What does the future hold for Kuwait Infrastructure sector?

Faced with falling oil revenues as a result of the impact of Covid-19 and the OPEC production cuts, Kuwait adopted a conservative approach to government spending for the better part of 2020.

Several large capital expenditure projects were put on hold as the government sought to reprioritize projects, leading to a slowdown in the infrastructure sector in Kuwait.

However, large-scale infrastructure projects are also a means of reviving economic growth, and the importance of private sector partners to help finance, develop and operate infrastructure assets has never been greater.

Trend 1: Uncertainty creates planning complexity

Over the coming year, we expect infrastructure planners, operators, and developers looking for ways to enable a much more nimble and flexible approach to infrastructure planning, development, and delivery. Build back better is almost certain to result in build back different. 

Trend 2: Cities undergo an identity crisis    

Until very recently, cities acted as magnets, pulling people, capital and ideas inwards. How cities respond and adapt to the multipolarity catalyzed by COVID-19 remains to be seen. The new equilibrium is potentially a long way off.  

Trend 3: Borders become real again

What will this mean for ports and airports? This trend will cover insights from a ports and airports perspective. Indeed, we believe this year will see port and airport operators start to consider art of the possible - building newer and better infrastructure, unlocking more value from bytes than bricks and contributing to a cleaner and greener environment.

Trend 4: Supply networks reform

The impact on shipping, transportation and trade infrastructure will be significant.  This would mean the transport and logistics sector will have to reinvent themselves and newer business models will emerge. The 3-D printing potentially will get an even further boost to compliment supply chain localization and increase the resilience. 

Trend 5: A greener, fairer rebuild

Over the coming year, we expect to see the infrastructure sector become completely dominated by a focus on environmental, social and governance outcomes to ensure their actions are contributing to a fairer, more inclusive and more equitable world. We couldn’t be happier, and the world will be a better place for it.

Trend 6: Resilience jumps up the agenda

 Over the coming year, expect infrastructure owners, planners and regulators to start asking difficult questions about the resilience of their assets in its broadest sense. Those without an existing resilience plan should expect a grilling.

Trend 7: Delivering a digital world in a secured fashion

Over the coming year, expect the focus on connectivity to sharpen significantly. Very soon, governments are going to start to recognize that they must address the growing deficits in their digital infrastructure. And they will be looking at enhancing their connectivity in order to drive growth in both their economies and their balance sheets.

Trend 8: Policy and regulatory reform become imperative  

Indeed, infrastructure owners and governments currently have an unprecedented opportunity to rethink how they serve their stakeholders. We look forward to seeing and supporting the innovation and experimentation that will emerge over the coming year.

Trend 9: Governments look for partners

More than traditional financing partnerships, many governments are now striving to create partnerships that give them access to enhanced expertise and capabilities. Over the coming year, expect to see some governments start to reconsider the role the private sector plays not just in asset delivery, but also service delivery. In some cases, the partnership will be one of necessity as debt burdens from the pandemic push governments to find alternative models. In others, it will be driven by innovation and the desire to deliver more to stakeholders. Regardless, the outcome should be improved value for users and government alike.

Trend 10: New Finance floods into the market  

For well-prepared governments with a strong and structured pipeline, the news couldn’t be better. The ability to tap different sources of funding, including institutional capital and sustainable funds, over top of local and regional banks and capital markets, should lead to a wealth of well-priced capital to compliment government finances. Over the coming year, expect to see investors pile into vehicles that provide sustainable inflation-protected long-term annuity returns, particularly as treasury rates remain low. 

KPMG in Kuwait operates through its member firms KPMG Safi Al-Mutawa & Partners and KPMG Advisory W.L.L. providing a full range of audit, tax and advisory services to a portfolio of clients which include major corporations, government institutions, public sector agencies, and not-for profit organizations.

With over 200 employees and 8 partners based in Kuwait, we form part of a global organization of independent professional services firms operating in 146 countries and territories with more than 227,000 people working in member firms around the world drawing on global industry insights to complement our strong local knowledge.

Karen Watts 
Partner Risk
KPMG in Kuwait
kpwatts@KPMG.com