Middle East nations turn to private sector
DUBAI: Oil-rich governments from Tripoli to Tehran are increasingly relying on the private sector in a key change across the Middle East and North Africa, a report said yesterday. The value of public-private partnership (PPP) projects across the region, including those still in the pipeline, has more than doubled to $185 billion over the past year, the Dubai-based Middle East Economic Digest wrote.
The sharp increase comes as governments have ramped up efforts to get the private sector involved in financing, building and operating public infrastructure projects in a bid to offset shrinking income from oil since crude prices began to fall in mid-2014. “The rise of PPP over the past few years is one of the most strategically significant shifts in the business landscape of the Middle East since the nationalization of the oil industry in the early 1970s,” the report said.
Kuwait topped the list with joint projects worth $44.4 billion, followed by Libya with $36 billion, the United Arab Emirates with $27.6 billion and Iran with $14.3 billion worth of projects. The figures exclude any investments in the key energy sector. The report said that nearly two-thirds of the projects, worth around $100 billion, are in the planning stages and are expected to be awarded in the next five to six years. Countries across the region, especially those in the Gulf, have lost hundreds of billions of dollars in oil income due to the slide of crude prices.
Separately, Qatar National Bank, the Gulf emirate’s top lender, yesterday reported a rise in its quarterly profits despite a trade boycott against Doha by a Saudiled bloc of countries. QNB, one of the largest banks in the Middle East and North Africa, said its net profit for the third quarter of 2017 was up 5.3 percent on the same period last year, at 3.6 billion riyals ($980 million).
The bank’s profit over the first nine months of 2017 also rose six percent on the same period last year, it said in a statement. The report came as a diplomatic crisis that has seen Qatar isolated from its neighbors entered its fifth month. On June 5, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed political and economic sanctions on Qatar, accusing the gas-rich emirate of support for radical Islamists. Doha has categorically denied the charges.
Moody’s Investors Service last month said that Qatar’s banking, trade and tourism had been impacted by the sanctions. The credit ratings group estimated that Qatar had spent $38.5 billion - some 23 percent of its GDP - on propping up its economy during the first two months of sanctions.
Moody’s said some $30 billion had flowed out of Qatar’s banking system in June and July, adding that a further decline was likely. QNB said it has maintained a highly diversified international and local funding base. The bank’s total assets rose 11 percent to $216 billion on September 30, up from $194 billion a year ago.