This was the consensus of panelists who took part in the fifth session of the Jeddah Economic Forum here on Monday.
Nahed Taher, the founder and CEO of Gulf One Investment Bank, who moderated the session, emphasized the need for more PPPs.
Taher also emphasized the need to focus on small and medium enterprises (SMEs) to reduce the Kingdom’s unemployment problem. “Fighting poverty is the best way to promote security,” she said while commenting on the government’s plan to beef up its security agencies with 60,000 men.
She separated privatization from PPPs saying that handing over areas such as education and water entirely to private development is not right, “but a partnership between both sectors for a long term investment produces a win-win situation where the customer as well is happy with the service.”
Taher said using green technology would be beneficial to the economy.
“Our GDP is 20 percent less because of pollution; less emission makes money,” she said.
The subsequent savings release cash into the economy for other projects, she added.
Taher said that noncrude oil industries and the transport and communication sectors were the most promising areas for future PPPs as they produced 4.3- and 4.5-to-1 returns on investment.
Taher said her bank was ready for partnership with the government to carry out educational projects in the Kingdom.
Edward Oakden, head of the UK's Trade and Industry body, agreed that PPPs produced efficiencies, savings and delivery over the public sector. “Over the years they have been up to 30 percent cheaper and more on time than those done entirely by public procurement. But you do have to fit the circumstances of the project to the particular financing method,” he said. He also emphasized that SMEs can create more job opportunities.
Richard McCormack, executive vice chairman of the Bank of America, sounded a note of caution when he said there were thousands of examples of PPPs that had succeeded but many had failed. “The devil is always in the details,” he said. “If the project is not well designed, if it is not well monitored, if expectations are not clearly spelled out and if there is not clear transparency in all phases of this process the project stands the possibility of not being successful and an embarrassment to all parties.”
