Public Private Partnerships: New Way Forward in Overcoming Infrastructure Development Adversities in Gulf
In light of a global economic recession and alarming health pandemic, a variety of infrastructural and development-related quandaries have exerted stress on much of the world’s economies. Many challenges pertinent to development remain unsolved given the different limits related to external shocks.
Accordingly, the rentier economic nature of Gulf countries and its implications on other socio-economic variables has generated a rich literature of contested debate on concepts such as productive investment, sustainable employment, the “resource curse”, and private initiative. Lately, public-private partnerships (PPP) in the region have grown popular in recurrent conversations which attempt to discuss ways to put states like Saudi Arabia in a different and fresh trajectory in the pursuit of sustainable infrastructural development. This blogpost seeks to modestly outline the most notable challenges and developments facing Gulf states with regards to this subject, alongside providing evidence-based policy procedures for any weighted limitations under study.
Advancements and limitations
A handbook prepared by “Private Sector Development” titled “Public-Private Partnerships in the Middle East and North Africa” highlights the capacity for such arrangements to amplify both innovation in the private sector and delivery on behalf of the public sector. This is particularly pertinent to countries like Saudi Arabia, who generally lacks the technical capacity, competence, and organization to launch apt services (Chackerian & Shadukhi, 1983). The report further illustrates some limitations enforced by the political turbulence of the region and a plethora of legal barriers related to inter-elite dynamics. In truth, these barriers ought to be lifted if the aim posed is concerned with attracting investment.
Interestingly enough, a report by Oliver Wyman titled “Private Investment is Key to Unlocking Long-Term Capital for Gulf Infrastructure” exactly tackles some of these developments within the Saudi kingdom, in which a Private Sector Participation draft law was proposed and worked on in 2019. As the law aims at amplifying investor protection and transparency, it is set as a benchmark to arrive at Saudi Vision 2030. However, another challenge posed by the report takes into account the relatively underdeveloped PPP infrastructure regulations and frameworks in countries such as Qatar and Saudi Arabia. The report also emphasized the urgent need for these types of frameworks to accommodate the growing population within the region. While mineral resources have proven effective in developing these countries’ prime sectors, diversification steered by the state (and coupled with private initiative) is reportedly necessary to respond to unexpected shocks.
One particular example highlighted in an overview by Al Tamimi & Company is the development of the country’s health infrastructure. This plan includes but is not restricted to increasing private sector share of healthcare spending, partly privatizing an entire medical city via an adequately-framed legal PPP scheme, and updating the very utility and efficiency of research-related laboratory services in consultation with professionals and technicians within the private sector.
Predictions and prescription
Taking note of these specific and general developments, the direction being taken by the Kingdom and other neighboring states seems promising. Nevertheless, accompanied by the aforementioned challenges are recurrent difficulties related to health (such as the coronavirus pandemic), regional stability (the Gulf-Iran dilemma), personal initiative and political opportunity, and general issues relevant to general “good governance” criteria. While some conditions may seem out of control, a lot have to do with the policies and conscious decisions/priorities set forth by these states and their policymakers.
In order to conduct a cautious prescription, I make use of Alhomadi’s case study in Saudi Arabia, alongside my aforementioned reading above. The resolution to these recurrent debates often thus includes generating a sufficient amount of political will amongst government officials building up the incentive to invest in PPP implementation. In addition, it’s also imperative to advance and formalize various institutional, regulatory, and legal procedures relevant to the companies pursued and their relationship to the bureaucratic offices.