Dubai – MENA Herald: In today’s questioning world, with populist sentiments rising against globalization and the greed of a few, the private sector should not only revisit its business models but also conduct a dialogue with other stakeholders including the government and civil society, experts concluded during a session titled ‘Private Sector of the Future’. Organized in collaboration with the International Finance Corporation (IFC), the session took place on the last day of the World Government Summit 2017 in Dubai.
Pointing to the private sector’s increased focus on sustainability, Dimitris Tsitsiragos, Vice President of New Business at IFC, said: “Sustainable business models used to be seen as risky and costly, but increasingly less so now. We believe that development and profitability go hand in hand, and we see companies willing to take risks in sustainable development and creating new markets. According to one study, UN Sustainable Development Goals (SDGs) could open up 60 of the world’s biggest market hotspots, worth up to US$12 trillion a year in business savings and revenue.”
He added: “Sustainable development is a business opportunity, and within it, gender equality is another opportunity. Addressing gender inequality can contribute about US$28 trillion to global GDP by 2025.”
Tsitsiragos praised the region’s efforts in the renewable energy sector, highlighting global opportunities in urbanization and digital transformation. Furthermore, he emphasized the need for governments to work with the private sector to shape a sustainable and inclusive future.
He said: “For that to happen, governments have to tackle various challenges that investors face – corruption, regulation, overbearing national companies that squelch private enterprises – and create a level playing field for the private sector. We see progress, but we feel a lot more needs to be done.”
Joseph Brandt, CEO of ContourGlobal, which invests in power infrastructure in remote corners of the world, pointed to the challenges in attracting private capital.
He said: “The challenge has been to attract the type of investors that are comfortable with infrastructure as an asset class, with investing in power, roads and ports. We need to bring them out of their comfort zone in terms of geography and get them to understand that the investment returns are at a risk-adjusted basis actually much better than what their capital is yielding in the developed world, save for the headline risk.”
Citing the example of Togo, where ContourGlobal invested in a 100 MW power plant, doubling the country’s electricity capacity, Brandt added: “We had government guarantees for offtakes, long-term contracts, no volume risk, constructive agreements with development finance institutions (DFIs), and IFC as an equity partner. Our investors were universities from the US and pension funds from the Netherlands. Fast-forward 11 years, and we are still in the phase of attracting very hesitant and nervous capital, project by project.”
Fadi Ghandour, Executive Chairman of Wamda Capital and founder of Aramex, believes the private sector should examine its relevance in society beyond producing products and making profits.
He said: “The private sector must forge partnerships with the government, DFIs and society, otherwise it will continue to be viewed negatively, and that would be detrimental to society.”
Anna Ryott, Managing Director of Swedfund, the development finance institution of the Swedish government, stressed that investment is not just about financial viability and sustainability, but, even more importantly, about impact on society.
She added: “We invest 70 percent of our capital in Sub-Saharan Africa, and our entire business model is built on three pillars representing its impact on society – number of jobs created, contribution to tax income in the target countries, and knowledge transfer.”
For his part, Sandeep Aneja, founder of Kaizen Private Equity, said: “I believe the private sector has an important role to play in uniting the government, the people, and the educators in a working partnership.”
Explaining his reasoning, he added: “We need to think of the people who are not in the room – the millennials – who are going to drive the economy for the years to come and will earn extremely differently from us. One skill we must give them today is the skill to learn and unlearn. This skill is not easy to impart and extremely difficult to measure. As the private sector is at the forefront of risk management, it potentially has the ability to develop such a measuring mechanism and invest in it.”
The World Government Summit (WGS) 2017 has drawn the participation of more than 4,000 personalities from 139 countries around the world, reflecting the leading stature of the summit on regional and international levels and the high interest from governments, global organizations, private and public sector entities, decision makers, entrepreneurs, academics and university students as well as scientists and innovators. WGS 2017 features 150 speakers across 114 sessions that highlight the world’s most pressing challenges and showcase best practices and cutting-edge solutions to deal with them.
