PPP model picks up pace in UAE ventures

ALKESH SHARMA / Emirates Business

Public-private partnerships (PPP) might be a comparatively new investment model, however, over the years it has been embraced in most of the corporate circles in the country. Fuelled by the government’s strong will and decision to diversify from an oil-based economy, PPP engagements — accounting to millions of dhirams — are presently evolving at lightning pace across the Emirates.
“PPP is an extremely important tool for the future development of the regional economies. Government spending is coming down to less oil revenue but development in key sectors like healthcare and education still needs to progress for a growing young population; therefore PPP is a key source in bridging this funding gap,” Akber Naqvi, Executive Director, Al Masah Capital, told Emirates Business.
PPP concept is in vogue in the UAE and all the emirates are looking forward to initiate more of such projects in varied sectors including construction, power, transport, renewables and energy efficiency-related industries.
Experts strongly emphasise that PPP ventures are not only ensuring easy capital for projects but they are also the perfect medium of knowledge sharing and expertise transfer.
Naqvi added, “Other than financing, PPP also provides greater skill-sets, experience and knowledge that local governments may not have. As economies develop, they go through a cycle where initially governments take the role of primary spender. However as markets evolve, develop and create more opportunities, private sector contribution increases. PPP is a logical extension of that cycle as it facilities the transition to a more balanced economy that is driven equally by both public and private sectors.”
Notably, private sector investment pools can easily bridge the gap in the region’s capital funding needs. It is the high time to ensure an increased participation of private players and at the same time holding the right talent while working in the direction of continuing economic development.
“As part of fiscal reforms, GCC nations have started introducing taxes and dropping subsidies. But there is a need for more structural reforms that include initiatives like 100 percent foreign ownership and enhanced PPP frameworks. These models are necessary for the sustainable development of this region,” said Michael Armstrong, FCA and ICAEW (accountancy and finance body) Regional Director for the Middle East, Africa and South Asia (MEASA).
According to recent reports, new PPP projects worth over AED50 million are expected to see the day’s light in the UAE by January 2018.
“We need to look for feasible opportunities to deliver key projects using the successful PPP model of investment. It is not the duty of governments alone but private entities should also chip in enthusiastically. We have observed very good outcomes in the power sector due to
PPP ventures in the last few years
and we are looking forward to replicate the same success formula in
the social infrastructure industry,” Naseer Abdullah, who is working with a seed capital fund in Dubai, told Emirates Business.