EU - IFIs: A Coordinated Response to Emerging Challenges in the Southern Mediterranean

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Marcos Bonturi Director, Global Relations Secretariat, OECD

Brussels, 1 October 2014

The OECD and the MENA region: Promoting inclusive growth and job creation

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The regional MENA-OECD Initiative on Governance and Investment for development

Objective: regional fora to foster policy dialogue on investment climate, governance structures and operations, regional partnerships, and inclusive and sustainable economic growth

2 pillars Governance Investment

• Open/clean governments • Efficient Machinery of Government • Gender Equality • Justice Institutions • Territorial Development

• Investment policies and promotion • Entrepreneurship and SME development • Business integrity and corporate

governance • Women in the economy

Country-specific activities to promote reforms Examples: • Business Climate Review (Egypt: 2010 & 2014; Morocco: 2011) • Transition Fund projects (eg Tunisia: promoting GVCs and PPPs, Jordan: supporting investment reforms) • Adherence to the OECD Declaration on International Investment (Egypt, Jordan, Morocco, Tunisia) • Country-programme Morocco

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Investment climate Business environment MENA challenges

OECD activities

• High unemployment (world highest youth unemployment rate)

• Limited growth

• Regional dialogue on investment policies and promotion

• Country assessments • Fostering regional

integration (cooperation with the Arab League)

• Regional dialogue on SME and entrepreneurship

• SME Policy Index

ISMED Programme

• Increase legal investment security and mitigate risks in infrastructure projects

Attracting infrastructure investment for job creation and sustainable development

Creating framework conditions for doing business

Women in the economy

Business integrity

ISMED integrated in the 4 pillars of the MENA-OECD Investment Programme

• PPP investment climate: a subset of the overall investment climate

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ISMED rationale: Infrastructure plays a vital role & governments procure

infrastructure is changing

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• MENA infrastructure needs

through 2020: USD 106 billion per year or 6.9% of annual regional GDP (World Bank, 2012).

• Methods of procuring

infrastructure have evolved: Public-Private Partnerships are now a key component of infrastructure procurement. Infrastructure projects in the MENA

region, by type of projects (1990-2012)

ISMED Implementation: OECD with support from EU and France

ISMED Support Programme

Policy Advice Advise host governments on reducing legal and regulatory risks facing private investors in infrastructure projects.

Policy Dialogue Bring governments, IFIs and private sector together in a dialogue to help ensure that project-specific recommendations lead to broader reform.

Capacity Building Assist local public authorities to better understand the elements of a successful PPP infrastructure project.

Provide policy support to increase private infrastructure investment

Coordination Ensure coordination between IFIs, regional/ bilateral financing partners, implementing institutions, to foster integrated approaches and provide a cooperation platform.

Joint EU-OECD

ISMED Working Group

Develop innovative policy tools fostering private infrastructure investment.

Task Force 1: Project finance and risk

mitigation Tailor existing risk mitigation and project finance instruments to MENA region realities.

Task Force 2: Arbitration

Foster cooperation between arbitration institutions and create a Euro-Mediterranean arbitration community, in cooperation with UNCITRAL

Task Force 4: Islamic finance

Identify ways to make existing Islamic instruments suitable and adapted to long-term project finance.

Task Force 3: PPPs & risk-sharing

Examine legal and governance aspects of PPPs and optimal proportioning of risks between private and public sectors.

Co-Chairs: France & Iraq

• Protecting Investment in Arab Countries in Transition: Legal Frameworks for Infrastructure Investment in Egypt, Jordan, Morocco and Tunisia Identifies gaps and suggests policy options for strengthening the legal environment for

investment, in particular in infrastructure development.

• Public-Private Partnerships in the Middle East and North Africa: A Guide to Policy-Makers

Best-practice guidance intended to assist MENA policy-makers in understanding what is

required to move a project from a conceptual stage to the point where it is a viable transaction, suitable for private-sector or IFI investment.

• Process:

Consultations with IFIs and relevant partners Validation Publications to be launched on 4 December 2014 Next step: Need for capacity-building

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Regional policy guidance: Analytical activities based on country assessments

• Egypt: River Transport Authority (Ministry of Transportation) Objective: Assist the RTA in advancing a Nile river ports PPP project Methodology: Identify the short and long-term actions required to

strengthen the project’s legal and business environment, prioritise the implementation of appropriate policy remedies

Jordan: Ministry of Environment Objective: Assist the Ministry of Environment in designing an

optimal incentives framework for renewable energy infrastructure Methodology: Examine the existing framework for renewable

energy development and identify potential gaps and challenges, prioritise the implementation of appropriate policy remedies

Morocco: Agence Marocaine de Développement de la Logistique (AMDL)

Objective: Assist AMDL in designing a national strategy for logistics zones development

Methodology: Drafting of a benchmarking study of legal frameworks for logistics zones

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Country-specific activities: A guided process for reforms

Process

Project identification with government and EC

Assessment studies in coordination with government stakeholders and consultations of IFIs

Public-Private Dialogue to discuss the assessment report and recommendations with participation of IFIs

Capacity-building on PPPs (eg training session on PPPs in Egypt’s River Transport Sector, 18 Sept. 2014) with participation of IFIs

Presentation of the assessment report to the Annual ISMED conference (4 Dec. 2014)

The ISMED Annual Conference 4 December 2014, Paris:

Launch Egypt, Jordan and Morocco Assessment Reports

• Recommendations to improve the frameworks for transportation PPPs in Egypt, renewable energy infrastructure in Jordan and logistics zones in Morocco

Launch PPP Handbook and the study on legal investment protection Review and discuss the recommendations of Working Group task forces Discuss coordination with IFIs and key partners

Define work plan and outputs in 2015 and beyond

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The 2014 ISMED Conference

• ISMED experience suggests a role for the OECD in helping MENA governments understand the challenges of PPPs.

• The OECD can help lay the ground work for IFI involvement

Following the public-private dialogue on Egypt’s river transport sector, AfDB and EBRD have now become engaged with the RTA (River Transport Authority) to determine project feasibility.

• The OECD as a convening power for IFIs consultations

Spring 2014: bilateral discussions with experts from EBRD, EIB, IFC, EC, MIGA and exchange of

information and studies (summary in the July 2014 newsletter)

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The Way Forward ISMED: a complementary and coordinated approach with IFIs

• The OECD and the EU Commission have been collaborating to pursue the common objective of sustainable development of the region.

• Analytical work and policy recommendations developed by the OECD with EU funding can reinforce the Commission’s actions in the region.

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The Way Forward: Leveraging OECD-EU Co-operation

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• Develop knowledge and best/innovative practices:

Develop recommendations on project finance and risk-mitigation; risk-sharing; Islamic finance and arbitration

• Develop tools for enhanced cooperation on investment

promotion and investment insurance schemes involving a wide range of stakeholders

• Enhance the efficiency of legal investment protection

measures and guarantee instruments for infrastructure projects

The Way Forward: Enhance knowledge, capacity and implementation

Opening Speech by Admiral Amer, RTA Chairman (Cairo, 16 Sept. 2014)

Training Session on PPPs, delivered to RTA staff with PPP Central Unit and partner IFIs (Cairo, 16-17 Sept. 2014)

Mr Marcos BONTURI Director, Global Relations Secretariat, OECD

Marcos.Bonturi@oecd.org

www.oecd.org/investment/psd/ismed.htm

With the financial assistance of the European Commission

Key Contacts