The total value of infrastructure and construction projects in the Gulf Cooperation Council (GCC) region reached approximately to $3.2 trillion (Dh11.74 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 to grow to US$9 trillion in 2025, according to a forecast by global accounting firm PriceWaterhouseCoopers (PwC).
Government officials, business leaders and experts discussed these economic opportunities at the two-day PPP MENA Forum that took place at Movenpick Grand Al Bustan, Dubai from February 23-24, 2022. More than 300 government officials, project owners, experts, business leaders, regulatory officials attended to underline the key issues in the development sector.
Emphasising on the social and sustainable public-private partnership, 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 percent of their GDP on public projects. This needs to be increased to 8.2 percent of the GDP by 2030 – in order to accelerate the economic growth.”
As of June 2021, the total GCC construction project market was estimated to be worth US$3.2 trillion, covering buildings, infrastructure, and industrial, along with the power and water, and oil and gas sectors. The PPP MENA Forum highlighted that the public-private partnership 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 governments 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. Public Private Partnerships (PPPs) will play a critical role in the region's post-COVID-19 recovery phase,” said a report by PwC.
“Although, 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, our survey, reveals that the region is 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.”
The Forum tackled timelines and requirements of current and future multibillion-dollar PPP project pipelines from across the region and PPP legislation plans.
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.
At the inauguration of the 2nd PPP MENA Forum, Dr. Ibrahim Al Omar, Deputy Assistant Minister for Investment Development, the Deputy Assistant Minister for Compliance and the Director General of Private Sector Participation Program, Ministry of Health, Kingdom of Saudi Arabia, said, “Saudi Arabia 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.
“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.
“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.”
As many as 242 public-private partnership projects worth $223 billion (Dh818 billion) are under development in the Middle East and North Africa region, according to recent reports, which 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.
This is more or less in line with a World Bank projection estimating that the Middle East and North Africa (MENA) region would need between US$75 and US$100 billion of investment per year over the next 20 years to meet its needs.
Leila Masinaei, Managing Partner, Great Mind Events Management and organiser of the 2nd PPP MNEA Forum, said, “The MENA region is growing rapidly and all the governments in this region 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.
“Discussions from this edition of the PPP MENA Forum will act to catalyse the activities and help to regain the momentum after the pandemic.”