Ministers Council and circulated among Arab states. Although it has not been implemented, the Union continues to coordinate with the Arab League and other relevant entities to push for its adoption.

2. Unified Contractor Classification System

The Union prepared a unified classification system for contractors in Arab countries, despite major challenges with harmonizing legislation. This system would provide a comprehensive database of qualified contractors for major Arab projects, especially reconstruction. However, it has not yet been implemented.

3. Project Data Collection

On March 22, 2022, the Union requested member states to provide details about reconstruction projects in their countries—including estimated costs, types of work, locations, requirements, and applicable laws. This would help create a central database accessible via the Union’s website. To date, no data has been submitted.

4. Diplomatic Visits and Advocacy

The Union president regularly visits Arab countries to coordinate with officials and encourage forming a strong Arab regional bloc in construction. He also urges local unions and contractor associations to advocate for allocating reconstruction project shares to local and regional Arab contractors, with local partners from each country.

5. Workforce Training and Knowledge Exchange

The Union supports Arab construction organizations in training human resources and promoting knowledge exchange through workshops and training programs, especially as reconstruction projects require skilled labor and modern construction technologies.

6. National Advocacy

During the March 22, 2022 General Assembly meeting, the Union urged all national associations to advocate for the allocation of reconstruction shares exclusively to Arab contractors with local partners and to remove barriers related to labor, materials, and capital transfer.

7. Preferential Access in Member States

In April 2024, during its General Assembly in Riyadh, the Union approved a proposal for each national association to grant preferential access to Arab contractors from other countries, provided a local partner is involved. This has not been implemented yet.

8. Strategic Alliances

The Union has facilitated multiple cooperation agreements between Arab contractor organizations, such as:

• Egypt-Iraq Contractors Union

• Egypt-Libya Construction Syndicate

• Egypt-Saudi Contractors Authority

• Iraq-Jordan Construction Syndicate

• Iraq-Saudi Contractors Authority

These aim to create partnerships for major reconstruction projects and give preference to these alliances.

9. Committee to Support War-Affected Contractors

In September 2024, the Union’s Board recommended forming a committee to monitor and support contractors in war-affected Arab countries. Each country’s union would report on struggling local companies and how they can be supported. Due to ongoing conflicts, no reports have been submitted or meetings held yet.

10. Cooperation with Financing Institutions

The Union is working to boost the developmental and financial role of Arab funds. It has held discussions with several institutions to secure support and guarantees for Arab contractors, especially in reconstruction:

• Participated in Islamic Development Bank (IsDB) annual seminars

• Participated in a MENA financing workshop organized by Egypt’s Ministry of Finance

• Held meetings with the Arab Bank for Economic Development in Africa

• Participated in the “Builders of Egypt” forum on September 22, 2024

• Met with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) to discuss financing and risk coverage

Summary and Recommendations

These efforts by the Arab Contractors Union aim to maximize the benefits of Arab companies’ expertise, generate employment, reduce unemployment, strengthen Arab economies, and support the development of vital sectors and local industries.

To ensure the mutual interests of Arab nations are met through reconstruction and sustainable development with Arab capabilities, the Union recommends:

• Holding conferences in affected Arab countries to assess reconstruction needs and plan execution.

• Developing strategies to increase local companies’ project shares, possibly by allocating exclusive portions to Arab contractors.

• Removing obstacles such as differing regulations and movement restrictions on people, equipment, and money.

• Facilitating access to locally produced materials and offering financial incentives.

• Addressing security risks through intergovernmental agreements and ensuring contractor rights in unstable regions.

• Creating a comprehensive reconstruction project database across sectors and countries.

• Encouraging Arab financing institutions to support reconstruction funding.

• Supporting the Union’s push for preferential treatment of Arab contractors over foreign firms.

• Establishing economic entities to help affected Arab countries recover.

Case Study: Rebuilding Gaza

Egypt proposed an alternative to the U.S. plan advocating for the displacement of Palestinians from Gaza. Instead, Egypt called for reconstruction while keeping Palestinians in their land, supporting both humanitarian and political goals, including preserving the two-state solution.

Reconstruction financing requires substantial Arab and Islamic coordination, possibly through creating a joint Arab-Islamic-European fund. Egypt has pledged to present a comprehensive reconstruction plan, ensuring residents remain involved in the rebuilding, as 70% of construction labor needs are non-specialized and can be sourced locally.

Experts also recommend using modern prefabricated and 3D printing technologies to speed up rebuilding. For instance, a four-story building can be completed in just one week using modern methods, which are 10 times stronger and 90% faster than traditional techniques. These technologies also reduce material use and construction time.

Egypt has factories capable of producing prefabricated buildings, particularly in the Suez Canal Economic Zone, which could be utilized for rapid reconstruction.

Therefore, displacing the population to rebuild is illogical, as the local workforce can contribute significantly. Between 60–70% of the labor needed is unskilled, ideal for rubble removal and recycling. Even skilled labor exists locally, and residents are best acquainted with their land and environment.