10 positive economic outcomes for developing countries in 2025

10 positive economic outcomes for developing countries in 2025

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10 positive economic outcomes for developing countries in 2025

In BROOKINGS on January 6, 2026


  • From a growing global middle class to expanding trade and faster, market-driven clean energy adoption, 2025 delivered tangible progress for developing economies despite a difficult global backdrop.
  • Inflation and food price increases are being held in check, and advances in digital public infrastructure, nutrition, and weather forecasting improved everyday resilience for hundreds of millions of people.
  • These gains show that, even amid crisis, targeted investments and multilateral cooperation can still move the needle on sustainable development.

2025 was not a good year for emerging markets and developing economies (EMDEs). It saw a new normal emerge of a world with slow growth, trade wars, overwhelming debt service burdens, collapsing aid, global warming, natural disasters, and conflict.

Amid this litany of woes, it is easy to forget that there were also positive developments. In this commentary, I focus on areas of significant year-over-year progress in EMDEs. This progress may have been slower than potential, but it is nevertheless worth celebrating.

10 positive economic outcomes in EMDEs in 2025

  1. A growing middle class. In spite of slowing growth, about 108 million additional citizens in EMDEs were able to join the ranks of the middle class in 2025, according to data from the World Data Lab. (Disclosure: I am a co-founder of World Data Lab and its Chief Economist.) Most of these new entrants were in South and South East Asia, but Africa and Latin America also saw an increase in their middle-class populations. Globally, the middle class accounted for over half the world’s population for the first time ever.
  2. An expansion of trade. International trade grew strongly in 2025, notwithstanding tariff wars, protectionist measures, and onshoring policies. UNCTAD’s nowcast suggests that global trade in goods and services will exceed $35 trillion in 2025, a rise of 7% over 2024. East Asia’s growth led the way, but African exports also grew strongly—faster than China’s, for example. As one example, Africa led all regions with a 10% rise in tourist arrivals through the first three-quarters of the year. Overall, services growth and South-South trade were leading drivers for EMDE exports.
  3. Faster green energy transitions. In 2025, low-carbon energy transitions in EMDEs became driven by the private sector—utility-scale firms and individual households—responding to lower prices for solar cells and panels. Between August 2022 and August 2025, the average export price of Chinese cells fell from $0.19/W to $0.03/W. Previously, investments depended on government policy, incentives, and publicly mobilized financing. As Tim Appenzeller writes in Science magazine: “That change in motivation may be the most important breakthrough of all, ensuring that this year’s inflection points are just the beginning.”

The scale and speed of the energy transition are impressive. Globally, in the first half of 2025, renewables accounted for a higher share of electricity (34.3%) than coal (33.1%) for the first time ever. This trend was driven by EMDEs: The U.S. and Europe used more coal in 2025 as renewables did not keep pace with demand. China’s story is well-known, but India also added a record 29.5 GW of solar capacity in the first nine months of the year. Similarly, Pakistan has installed around 18GW of solar panels and is on track to produce 20% of its electricity from solar in 2026, compared to 1% in 2023. The focus on renewables spreads well beyond these examples. In Africa, 29 African governments launched National Energy Compacts in 2025 to accelerate energy access and security as part of the newly formed M300 initiative of the World Bank and the African Development Bank.

  1. Peaking global greenhouse gas emissions. It is still too early to tell, but it is possible that 2025 will mark the year when global greenhouse gas emissions flatten or declineClimate TRACE, a non-profit coalition estimating real-time emissions, showed declining emissions in the early part of 2025 but now a very small increase of 55% in 2025 over 2024, perhaps because of data center use. The start of a downward global trend in emissions would be very good news for EMDEs. They bear the brunt of the natural disasters generated by climate change due to poor infrastructure, vulnerable populations, and reliance on agriculture. The World Resources Institute reckons the world is projected to warm by 2.3-2.9 °C; a dangerous prospect, and a far cry from the Paris 1.5 degree target, but roughly half of what was anticipated when the Paris Agreement was made a decade ago.
  2. Signs that multilateralism can still work. The reports of the death of multilateralism in 2025 were exaggerated. True, some events disappointed, notably the shelving of previously-agreed-upon maritime emissions levies, and the adjournment of talks on a global plastics pollution treaty, but there were examples of success in other areas. A High Seas treaty protecting biodiversity beyond national jurisdictions (BBNJ) was ratified and will legally enter into force in January 2026, providing an established process for marine protected areas and other matters. Both the World Bank and IMF successfully shored up support from their major shareholder, the United States. The International Finance Corporation launched an inaugural collateralized loan obligation, establishing a new class of assets in EMDEs with the potential to reach scale by tapping into global institutional investors.
  3. Business is still investing in sustainability. Despite reports to the contrary and a clear rollback in public policy requirements in the U.S. and Europe, business is still investing in sustainability. The green debt market surpassed $3 trillion in 2025 and, notwithstanding some slowdowns in the U.S. and Europe, issuances in the Asia Pacific region have strongly trended upward. Cost reductions and revenue growth drive corporate sustainability efforts, and there was solid growth in assets and returns in ESG funds in 2025, with particular interest from younger investors.
  4. Inflation and food price increases are being held in check. While negative news on inflation dominated headlines in several advanced economies, EMDE inflation in 2025 was the lowest since the IMF began its tracking in 2016. While there are regional differences, 12-month trailing inflation in Africa is ending the year at half its 2024 level. Some of this is attributable to low prices for traded foodstuffs. The FAO’s commodity price index shows declines in 2025 of the nominal international prices of cereals, dairy, and sugar.
  5. Going digital. After a slow start in building digital infrastructure backbones, developing countries are catching up to the rest of the world. According to the 2025 State of Digital Public Infrastructure report, as of 2025, at least 64 countries (including advanced economies) have DPI-like digital ID systems, 97 countries have DPI-like digital payment systems, and 103 countries have DPI-like data exchange systems, with many more in the planned or piloting stage. According to the same report, “Africa, Asia, and Latin America, and the Caribbean have the most dynamic and rapidly evolving picture for deployments …”
  6. Better nutrition. School meals have long been recognized as highly impactful for nutrition, learning, and overall child well-being. The latest State of School Feeding Worldwide report, released in 2025, finds that 466 million children worldwide receive school meals, with almost half of all primary school children covered. 60% more children are being reached in low-income countries compared to two years ago. Almost all the funding is from national government budgets, suggesting that school meals might escape the effects of the sharp aid reductions of 2025.
  7. More useful weather forecasting. The Extraordinary World Meteorological Congress in October 2025 reported on its shift to go beyond assessing “what the weather will be” to “what the weather will do to lives, infrastructure and livelihoods,” by integrating AI into its operational forecasts. The Early Warnings for All initiative, aimed at providing coverage of multi-hazard forecasts to all people by 2027, had an “unprecedented pace of progress” in 2025, with new pilots and capacity-building projects aimed at developing countries.

All is not well for people living in developing countries. But 2025 did see progress, at considerable scale, in a range of areas. Sustainable development practitioners should celebrate the positives while continuing to advocate for faster progress.

With Chinese investment, Egypt turns to Solar Panel Manufacturing

With Chinese investment, Egypt turns to Solar Panel Manufacturing

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Vietnam on the Nile? With Chinese investment, Egypt turns to Solar Panel Manufacturing

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Ann Arbor (Informed Comment) – A new $210 million facility is being built in Egypt to produce 4 gigwatts of solar components annually.

These numbers are not world shaking, but this development is. Egypt has enormous industrial potential. It has as many as 2.5 million workers in various sectors of the textile industry and 33 million over all, and the country’s literacy rate is now on the order of 75%. Literate workers are valuable because they are able to read and follow instructions.

If Egypt becomes a hub for producing solar cells, panels and arrays, it could be an engine for economic growth and also for the production of inexpensive energy in the country, which also acts as a fillip to economic growth.

Green Building Africa reports that “The $210 million Atum Solar project is being developed in the TEDA industrial zone in Sokhna and will have an annual production capacity of 2 GW of solar cells and 2 GW of solar modules.” The investors include JA Solar, a Chinese solar panel manufacturer, as well as concerns in the UAE, Bahrain and Egypt itself. The UAE and Bahrain have substantial investment capital lying about from oil sales, but small domestic populations and lack what economists call absorptive capacity. Egypt is a promising investment field for them as a fellow Arab country with a big workforce.

The plant will create over 800 direct jobs, and likely many more indirect ones.

The solar cells will be exported to the United States. Note that this facility is a way for JA Solar to sidestep the stiff US tariffs on Chinese solar cells, since the units will come from Egypt. The panels will be sold inside Egypt and also to other African countries.

The energy consultancy Ember reported last summer that there are now the first signs of large-scale African adoption of solar panels.

I commented about a year ago on a report that Sweden’s Sunshine Pro has partnered with Egyptian institutions to establish a solar panel manufacturing facility with a capacity to produce 1 gigawatt of solar panels annually.

Egypt is, of course, creating large solar farms for electricity generation, and so will have a use for these domestically produced panels. By the start of 2024, the Egyptians had installed 1.8 gigawatts of solar, most of it at the Benban Solar Park some 400 miles south of Cairo in the Aswan Governorate. It now, at the beginning of 2026, has about 2.8 gigawatts of solar capacity, with plans for a rapid build out the rest of this year. Cairo is hoping for 12 gigawatts of sustainables by the end of 2026.

As Chinese labor costs have risen, Chinese companies have been moving to other countries for some manufacturing purposes, benefiting from their cheaper labor costs. It is even government policy, with the slogan “Go out!” attached to it. Since China is the preeminent leader in greentech, it is natural that some of the expansion of Chinese investments in factories abroad would be in sustainables.

One advantage for Chinese firms of investing in a facility abroad is that they can often lower their tariff costs. For instance, the African Union has low tariffs for member states, so a factory that is partially Chinese-owned established in an African country can export cheaply throughout the continent. That role seems to be envisioned for the panels produced at the Atum plant, while the solar cells (the basic component of the panels) will be sent to the US.

If Egyptians manage their affairs well, they could become the Vietnam of the Middle East with regard to solar panel production. Vietnam now produces 18 gigawatts of solar panels annually and is the fourth-largest panel exporter, having 12% of the world market, up from almost nothing a decade ago.

The world’s largest rooftop solar installation

The world’s largest rooftop solar installation

Bahrain, Manama, Bahrain World Trade Center, WTC, Bahrain by IrinaKar via pixabay

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Bahrain announces plans for what will become the world’s largest rooftop solar installation

The evidence would suggest that a myriad of energy-rich nations in the Middle East are fostering investments in astonishing new renewable energy projects amid calls to diversify the global energy market. One such nation that has expressed its renewable energy ambitions is Bahrain. The Gulf nation has recently announced its plans to construct and operate what will be the world’s largest rooftop solar installation, marking a new future for the Middle East energy market that aligns with global emission and clean energy goals.

Even the Middle East has jumped on board the renewable energy train

The litany of Middle East nations are turning to the untapped and up until now, overlooked energy generation potential of the renewable energy market, following decades of relying on the conventional oil and gas sectors. The region has seen vast resources of oil and gas transforming nations into oil-dependent countries that have seen insane economic growth over the past few decades.

At the recent G20 Summit in South Africa, nearly every nation in attendance reaffirmed its commitment to reducing emissions and developing clean energy projects in the years to come. Following announcements of renewable energy projects in the Kingdom of Saudi Arabia, such as the world-changing NEOM project, Bahrain is aiming to become the home of the regional solar sector with an astonishing new project that will reshape the global energy market.

Bahrain’s new rooftop solar installation will be the largest in the world

Foulath Holding, the parent company of Bahrain Steel and SULB, has announced a new partnership with Yellow Door Energy, the leading sustainable energy developer in the Middle East and Africa, to develop a new 123-Megawatt-Peak (MWp) solar project in Bahrain, setting the stage for a new future in the nation, powered by solar power.

“Today, the island nation of Bahrain stands at the forefront of sustainable global innovation. We are incredibly proud of this transformative project – marking the largest rooftop solar plant in the world. This milestone not only strengthens our position as a regional leader in clean energy, but embodies our dedication to build a resilience, sustainable future in line with our national vision of elevating Bahrain’s international competitiveness.” – H.E. Noor bint Ali Alkhulaif, Minister of Sustainable Development, Chief Executive of Bahrain EDB

Bahrain’s new solar installation will be a landmark achievement for the global renewable sector

The project will consist of 77,000 solar panels installed across a new 262,000-square-meter stockyard shed. This would be the largest industrial-scale on-site solar project in the world, boasting ten rooftop solar photovoltaic (PV) plants and four ground-mounted solar PV installations set to reshape the nation’s steel industry for the better.

The project aims to generate an astonishing 200 million kilowatt-hours (kWh) of clean energy in its first year of operation and will benefit from a new Power Purchasing Agreement, which has become a prerequisite for new energy projects across the renewable energy biosphere. Yellow Door Energy will oversee financing, construction, and maintenance operations for the new solar project.

The clean energy transition has reached every corner of the world

Bahrain’s ambition to develop what will be the world’s largest solar rooftop installation comes as the market sees substantial growth, underscoring nations’ clean energy targets for the new year and further beyond. Turkey’s clean energy ambitions have been boosted by the news that AIIB and TSKB will fund a new solar project in the nation, exemplifying global sentiments toward the renewable energy market. The world has been forced to face the reality that the only constant is change; thankfully, the Middle East region is aiming to lead the transition to the renewable energy sector through astonishing new projects.

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MENA states are increasing focus on South-South cooperation

MENA states are increasing focus on South-South cooperation

 

Image for illustration: A man holds a “One World” sign on the Brooklyn Bridge, symbolizing unity and activism. By Lara Jameson via Pexels

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MENA states increasing focus on South-South cooperation

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MENA states increasing focus on South-South cooperation | Arab News

People take documentation at the hall of the Second High-level UN Conference on South-South Cooperation in Buenos Aires. (AFP)

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Several countries across the Middle East and North Africa have, in recent years, emerged as key players in reshaping global cooperation dynamics, particularly through South-South cooperation. This dynamic process allows developing countries, often historically marginalized in global power structures, to collaborate and share knowledge, resources and expertise. Regional nations are clearly transitioning from simple contributors to central champions of South-South cooperation, challenging the traditional north-south power structures that have dominated global governance for decades.
South-South cooperation aims to foster mutual development and solidarity among nations of the Global South by enabling exchanges of knowledge, technology and resources. The UN Office for South-South Cooperation, established in 1974, has long supported these initiatives, which include knowledge sharing, technical expertise, diplomatic ties and development financing. MENA countries, historically more aligned with the West due to geopolitical interests, are now at the forefront of this global shift, pushing for a more equitable and collaborative approach to global governance.
One of the most striking examples of MENA’s growing role in South-South cooperation is the significant increase in bilateral trade and investments between the region’s countries and other developing regions, particularly Africa and Asia. MENA countries’ economic diversification strategies are shifting their focus from traditional oil and gas revenues to more sustainable partnerships, driven by the desire to reduce reliance on the West.
Countries such as Saudi Arabia, Kuwait, Qatar and the UAE have long had national funds for development aid, such as the Saudi Fund for Development and the Kuwait Fund for Arab Economic Development. These have already invested billions into projects across Africa, Latin America and Asia. In fact, between 2011 and 2020, these four Gulf Cooperation Council countries provided more than $81 billion in bilateral official development assistance, with a significant portion aimed at boosting the economic growth of developing regions.
The Kuwaiti fund alone has issued nearly 800 loans and provided more than 230 technical assistance grants across 16 Arab states, supporting infrastructure, healthcare and education projects. In 2023, Saudi Arabia delivered $5.2 billion in official development assistance, including $4.7 billion dedicated to programmable bilateral aid, primarily for infrastructure and support to the least developed countries.

MENA countries are now pushing for a more equitable and collaborative approach to global governance.

Zaid M. Belbagi

In Africa, the scale of MENA’s investments is increasingly evident, as GCC-Africa greenfield foreign direct investment reached 85 projects worth $11.5 billion in 2023 alone. This surge is set to continue, with 73 projects in 2024 committing more than $53 billion, accounting for 6 percent of global FDI, further solidifying MENA’s leadership in South-South cooperation.
The GCC countries have also broadened their multidimensional partnerships with regions such as East Asia and Latin America. A notable example of this is Saudi Arabia’s deepening engagement with China, as the two countries have significantly expanded their cooperation in defense technology, energy diversification and infrastructure development. In 2024, trade between China and the GCC countries exceeded $288 billion, illustrating the scale of this strategic partnership, which now includes joint ventures in areas such as drones and missiles, reducing the region’s reliance on traditional Western defense suppliers.
However, countries across the MENA region are now actively pursuing partnerships that go beyond financial assistance. Morocco, for example, has spearheaded major initiatives aimed at boosting African integration and economic autonomy. The Nigeria-Morocco gas pipeline, designed to address energy needs across West Africa, shows how MENA countries are leveraging their resources to fuel the growth of their southern neighbors.
Qatar, too, is rising as a key player in South-South cooperation, particularly through its diplomatic and financial investments. Qatar’s establishment of the South Fund for Development and Humanitarian Assistance under the Group of 77 highlights its commitment to strengthening multilateral South-South ties. The fund has already been instrumental in supporting development initiatives across several Global South countries.
The UAE has similarly expanded its partnerships with emerging economies, not only in Asia but also in Africa and Latin America. Its Masdar City, a global leader in renewable energy development, provides a model for sustainable energy projects in the Global South, particularly in countries struggling with energy security. The UAE’s growing collaboration with South Korea for technology transfer in defense and renewable energy is another example of how the region is diversifying its partnerships and reducing dependence on Western institutions.
Furthermore, the shifting global order is becoming increasingly evident in MENA’s relationships with regional players such as India and Brazil. In 2024, India’s Comprehensive Economic Partnership Agreement with the UAE marked a significant milestone in enhancing bilateral trade, with merchandise trade topping $83 billion. The agreement has facilitated trade across multiple sectors, including non-oil commodities, technology and renewable energy.
Despite the growing influence of South-South cooperation, the MENA region is not immune to challenges. To fully capitalize on its emerging role as a champion of South-South cooperation, the region’s countries must continue to strengthen their local capabilities, enhance technological innovation, strengthen diplomatic ties and, most importantly, build robust domestic industries.
These efforts are already evident in countries such as Saudi Arabia, the UAE and Qatar, which are heavily investing in developing their own defense technologies, renewable energy infrastructure and space exploration programs. Through these strategic initiatives, regional champions are leading the charge in shaping a more equitable and decentralized global order.
The region’s leadership in South-South cooperation marks a significant shift in global governance, challenging the traditional north-south divide. With countries in the region increasingly diversifying international partnerships, investing in shared development projects and fostering diplomatic engagement, the region is contributing to the rebalancing of global power structures, offering an alternative to the conditionalities of Western institutions such as the International Monetary Fund and World Bank.
This shift signals growing autonomy for countries in the Global South, where shared development goals and mutual cooperation are becoming the cornerstones of a new international order. The result is a more plural, negotiated and less hierarchical global governance system, in which MENA’s leadership is central to driving an innovative and equitable future for the Global South.

• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council.
X: @Moulay_Zaid

Read the original in https://arab.news/px8na

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Sustainable water initiatives in MENA projects and technologies

Sustainable water initiatives in MENA projects and technologies

Peaceful beach scene with ocean waves and wind turbines at sunset, showcasing renewable energy. by Christian Himmel via pexels

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Sustainable water initiatives in MENA

NatureAsia Published

24 December 2025

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As water scarcity deepens across MENA, wastewater use is emerging as a solution.  We look at projects and technologies being adopted across the region.

Rasha Dewedar

The As-Samra wastewater treatment plant, Jordan. Credit: Jake Lyell/ Alamy Stock ImagesThe As-Samra wastewater treatment plant, Jordan. Credit: Jake Lyell/ Alamy Stock Images
The Bahr El Baqar wastewater plant in Egypt recycles more than five million cubic metres of water every day for agricultural use daily for farmland. Yet across the region, many similar facilities are either operating partially, unfinished, or abandoned.The Middle East and North Africa region has 14 of the world’s top 20 water-scarce countries. This challenge, driven by climate change, urbanization, and population growth, demands reliable and sustainable solutions.

 

Wastewater Treatment (WWT) removes pollutants, microorganisms, and chemical toxins, making water safe for reuse. Plants often combine two or more technologies to reach the required quality, depending on costs, purpose, and environmental factors.

 

Conventional methods for WWT deliver results quickly but are energy-intensive, whereas extended methods are nature-based systems, like lagoons and reed beds, that require more land but consume less energy and require minimal maintenance.

 

Why plants fail

 

One of the main challenges for wastewater treatment in MENA is cost.

 

“Many WWT plants in MENA have been constructed but never operated close to capacity, or shut down,” says Sammy Kayed, co-founder of the Environment Academy at the Nature Conservation Center, American University of Beirut.

 

Energy is another challenge. Treatment plants require more energy, especially in hot climates, explains Mostafa Hadei, Assistant Professor of Environmental Health Engineering at Tehran University.

 

Looking for smarter Solutions

 

Efforts are already in place to overcome the challenges and introduce innovations in WWT. Between 2018 and 2022, the International Water Management Institute (IWMI) launched ‘ReWater’, a regional project aimed at expanding water reuse in Egypt, Jordan, and Lebanon. The project addressed cultural resistance, outdated regulations, and the lack of financial models for cost recovery.

As one of the ReWater project partners, the International Center for Agricultural Research in the Dry Areas (ICARDA), has experimented the usage of wastewater on specific crops and soil to reach the best techniques for irrigation systems, at the Sarapium Wastewater Treatment Plant in Ismailia, Egypt.

 

ReWater MENA launched the National Analysis of Water Reuse Potential in Irrigation, offering a technical and governance guidance to the potential of water reuse in Lebanon and the potential of its manifestation in the current political and economic context.

Kayed suggests nature-based solutions that benefit both people and the planet. This method usually involves Reeds, coarse grasses that grow in wet areas, and is used as a cheap method to treat liquid waste.

 

“One promising method I’ve worked on is lagoons and reed beds,” says Kayed. “If designed carefully, they can operate relatively passively at a fraction of the cost and are best suited for irrigation of orchards”.

 

Hadei says that the broader adoption of WWT depends on comprehensive planning, strong public-private partnerships, financial incentives, and applying “fit-for-purpose” treatment that cleans water only as much as needed for its intended use.

 

Sustainable Practices 

 

Building on the ReWater project, IWMI launched ReWater+ in Egypt, Jordan, and Morocco, as part of the Near East and North Africa Water Scarcity Initiative. The project involves multiple partners and stakeholders collaborating to analyze costs, benefits, and social impact.

 

“Reuse projects often reduce emigration from rural areas, fix soil, and increase employment rates, which in turn offer financial gains,” says Youssef Brouziyne, the International Water Management Institute’s (IWMI) MENA representative. In the Bahr El Baqar  project operational costs are optimized at every step, and revenue is diversified through selling byproducts. The plant was launched Bahr El Baqar in 2021, and  treats 5.6 million cubic meters of water per day to cultivate more than 400,000 acres in Sinai.

 

Integrating local capabilities is another factor in ensuring sustainability. “WWT plants can produce biogas from sludge to lower energy costs, and nutrients can be recovered and reused in agriculture,” says Hadei.  The As-Samra plant in Jordan, for example, produces almost 80% of its required operational energy from biogas and hydropower, while generating bio-solids for fertilizer and fuel.

 

Other projects highlight the social dimension of water reuse, like the SafeAgroMENA project by IHE Delft, running in Egypt, Lebanon, Iraq, and the Netherlands. The project employs an interdisciplinary approach to provide safe water for agricultural use, helping small-scale farmers reuse treated wastewater safely, according to Hadeel Hosney, the project leader.

“SafeAgroMENA is economically relevant and sustainable, as it conducts comprehensive assessments from a technical, political, and socio-economic perspective,” says Hosney. This practice allows the development of tailored, nature-based solutions using local materials from target countries.

 

Digital innovation is also shaping the sector, including decision-support, earth observation, and data analytics tools, all powered by AI. Such tools offer valuable insights into wastewater’s supply and demand, and recommend water reuse accordingly, in countries like the United Arab Emirates, Saudi Arabia, and Egypt.

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