In May 2020, Qatar introduced a Private-Public Partnership (PPP) law to create a regulatory framework that would drive privatisation in the region. This move reflected the government’s commitment to forging strategic partnerships with the private sector as part of the nation’s economic diversification plans.
Since then, Qatar has made strides on its journey towards economic diversification, demonstrated by the signing of the Al Wakrah & Al Wukair Sewage Plan project at a total project cost of QAR5.4 bn, securing QAR2.7 bn or 50 percent of the project’s capital funding through international private finance. To bolster the PPP agenda, Qatar’s Ministry of Commerce and Industry (MoCI) also established a dedicated unit as a hub of expertise for launching PPP projects and implementing policies.
As a result, the PPP market is in a growth phase with an estimated QAR10bn worth of projects in the immediate pipeline and large-scale projects being planned or initiated in multiple sectors.
While the 2023 budget reduces the allocation for capex on major projects by 14% compared with the 2022 budget, this still totals $18 bn, about 8% of GDP1, as some public projects that were postponed to prioritise those that were essential for the World Cup, are now being picked up in 2023 and beyond. Regional private sector is also eager to invest, as reflected in our latest CEO survey, which showed that 58% of Middle East CEOs are not slowing down investments despite global macroeconomic uncertainties.
Following a successful FIFA World Cup, Qatar continues to be in the spotlight with the nation expected to carry a strong investment momentum into 2023. In fact, the nation ranks first among the world’s top foreign direct investment (FDI) destinations having achieved a compounded annual growth rate of 70 percent between 2019 and 20222.
Against this backdrop, which sectors are set to attract the most PPP investments in line with Qatar’s National Vision 2030?
1. Healthcare industry:
Despite its relatively small size, Qatar’s health expenditure per capita remains the highest in the GCC at USD1,8723. The nation is estimated to spend a budget of QAR21.1bn on healthcare in 2023, representing 11 per cent of Qatar’s fiscal budget, compared to QAR20bn in the previous year, signalling a 5.5 per cent increase4.
This expected rise in government expenditure highlights the opportunity for PPPs in this sector, encompassing the construction and operation of hospitals, clinics, and other facilities, as well as providing related services like medical equipment and supplies.
2. Education industry:
Following the successful completion of its first PPP project, Qatar is investing heavily in extending its education infrastructure. In 2019, the government announced a PPP initiative in the education system, whereby it plans to build 45 new schools at an estimated cost of USD1bn5, which is seeing great interest from the private sector across the education, construction and financial sector. In 2023, Qatar is estimated to spend a budget of QAR18bn on its education sector, representing nine per cent of Qatar’s budget, compared to QAR17.8bn in the previous year, signalling a two per cent increase.
Education-focused PPPs include the construction and operation of schools, universities, and educational facilities, in addition to offering relevant services like technology and training.
3. Hospitality industry:
Following a successful FIFA World Cup, Qatar anticipates a surge in tourism, leading to significant growth in the hospitality sector. Tourism is expected to contribute 15 per cent of Qatar’s global domestic product (GDP), or USD55bn, with the country targeting close to seven million tourists by 20306. The tourism agenda is accelerated by Qatar’s plans to become a global sports hub as it capitlises on its existing assets.
PPPs in this space involve constructing and operating hotels, resorts, and other facilities, as well as offering related services like food and beverage.
Additionally, other sectors like transportation, energy, water, and social infrastructure also present promising opportunities for PPP investment in Qatar. Examples include car parks, power and water plants, wastewater treatment facilities, food security initiatives, LED lighting projects, and the on-going development of Qatar University.
1) https://www.pwc.com/m1/en/publications/qatar-economy-watch-feb-2023.html
2) MENA countries to carry the strongest investment momentum into the new year | fDi Intelligence – Your source for foreign direct investment information - fDiIntelligence.com
3) Demand for health services rises in Qatar - Qatar 2020 - Oxford Business Group
4) Qatar's Budget a solid financial roadmap for 2023 | The Peninsula Qatar
5) Qatar's Budget a solid financial roadmap for 2023 | The Peninsula Qatar
6) Qatar hospitality scores big; hotel rooms to rise 89% by 2023 (arabnews.com)
Looking ahead
As Qatar’s PPP market grows, its share will expand over the coming years, offering considerable prospects for both domestic and international investors in numerous sectors. We expect that the establishment of a dedicated PPP unit and the introduction of PPP law to be received positively by the private sector, particularly foreign entities, as it is likely to enhance the unit’s capacity and capability.
