Kuwait has all the key elements needed for stable economic growth and sustainable social development: ample revenue from abundant hydrocarbon resources, strong fiscals backed by one of the world’s largest sovereign wealth funds, a young educated and energetic population, as well as a leadership with a clear vision and strategic plans for the future.
Kuwait also has a storied history of being at the forefront in the region and the wider Arab world in pioneering social, cultural and political reforms. It was the first in the region to introduce a constitutional framework for governance, an elected parliament, permit liberal freedom of expression, and introduce a partially-democratic style of governance with separate powers vested in the legislative, executive and judiciary.
And yet, Kuwait has in recent decades been consistently eclipsed by its more dynamic neighbors in the six-nation Gulf Cooperation Council (GCC) bloc on most metrics of development, including in terms of implementing necessary fiscal reforms, innovative projects, infrastructure plans, and in attracting foreign investments.
Kuwait, which at one time was in the vanguard of urban infrastructure development has now been shadowed by others in the region. The country was a pioneer in medical care having built the Amiri Hospital in 1949 to provide free medical care to citizens and residents. In 1953, the country set up one of the earliest wealth funds in the world, the Kuwait Investment Authority to diversify Kuwait’s oil wealth. The Kuwait University, which was established in 1966 imparted free higher education to citizens and attracted students from all over the region.
But all that was in yesteryears…
Since the 1980s, the country has trailed the region in introducing innovative policies and programs, in implementing much-needed economic and fiscal reforms, and in lagging behind on most metrics of infrastructure development. Many of Kuwait’s grandiose development plans and capital investment projects in the past have been either shelved or scrapped due to various reasons, ranging from bureaucratic hurdles, incompetant execution, budget constraints and alleged financial improprieties.
But perhaps more than anything else, Kuwait’s stunted development could be attributed to democratic style of functioning. One reason why neighboring states have been able to leapfrog Kuwait in development is that project takeoffs in other GCC states are not shot down or delayed by headwinds from a vocal parliament. Objections by opposition legislators in the National Assembly have often derailed or impeded necessary economic and financial reforms, and delayed the launch of several critical projects in the country.
Decades of underspending on urgently needed projects have led to inadequate or poorly maintained infrastructure in the country, including dilapidated water supply and sewage systems, congested road networks, absence of a modern public transportation system, and an international airport that remains, to put it mildly, a not up to the country’s image as a wealthy developed nation.
Over the years, political infighting and schism in parliament between an elected legislature and an appointed executive have been a major bane in introducing much-needed reforms, implementing vital projects, and in attracting foreign investments. Not surprisingly, Kuwait’s project market in terms of the value of awarded project contracts, and inward foreign investments have steadily declined.
Total value of awarded projects in Kuwait in 2016, which stood at KD5.6 billion, fell in 2017 to KD4 billion. In 2018, project awards dropped precipitously to KD1.8 billion — the lowest since 2009. And, in line with this declining trend, project awards in the first half of 2020, which were understandably low due to the coronavirus pandemic, stood at just KD500 million, a drop from the KD800 million awarded in first-half of 2019.
Kuwait also lost out to its more dynamic neighbors when it came to greenfield investment projects. According to the latest figures from global investment monitor, FDI Markets, during the five-year review period from 2013 to 2018, the UAE topped the regional list in attracting investments, while Kuwait came in last. During the review period, the UAE attracted investments worth US$50 billion in 1,582 greenfield projects — Kuwait received $4 billion in 73 projects.
In a bid to redress the laggard label and expedite the implementation of infrastructure and other construction projects, Kuwait launched a five-year National Development Plan in 2015. The plan was revamped and rebranded in 2019 as the New Kuwait: Vision 2035 plan, to reflect His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah’s strategic vision of transforming the country into a financial, trade and cultural hub in the region within the next 15 years.
Under the overarching umbrella of Vision 2035 the government has identified 164 strategic development programs and policies aimed at diversifying the economy away from its dependence on oil, encouraging greater private participation in development, and privatizing several public sector entities. To act as cornerstones to achieve the 2035 objectives the government outlined seven development pillars: Infrastructure development, Human Capital, Economy, Healthcare, Public Administration, Living Environment, and Kuwait’s Global Position.
To develop, supervise, monitor and regularly report on the plan, the government recalibrated the General Secretariat of the Supreme Council for Planning and Development (GSSCPD). Tasked to be the overall architects of Vision 2035, the GSSCPD has outlined various one-year and five-year development plans to achieve the goals of New Kuwait. The Council also regularly tracks, measures and reports on the progress and performance of the plan as it advances through various phases on its way to realizing Vision 2035.
At a recent media conference held to present its annual report on the 2019-2020 plan that ended on 31 March, the Secretary-General of GSSCPD, Dr. Khalid Mahdi revealed that 135 projects were included in the 2019-20 development plan. Of these, 119 projects were brought forward from the previous year and 16 new projects were added during the current year; 67 projects were more than 50 percent complete, 51 ventures were 38 percent complete,10 were 7 percent completed, four were in the 3 percent stage, and three were 2 percent complete.
Clarifying some of the challenges facing execution of projects, Dr. Mahdi said a total of 660 hurdles were identified in the implementation of various projects, including 248 administrative challenges, 190 technical challenges, 103 obstructions of financial nature, 91 challenges from supervisory authorities and 28 objections from the legislative side. He added that, while 40 percent of the projects were on schedule and 2 percent of the projects were ahead of schedule, 58 percent of the projects were running late. In addition, although nearly 22 strategic projects are identified among the pending projects, total funds allocated for projects in the 2019-2020 development plan was KD3.2 billion, which was lower than the KD3.8 billion a year earlier.
For its part, the Ministry of Public Works (MPW), which oversees the execution of projects under the plan, said that nearly 20 design agreements for construction projects suffered delays from various causes. These included a building project in the south Surra with a delay of over 70 percent, as well as a printing press project in Subhan, the family court project in Jahra, and the Children’s Hospital project in Al-Sabah health district, all delayed by over 50 percent.
According to the report, the delays were from various factors, including failure of consultants to adhere to MPW design specifications, technical difficulties and incompetence of contractors. The ministry said it had taken several measures against the erring parties, such as imposing fines for the delay, and requesting the Central Agency for Public Tenders to apply necessary penalties on the companies.
Despite having one of the world’s largest sovereign wealth funds, hydrocarbon reserves and resources, and ample liquidity with local commercial banks, Kuwait has persistently struggled to implement many of the critical infrastructure and development schemes that the country direly needs. A public debt bill that would have allowed the government to borrow on the international debt market at highly favorable terms, and help it tide over recurring budget deficits, has been repeatedly thwarted in parliament by lawmakers who accuse the government of economic and financial mismanagement.
The lack of cohesion between the executive and legislative, project gridlocks by different ministries, bureaucratic holdups in tendering and procurement processes, ineptitude of consultants and contractors to execute projects, budget constraints, lack of necessary economic reforms, we could keep counting the numerous reasons for project delays in the country, and its continued unattractiveness to investors.
But enumerating causes for project tardiness is simply an exercise in futility; what Kuwait urgently needs is a more decisive and assertive government. A government capable of overcoming hurdles, attracting investments, and boosting the implementation of crucial projects that are needed to achieve its socio-economic objectives, and its Vision 2035.
Report by The Times Kuwait