Middle East And Africa PPP Guide: The Emergence Of Public-Private Partnerships (PPPs) In The Middle East And Africa

Author:Mr Neil Cuthbert and Atif Choudhary
Profession:Dentons Worldwide
 
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Introduction

The purpose of this article is to analyse and summarise the emergence of the public-private partnership (PPP) model in the Middle East context (with a focus on the Gulf Cooperation Council (consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) (GCC)) and also in the context of selected emerging markets in Africa that have recently looked to introduce the PPP model. Although Governments and the private sector have a history of working together to procure energy, infrastructure and other projects in these regions, they have largely done so in the absence of codified or other clear PPP legal frameworks of the kind seen in more developed jurisdictions.

With oil prices continuing to stall and without any obvious signs of recovery, and with fiscal deficits beginning to be seen across the region, Governments in the GCC are looking to step away from their traditional reliance on oil revenues and sovereign reserves in order to continue with their ambitious plans for development. Populations continue to grow and require more sophisticated infrastructure and services, and increasing industrialisation and the recognition of the need for economic diversification all mean that the GCC nations are, like many others, looking to new methods of financing projects. Likewise in Africa, population growth remains staggeringly high and a continuation of budgetary limitations for Governments also means that alterative methods for funding infrastructure and services needs must be found. It is becoming apparent that PPPs lie at the forefront of such alternative methods.

In order to implement this change in direction, certain of the jurisdictions in the GCC and Africa already have, and other jurisdictions are in the process of developing, viable PPP legal frameworks. The rationale for this is not only to provide legal certainty for foreign investors who may be hesitant to invest heavily in markets with under-developed legal systems, but to set out clear boundaries in relation to matters which are important to all project parties, such as risk allocation and mitigation.

This article provides a brief introductory overview of the PPP model generally, its history in the GCC and selected jurisdictions in Africa, challenges which are inherent in its successful implementation and a summary of the implementation of PPP legal frameworks within the GCC and selected jurisdictions in Africa. What will become clear is that although...

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