Promote the use of public-private partnerships for funding and undertaking projects

Given the region’s considerable investment needs, SEMCs need to develop their capacity to mobilize the private sector and make themselves attractive to foreign direct investment (FDI). IPEMED recommends the following for harmonious PPP practice in SEMCs.

1.    Develop the local banking sector to provide expertise in financing, which currently presents long-term limitations. Funding should be in local currency to protect against currency fluctuations.

2.    Encourage participation from the national private sector in place of major international groups.  The national private sector’s participation is also low, resulting in the strong presence of international private groups.

3.    Secure and guarantee investments in the Mediterranean by setting up a legible, efficient legal system. The legal framework should be designed to be unified, simple and non-fragmented.

4.    Generalize and standardize procedures as much as possible to facilitate PPP creation.

5.    Create PPP units that bring together legal, economic and financial skills. Their role would be to disseminate best practices as far as possible, support authorities’ project bids and plan and prioritize certain PPP projects.

6.    Work on a reasonably sized pilot project that has succeeded because its economic profitability is obvious for the private operator. As pointed out by Alain Poliakoff, “Don’t try to work on too many projects at once.”

7.    Encourage countries to continue developing their regulatory frameworks with the adoption of draft laws in Lebanon and Syria.

8.    Grant local authorities a bigger role with the concept of spontaneous offers. The Moroccan regionalization process moves in this direction and offers much greater financial autonomy to authorities (especially for digital equipment); involve local SMEs to boost job creation and strengthen SEMCs’ industry.

9.    To avoid associating PPPs with privatization, encourage users to agree to higher tariffs and the withdrawal of the public sector from public services. This entails training all stakeholders (public and private) to reach mutual understanding. One of the keys to success in PPPs involves constant dialogue between the delegating authority and the private sector while recognizing their shared interests.

10.    Reduce barriers to investment while encouraging SEMCs to durably attract FDI thanks to a better legal, institutional and financial environment. This would encourage competition between investors and lenders.

11.    Boost regional cooperation by exchanging PPP experiences (through existing units). This should involve reinforcing expertise linked to processes and procedures for implementing PPP projects.

12.    Encourage participation from international financial institutions. Through lending their support to PPPs, international set-ups (e.g. OECD, World Bank, IFC, EIB, AFD, etc.) would help accelerate the expansion of this type of funding in the Mediterranean zone.

13.    Foster the creation of a one-stop shop for accredited projects grouping national and international stakeholders so that states could deal with a single contact. As Eric Diamantis, Vice-President of IPEMED, says: “A pool of experience similar to the PPP task force set up by the EIB in Europe would be necessary.”