The total value of infrastructure and construction projects in the Gulf Cooperation Council (GCC) region reached approximately to $3.2 trillion in mid-2021, according to reports, of which a large chunk is expected to be executed through the Public-Private Partnership (PPP) route, creating a massive opportunity for large players.
Worldwide infrastructure spending is on the rise and will grow to $9 trillion in 2025, according to a forecast by global accounting firm PriceWaterhouseCoopers (PwC).
As many as 242 PPP projects worth $223 billion are under development in the Middle East and North Africa region, said industry experts at the two-day PPP Mena Forum which kicked off today (February 23) in Dubai.
This figure is set to go up as project execution picks up with return to normalcy and higher oil price that will fuel economic growth in the Middle East – pushing public-private partnership sector, they stated.
According to experts, this forecast is more or less in line with a World Bank projection estimating that the Mena region would need between $75 and $100 billion of investment per year over the next 20 years to meet its needs.
The PPP Mena Forum has attracted more than 300 government officials, project owners, experts, business leaders, regulatory officials who will be discussing these economic opportunities and are also expected to underline the key issues in the development sector at the event.
Emphasising on the social and sustainable PPP, Nasser Massoud, Chairman of the 2nd MENA PPP Confercence and Specialist in Social Sector PPP, said: "For every $1 billion spent in projects, 168,000 jobs are created with a 0.48 percent growth in GDP that in turn creates 442,000 jobs indirectly."
"According to the World Bank, Mena countries have been spending less than 3% of their GDP on public projects. This needs to be increased to 8.2% of the GDP by 2030 – in order to accelerate the economic growth," he stated.
As of June 2021, the total GCC construction project market was estimated to be worth $3.2 trillion, covering buildings, infrastructure, and industrial, along with the power and water, and oil and gas sectors.
The ongoing forum will show that the PPP model could help the large funding gap in the massive infrastructure development being undertaken by the governments of the Middle Eastern countries.
"Given the challenges that governments in the region are operating under, it is clear that they will seek private sector support in infrastructure projects delivery and look to attract private sector participation and funding to reduce the burden on the already stretched public finances," stated PwC in its report.
PPPs will play a critical role in the region's post-Covid-19 recovery phase, it added.
In his opening address, Dr Ibrahim Al Omar, Deputy Assistant Minister for Investment Development and for Compliance and the Director General of Private Sector Participation Program, Saudi Ministry of Health, said: "The kingdom is currently undergoing a huge transform as part of the Vision 2030 and healthcare and wellbeing of our people are at the core of the development."
Saudi healthcare sector currently offers SR48 billion worth of projects that will create 224 primary healthcare centres and add more than 20,000 hospital beds across the Kingdom by 2030 – as part of the Saudi Vision 2030.
"Our primary objective is to ease access to healthcare services, improve the value of the healthcare services, strengthen precaution against healthcare threats. So, we have created a strong regulatory environment," stated Dr Al Omar.
"Now we are shifting towards investment and execution of projects that are at various stages of planning, tendering and construction. We are developing a large number of hospitals, clinics and healthcare centres across the country that will increase the wellbeing of the people," he added.
According to PwC, most countries in the GCC have placed the provision of modern infrastructure and world-class public services at the heart of their respective national visions. However the survey found that the region was finding it challenging to implement infrastructure projects efficiently and that increased market volatility, oil price volatility and the economic cost of Covid-19 are putting a strain on government resources across the region.
Leila Masinaei, Managing Partner, Great Mind Events Management and the event organiser, said: "The Mena region is growing rapidly and all the governments here are trying to work together to make it the centre of all the businesses. Most Middle Eastern countries have now updated their PPP legislations that give a lot of clarity to the private sector as well as foreign investors willing to participate in the public projects."
"The discussions which will come out of this edition of the PPP Mena Forum will act to catalyse the activities and help to regain the momentum after the pandemic," she stated.
Governments of the Middle Eastern countries are increasingly relying on private capital and private sector resources to build and expand infrastructure – in the roads, highways, bridges, utility, energy, power, aviation and telecom sectors.
Across the Mena region, PPP pipelines are either in full flow, or are primed to admit a slew of new projects under a climate of increasing cooperation between the public and private sectors.
Experts pointed out that PPP development is still slow in Africa as a whole – in 2019, the continent only accounted for $7 billion of the $97 billion of private investment commitments made across the world’s low and middle-income countries.
During the forum, a distinguished expert panel of speakers will include all the key stakeholders from government entities, PPP units, developers, operators, investors, contractors and financial institutions to discuss pressing challenges facing the sector and exchange ideas on how PPP projects can be fast tracked, best practices for managing contractual issues and innovative funding models for upcoming PPPs.
The panel discussions include, Restructuring PPPs in the age of Covid-19, The future of PPPs in healthcare, The future of PPPs in healthcare, Managing the fiscal risks of PPPs in a long-term contract, A force for good – enhancing social impact through public private partnerships, and Power, utilities and waste-to-energy – Building a sustainable future in the power industry. The Forum will also include presentations and country briefing sessions by senior officials.
The event is supported by – The Saudi Ministry of Health, World Association of PPP Units & Professionals, Bahrain’s Ministry of Works, Municipalities Affairs & Urban Planning, Jordan’s Ministry of Finance, Egypt’s Ministry of Finance, Istanbul PPP Center of Excellence and Kuwait’s Authority for Partnership Projects.-TradeArabia News Service