Karachi: InfraZamin collaborated with Nutshell Group to jointly host Pakistan’s first ever Infrastructure Summit at a local hotel in Karachi. Infrastructure development helps reduce unemployment and stimulates economic growth. In his welcome address, Muhammad Azfar Ahsan, Founder & CEO, Nutshell Group, and former Minister of State & Chairman, Board of Investment, said, “For infrastructure, we need political stability for an empowered public sector funding and though there is a huge potential for economic growth through foreign direct investment, we need to focus on the local investors first and mobilize that money on priority.” Maheen Rehman, CEO, InfraZamin, emphasized the importance of infrastructure development. She said that as a country of 220 million people, we should be spending 10% of our GDP for developing the infrastructure on an annual basis, whereas our current spending is less than 2%. She highlighted the need for rigorous development in the areas of education, health, and agriculture.
Continuing the discussion, Layth Al-Falaki, CEO GuarantCo, said, “Development now is ‘climate resilience’ and Pakistan being a frontline state for climate crisis needs to inbuild the SDGs into its vision. Now is the right time to invest in climate-resilient projects to rebuild infrastructure in the country.” Corroborating on the same, Jo Moir, Development Director Foreign Commonwealth & Development Office in British High Commission Islamabad, stated, “Due to Pakistan’s severe climate vulnerability, we believe in not only providing the right infrastructure for climate resilience but also assisting in the transition to decarbonization.”
The Chief Guest, Governor State Bank Pakistan, Jameel Ahmad, added the tangent of Green Economy by elaborating on the sustainable initiatives of the State Bank; “On behalf of SBP, I assure you that we will continue to promote sustainable infrastructure financing and facilitate the financial institutions.” Talking about the disastrous floods in Pakistan, Mr. Ahmad highlighted that the country needs USD 16 billion to overcome the devastation. Besides post-flood rehabilitation and development, the country also needs economic feasibility for health, food, water, and agriculture. He further expounded that the investment opportunities in Pakistan are very limited, whereas the need for investment is much more. Measures to promote a climate-resilient economy will be the game changers and he was happy to note that many banks had already initiated green banking guidelines.
Talking about the lessons from the Private Infrastructure Development Group (PIDG) experience on blended finance, Layth Al-Falaki, CEO GuarantCo, said, “At PIDG, we walk the talk, and that sets us apart because we start with a risk appetite. We support the private sector in fragile countries affected by crisis and conflict.” The conversation between Maheen and Al-Falaki focused on the possibility of investment in emerging markets of Asia and Africa. Talking about the future, Layth Al-Falaki commented, “We need to find a way to get investment in capital markets, especially for climate resilience.”
A panelist dialogue on “Developing Private Sector Markets to Finance Long Term Projects” was moderated by Moin Iqbal, Head of Business Origination, InfraZamin. Talking about commercial banks, Zafar Masud, President & CEO, The Bank of Punjab, said, “There is a serious problem as far as the asset-liability is concerned; only 1.2% of the total deposits are beyond 5 years. If we forecast a 10-year GDP forecast for Pakistan, the requirement is around PKR 5 trillion a year for infrastructure financing, which is not possible through the current funding pot.”
Speaking of challenges, Farrukh H. Khan, CEO Pakistan Stock Exchange, commented that the basic challenge is the current practice of banks of investing in bonds and holding on to them for long periods of time.” Naz Khan, Principal Country Officer, IFC, Pakistan, said, “The current portfolio of Infrazamin/PIDG in Pakistan is close to 1.3 billion USD and IFC is looking to scale up to almost double in the next 3 years.” She also spoke of the needed paradigm shift where infrastructure ownership needs to come from private equity.
Yasir Qadri, CEO, UBL Fund Managers, contributed to the discussion; “We never thought we could raise microfinancing from mutual funds, but we did, and it was quite a large sum, so if we get the product structure right, a lot can be achieved.” The session ended when Syed Moonis Abdullah Alvi, CEO, K-Electric, asserted that privatization of the power sector in Pakistan is the only solution to get rid of the PKR 3 trillion circular debt. Zafar Masud and Farrukh H. Khan appreciated K-Electric’s financial modeling and shared their willingness to collaborate.
Moving to the Closing Session, Dr. Shamshad Akhtar, Chairperson, Pakistan Stock Exchange, SSGC and Karandaaz, summed up the discussion, “It is important to recognize that InfraZamin/PIDG has the power to leverage long-term infrastructure financing from both domestic and foreign investors.” She also said that Pakistan’s fiscal constraints limit public investment in infrastructure, which makes it critical for us to attract private financing. She expressed her wish to see an infrastructure bank in Pakistan.
The Guest of Honor, Akif Saeed, Chairman, Securities and Exchange Commission of Pakistan, spoke on the development of capital market ecosystems for sustainable infrastructure funding. He said, “We need to have a dialogue between different stakeholders to have an integrated approach towards infrastructure development and SECP will work hand-in-hand with InfraZamin to achieve this goal for Pakistan.”
In her closing remarks, Maheen Rehman said, “The purpose of this summit was to highlight new ways to develop the basic infrastructure needed for Pakistan. InfraZamin along with PIDG and GuarantCo is committed to support financing with innovative instruments where needed.” She also spoke on the need for local players and the private sector to be the main engine for growth.
The International Finance Corporation (IFC), UK Aid, Infraco Aisa, Private Infrastructure Development Group (PIDG) and GuarantCo are partners with InfraZamin Pakistan.