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KARACHI: InfraZamin partnered with Nutshell Group to co-host Pakistan’s first ever Infrastructure Conference at a local hotel in Karachi.
Infrastructure development helps reduce unemployment and stimulate economic growth. In his welcome address, Muhammad Azfar Ahsan, founder and CEO of the Nutshell Group, and former foreign minister and chairman of the Board of Investment, said: “For infrastructure, we need political stability for enhanced public funding and even though it is huge. the possibility of economic growth through foreign direct investment, we need to focus primarily on local investors and mobilize that money as a priority.
InfraZamin CEO Maheen Rehman emphasized the importance of infrastructure development. She said that as a country of 220 million people, we should spend 10% of our GDP to develop the infrastructure on an annual basis, but our current expenditure is less than 2%. She pointed out the need for strict development in the fields of education, health and agriculture.
Continuing the discussion, GuarantCo CEO Layth Al-Falaki said, “Development now is ‘climate resilience’ and Pakistan, being a frontline country for climate issues, needs to incorporate the SDGs into its vision. Now is the right time to invest in climate-resilient projects to rebuild the country’s infrastructure.” Jo Moir, Director of Commonwealth and Development Affairs at the British High Commission in Islamabad, confirmed the same: “Due to Pakistan’s severe climate vulnerability, we believe in not only providing the right infrastructure for climate resilience but also help with the transition to decarbonisation.”
Chief Guest State Bank Pakistan Governor Jameel Ahmad added a green economy touch by elaborating on the State Bank’s sustainable initiatives; “On behalf of SBP, I assure you that we will continue to promote sustainable financing of infrastructure and facilitate financial institutions. Speaking about the disastrous floods in Pakistan, Ahmad said the country needs US$16 billion to overcome the devastation. Apart from post-flood rehabilitation and development, the country also needs economic viability for health, food, water and agriculture. He further explained that the investment opportunities in Pakistan are very limited, but the need for investment is much greater. Actions to promote a climate resilient economy will be a game changer and he was pleased to note that many banks had already launched green banking guidelines.
Layth Al-Falaki, CEO of GuarantCo, said of the lessons learned from Private Infrastructure Development Group’s (PIDG) experience with blended finance: “At PIDG we are talking to each other and that sets us apart because we start with 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 investing in the emerging markets of Asia and Africa. Speaking about the future, Layth Al-Falaki said: “We need to find a way to get investments in the capital markets, especially for climate resilience.
A panel discussion on “Evolving private markets to finance long-term projects” was moderated by Moin Iqbal, Head of Business Origination, InfraZamin. Talking about commercial banks, Zafar Masud, Director and CEO, Bank of Punjab said, “There is a serious problem as far as the asset debt is concerned; only 1.2% of total deposits are longer than 5 years. If we project a 10-year GDP forecast for Pakistan, the requirement is PKR 5 trillion per year for infrastructure financing, which is not possible with the current funding pool.”
Talking about challenges, Farrukh H. Khan, CEO, Pakistan Stock Exchange, said that the fundamental challenge is the current habit of banks to invest in bonds and hold them for a long period of time.” Naz Khan, Country Head, IFC, Pakistan, said: “The current portfolio of Infrazamin/ PIDG in Pakistan is close to USD 1.3 billion and IFC aims to grow almost double in the next 3 years. She also spoke about the necessary paradigm shift where ownership of infrastructure needs to come from private equity.
Yasir Qadri, CEO, UBL Fund Managers, contributed to the discussion; “We never thought we could raise microfinance from mutual funds, but we did and it was quite a large amount, so if we get the product structure right, a lot can be achieved.” The session ended when Syed Moonis Abdullah Alvi, CEO of K- Electric, asserted that privatization of Pakistan’s power sector is the only solution to get rid of PKR 3 trillion circular debt. Zafar Masud and Farrukh H. Khan appreciated K-Electric’s financial models and shared their willingness to collaborate.
Dr. Shamshad Akhtar, Chairman of the 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 both domestically and internationally. foreign investors.” She also said that Pakistan’s fiscal constraints limit public investment in infrastructure, making it important for us to attract private funding. She expressed her desire to see an infrastructure bank in Pakistan.