Kuwait Financial Centre S.A.K. “Markaz” organized a roundtable meeting with World Bank officials and economic figures from Kuwait’s private sector to discuss challenges and opportunities facing Kuwait’s private sector. The discussion was held in Kuwait City at the occasion of the visit of Ms. Inger Andersen, MENA Region VP – World Bank who was in Kuwait accompanied by a delegation from the Bank on a mission to review the Bank-Kuwait cooperation program.
Attending business leaders included 20 private sector representatives from eight economic sectors, which were Investment, Education, Oil and Gas, Construction, Banking, Real Estate, Petrochemicals and the Industrial sector. Also among the attendees were senior officials from the World Bank Regional Strategy and Programs Departments in the Middle East and North Africa Region and Dr. Merza Hasan, World Bank Executive Director for the Arab States, in addition to officials from the World Bank Kuwait Country Office headed by Dr. Bassam Ramadan.
Markaz CEO Mr. Manaf Alhajeri opened the discussion stating that “The objective of this gathering is to provide a forum for the World Bank to learn firsthand the challenges and opportunities the private sector is facing and how the World Bank can help address those and contribute to Kuwait’s sustainable development.”
Mr. Alhajeri set the framework of the discussion, saying: “It is our true belief that our region has the unique and unusual character of being a super solvent region from the state finances point of view, but with shallow capital markets for the private sector to grow and expand to help create jobs and redress imbalances in our economies.”
Ms. Anderson addressed the roundtable pointing out that “Kuwait has been a partner in the World Bank’s Strategic Cooperation Program for over thirty years. The program’s framework presently covers strategic areas such as improving public sector performance, diversifying the economy through increased private sector development, and enhancing human development, including through technical assistance in the education sector. In 2008, the Kuwaiti government and the Bank signed an agreement to establish the World Bank’s office in Kuwait. The office was officially inaugurated in January 2009.”
Ms. Anderson stressed the importance of such dialogue in improving the Bank’s understanding of the private sector in Kuwait. She noted that supporting government efforts to enhance the private sector’s ability to contribute to the country’s sustainable development has been among the Bank’s strategic priorities in Kuwait.
The roundtable concluded with the following highlights:
- Institutions dealing with the private sector must share the principle that the private sector is a key partner in promoting sustainable economic development and creating jobs. Such commonality in principle can be reinforced through policy statements that address;
- Growing demands for effective service delivery to the private sector by the public sector.
- Call for a more capable, responsive, and high performance public sector that delivers public goods and services to make growth inclusive and equitable.
- Promote an open government where businesses have increasing opportunities to know what has been decided (transparency) and to be heard (consultation and participation).
- Strengthen performance-linked compensation in the public sector.
- Enhance transparency and availability of information.
- Focus on service delivery reforms.
- Increase private sector participation in policy development and implementation.
- Enhance accountability of public sector leaders.
- Ensure rule-based public administration practices are in place.
Institutions and Capacity building
- Developing public institutions that actively engage with the private sector enabling them to become world class institutions, and promoting a performance-based culture that rewards excellence in all facets of business, including in managing human resources, governance, and promoting best practices.
- Enhancing technical and institutional capacities of the public sector to provide sufficient depth in government to deal with the rising complexity of the business environment in a timely and pre-emptive manner. Relying on external consultants cannot be sufficient by itself to improve public sector effectiveness, unless the agencies and ministries concerned have sufficient intellectual depth to absorb and execute the knowledge procured by outsourced consultancies.
- Institutions interacting with the private sector should be more competitive and world class in terms of their human resources recruitment policies, vision, and openness to business.
- Open and free market practices should be promoted; prices should be flexible enough by the private sector to reflect supply and demand changes and to reflect goods and services differentiation. Such price flexibility should not be undermined by the regulatory bodies.
- A number of government agencies are entering directly or indirectly in competition with the private sector, thus crowding-out the private sector. The state should promote – not weaken- the private sector.
- Tackling market distortions in wage discrepancies between the private and public sector is key for private sector development in Kuwait.
- Improving and developing investor’s access to land trough fair and transparent procedures is a must to enhance private sector contribution to a more sustainable and balanced economic growth.
- Measures to combat corruption must go hand in hand with key performance indicators for the state in terms of honoring its role to empower the private sector. Such indicators can include growth of the non-oil sector, jobs created by the private sector, and foreign direct investments.
- Create or revisit “arm’s length” institutions and policies to ensure that various state agencies do not enter in litigations with the private sector while becoming both opponent and arbitrator.
- The post crisis debate on Governance and transparency should not solely target the private sector. The debate should also include the importance of good governance in the public sector, given the critical role the public sector plays to improve transparency, efficiency, and effectiveness in the system.
- Reforming public sector’s governance, transparency, and effectiveness is a must. Modernizing our institutions to adopt the investor/client friendly environment is no longer a choice, it is an absolute must.
- There is need for policy making tools to ensure optimal coordination among various government bodies dealing with the private sector.
The participants concluded that no sustainable economic growth can be achieved without a capable public sector –that is well equipped with strong policy making tools - and a vibrant private sector with able leaders who can help shape such policies. They agreed that the World Bank, with its solid track record of successful development support in more than 180 countries and in various sectors, is well positioned to act as a strong reservoir of developmental knowledge and could play a role in supporting private sector development in Kuwait, including through support to the government efforts to reform the public sector itself.
About Kuwait Financial Centre “Markaz”
Kuwait Financial Centre S.A.K. 'Markaz', established in 1974 with total assets under management of over KD 865 million as of December 31st, 2011, is the leading and award winning asset management and investment banking institution in the Arabian Gulf Region. Markaz is listed on the Kuwait Stock Exchange (KSE) since 1997 under ticker Markaz.