Business and government leaders at the World Economic Forum on the Middle East and North Africa (MENA) called on countries in the region to forge public-private partnerships to drive urgently needed infrastructure development.
Infrastructure development “is a huge opportunity not just because of the high youth unemployment and the need for facilities but because interest rates have been low and there is a surplus in savings,” said meeting co-chair Gordon Brown, who served as British prime minister from 2007 to 2010.
Brown, who is currently chair of the World Economic Forum Global Strategic Infrastructure Initiative, said it was an opportunity to “have a greater impact on the quality of life of people”.
MENA countries spend only 5 percent of GDP on infrastructure, compared with 15 percent in China. With oil prices low, governments in the region can divert money that would normally go on energy subsidies to infrastructure development instead, Brown said.
“The main investor in infrastructure in the region is the public sector, but it cannot do it alone,” added Hani Mulki, chief commissioner of the Aqaba Special Economic Zone Authority (ASEZA) in Jordan.
“The main problem is that the private sector is shying away from coming into long-term infrastructure projects.”
Infrastructure development must move forward, despite the geopolitical and economic instability in the region, Mulki told participants.
“We need the political will for these partnerships. We cannot wait for [the conflict with] Daesh (ISIL) to end. We need to get to work.”
Majid Jafar, CEO of Crescent Petroleum in UAE, agreed: “We can’t wait for the stability to make the investments. The investments will lead to the stability.”
Cross-border infrastructure development would offer major benefits to the region, Mulki argued.
“We need to look at projects that transcend boundaries of countries. This will create an interdependent region. That should reduce risk. It would help minimize disparities in income. It would combat terrorism and extremism and, at the same time, provide for transparency.”
While certain countries, such as Jordan, have shaped frameworks for public-private cooperation on infrastructure, there are significant impediments to regional collaboration.
“We can’t ignore the politics,” Jafar said. “International trust is at its lowest level ever and that is an obstacle to cross-border investments and the multinational cooperation that we say we need.”
MENA economies should focus on infrastructure aimed at meeting basic needs such as water and electricity, said meeting co-chair John Rice, the Hong Kong-based vice-chairman of GE.
He proposed that the World Bank and other international financial institutions relax their lending requirements for projects aimed at the bottom of the pyramid.
“Without sovereign guarantees, I don’t see foreign capital being available [for infrastructure development] at the level close to what is required,” he said.
The World Economic Forum on the Middle East and North Africa closed on Saturday at the Dead Sea in Jordan.
More than 1,000 business and political leaders and representatives of civil society, international organizations, youth and the media from over 50 countries took part under the theme of Creating a Regional Framework for Prosperity and Peace through Public-Private Cooperation.
Click here for all the stories from our coverage of the World Economic Forum, MENA, in Jordan
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