Press Release
DIFC Economics Workshop explores alternative financing methods for
regional infrastructure development
Arab economies ready themselves to build for future but conventional funding still
limited as a result of global financial crisis
Dubai, 14 December 2009: Top-level delegates representing major economies from across the region gathered
in Dubai today to discuss and identify the best possible means to access channels of funding for the on-going
and proposed infrastructure development projects in the region.
The interaction hosted by the Dubai International Financial Centre (DIFC) as part of its DIFC Economics
Workshop series, featured top executives from leading developmental and financial institutions from around the
world as well as senior officials from the DIFC Authority, on the speakers panel.
Dr. Nasser Al Saidi, Chief Economist at the DIFC Authority, pointed out that the regional economies - and
particularly the Gulf countries - are relatively young and unhampered by historic and obsolete technologies that
some of the more mature economies face. This allows the GCC countries to leap ahead and adopt the most
modern technologies, without going through intermediate phases
“Infrastructure investment has been a major driver of economic growth in the Gulf region over the past six years.
Despite the global financial crisis, there continues to be enormous demand for new infrastructure across the
GCC countries and the region driven by population growth, economic development and diversification
imperatives as well as the overall aim of being counted amongst the most advanced nations. Indeed countercyclical fiscal policy has focused on maintaining or even increasing government expenditure on public works
and infrastructure,” said Dr Al Saidi.
“The size of infrastructure projects in the Gulf is currently estimated at the whopping figure of some US $2.3
trillion.
“Effective financial solutions, the availability of long-term finance and continuous and timely funding are critical
to the smooth implementation of new infrastructure projects, and in turn, to the sustained economic growth of
the GCC countries and the region,” pointed out the DIFC Chief Economist.
“However, due to the global financial crisis, banks have tightened access to financing limiting funding options.
The DIFC Economics Workshop on infrastructure finance was organised to explore alternative means and
methods of financing infrastructure development,” Dr. Al Saidi added.
Some of the alternative means of funding identified by the workshop included Project Financing, Public-Private
Partnerships (PPP), Build-Operate-Transfer (BOT) models, Capital market based financing, Housing Finance as
well as raising Public Debt and recourse to Islamic instruments such as Sukuk (Islamic bonds).
Apart from Dr Al Saidi, other speakers were drawn from leading banks and financial institutions involved in
providing infrastructure finance and included Adil Marghub, Manager, Infrastructure Cluster at the International
Finance Corporation (IFC), Suresh Vasan, Director of Energy Financial Services at General Electric (GE) and
Frank Beckers, Managing Director and Head of Project & Capital Advisory at Deutsche Bank.
Frank Beckers managing Director of Deutsche Bank commented “Given the challenging amounts of financing to
be raised for infrastructure developments, we will have to explore all available liquidity pools. This will likely
require a more diversified approach towards funding sources compared to the bank loan focused approach we
have seen so far. However, the strategic nature of most infrastructure developments in the GCC, evidenced
also by strong government support, will continue to support those efforts.”
Adil Marghub Manager, Infrastructure Cluster at the International Finance Corporation (IFC) added “Beginning
in the fall of 2008, the tightening of global credit conditions adversely affected global infrastructure finance.
Lending from commercial sources declined substantially while state owned and multilateral and bilateral (IFIs)
have emerged as growing players in funding infrastructure finance”, said Mr. Marghub. “The MENA region has
been one of the more active regions globally in infrastructure projects, and the underlying fundamentals for an
increasing role for the private sector in infrastructure remain strong.”
- Ends -
About DIFC
The Dubai International Financial Centre (DIFC) is an onshore hub for global finance. It bridges the time gap
between the financial centres of Hong Kong and London and services a region with the largest untapped
emerging market for financial services. In just five years, over 850 firms have registered at DIFC. They operate
in an open environment complemented with world-class regulations and standards. DIFC offers its member
institutions incentives such as 100 per cent foreign ownership, zero tax on income and profits and no
restrictions on foreign exchange. In addition their business benefits from modern infrastructure, operational
support and business continuity facilities of uncompromisingly high standards.
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