WEF delegates call for MENA infrastructure push
With low oil prices and lesser interest rates, coupled with savings surpluses, time is ripe to invest in MENA’s infrastructure.
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 former British Prime Minister Gordon Brown, who is currently Chairman of the WEF’s Global Strategic Infrastructure Initiative.
Currently, countries in the region spend only a tiny percent of their GDP on infrastructure, while fast-growing China spends close to 15 percent of its GDP on the sector – close to $1.3 trillion.
Assisted by low oil prices, governments in the region can divert money that would normally go on energy subsidies to infrastructure development instead, Brown said, adding that, by doing so, “you can have a greater impact on the quality of life of people”.
Thierry Déau, CEO of Meridiam Infrastructure in France, was optimistic. “You can mobilize long-term capital if you have the right project partnership,” he said. “There is a lot of capital in this region and it needs to commit to this region to give comfort to the capital from outside.” He appealed to investors, including private institutions and sovereign wealth funds, to “commit to their own people”.
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 General Electric.
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 concluded.