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Middle East Report 2010| pfi| 23

The extent of the shift from build it to buy it cannot be underestimated

to the greenfield arena. Finally, in the aftermath of the “credit crunch”, infrastructure projects have moved high- er up on the agendas of multilateral and bilateral devel- opment agencies, which are already familiar with the sector. Though their lending ticket sizes tend to be small- er compared with ECAs, their commitments are not tied to content sourcing as is typically the case with ECAs. In conclusion, the MENA region is poised to extract sig- nificant benefits by applying the best practices honed from older infrastructure markets and established PPP models to the burgeoning demand for greenfield assets in the region. I(W)PP projects have already become rel- atively commoditised and easily replicable, which saves time and money for the development and financing of new projects.

The challenge for PPP projects remains when the struc- ture is untested or introduced to a new market, such as is the case for core infrastructure projects including ports, roads, and railways where suitable and replicable precedents have yet to be designed for the MENA market. However, given the willingness of the private sector to embrace infrastructure financing, the ground work laid out by the power market, and the marked recovery of the financial markets, PPPs provide a proven and viable pro- curement mechanism that can deliver strong results in MENA into the long term. And given the liquidity con- straints and budgetary challenges of regional sovereigns, PPPs will in due time become, in the words of the Unit- ed Nations, a “strategic necessity rather than a policy option” for many MENA governments.

Footnotes 1HSBC estimates 2HSBC estimates

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