Public sector in the Middle East needs to improve infrastructure, ensure financial sector stability and access to finance as well as to create a skilled workforce, according to a CEO survey.
The PwC 14th Annual Global CEO Survey clearly shows optimism returning to the private sector in those countries worst hit by global recession; but the public sectors in many countries are now facing their own challenges as government’s battle to control increased public spending and manage public sector debt.
It is clear from the survey that public sector managers are facing many of the same challenges with which private sector CEOs have been wrestling through recession such as the need to retain and motivate core talent, and to innovate operations so they deliver more for less.
Drawing on the results of the Survey, and adding to it with valuable insights from senior government decision-makers, PwC’s Public Sector Research Centre has published its latest report in the Government and Global CEO series entitled Rethinking government: doing things differently.
The report sets out the views of CEOs, including a shared agenda with governments on issues such as health, wellbeing, education and climate change. It also highlights PwC’s views on how public sector organisations could do things differently to meet the needs of business and citizens.
The key risk facing business, uncertain, volatile economic growth, is now integrally linked with the challenge to governments, mainly in the West, of stabilising their economies by dealing with fiscal deficits and scaling back government debt whilst avoiding punitive tax increases.
“Clearly, the issue of uncertain growth and fiscal deficits does not apply equally to all countries, particularly in strongly growing economies such as China, India, Brazil and the Middle East. But we were surprised by the degree of consensus internationally on the threat to business arising from the impact of fiscal deficits,” said Jan Sturesson, PwC’s Global Leader, Government and Public Service.
Nearly two thirds (61%) of CEOs surveyed were concerned about fiscal deficits – including CEOs in countries where governments are not undertaking major austerity measures in their domestic economies, the exception being the Middle East. But there is evidence that business will actively support new government policies that will promote growth that is economically, socially and environmentally sustainable – 72% agreed with this approach.
The challenges identified by CEOs in the Middle East include improving national infrastructure, ensuring financial sector stability and access to finance, and creating a skilled workforce.
“These three priority areas for governments are fundamental to the creation of employment and new business opportunities that the increasing number of young people in the Middle East will require for the future,” added David Stevens, PwC’s Middle East Government Leader.
“In our view, governments must rethink the role of the state in the 21st century, develop policies to achieve ‘good growth’, tackle their finances, and innovatively consider doing fewer things and doing them very differently. Even those governments in the region that are not under such extreme budgetary pressures will benefit from taking a fresh look at ‘future-proofing’ their activities so they reduce the risk of being confronted with these types of problems in the future,” added David.
“A key message is the backing given by business for collaboration; 54% of CEOs surveyed believe that government and business partnership will be more effective at mitigating global risks from climate change to financial crisis. The need for collaboration is exemplified by the issue of infrastructure development, which is a top priority in the Middle East.”
“Given the dramatic need for investments in infrastructure, occurring at a time when many governments are scrutinising their budgets, the role of private capital in financing and developing infrastructure seems more critical than ever,” said Neil Broadhead, Middle East Capital Projects and Infrastructure Leader, PwC.
“Vast segments of existing infrastructure in the developed world are becoming deficient and the demand for new infrastructure in developing economies is growing. The scale of this infrastructure funding requirement means it’s unlikely to be met solely through public finance – there is a need for governments to collaborate with the private sector and reinvigorate capital markets as a source of funding.”
“Collaboration needs persistent engagement – perspiration as much as inspiration,” added Jan Sturesson. “A long-term view, investment in relationships and effective governance arrangements all need to be in place to realise desired outcomes.”