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DUBAI / WAM
If GCC states increase private sector involvement in their economies, they could avoid $165 billion in capital expenditures by 2021, says a study by management consultancy Strategy& (formerly Booz & Company).
According to the study issued by the Ideation Center, the leading think thank for Strategy& in the Middle East, they could also generate $114 billion in revenues from sales of utility and airport assets, and up to $287 billion from sales of shares in publicly listed companies. GCC states could also narrow the innovation gap with other countries, enhance the delivery of and access to government services, and improve their infrastructure. With more Private Sector Participation (PSP), these countries can achieve operational efficiencies of 10 to 20 percent, reducing government budget deficits. Greater PSP could also help them close their innovation gap with other countries. Between 2013 and 2015, 70 percent of global innovations stemmed from the private sector, versus 13 percent from the nonprofit sector and only 8 percent from the public sector.
Increasing PSP through the establishment of public–private partnerships (PPPs) and the privatization of government assets is an ideal response to these challenges, suggests Strategy&. Most GCC countries, including Kuwait, Dubai, Oman, and Bahrain, recognize the importance of PSP and have incorporated it in their national plans. However, there is a lack of a dedicated PSP policy and legal framework, as well as an effective institutional set up.