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IBMBT_23_GUECEM_Malik_VFR.pdf
Bachelor thesis

Water infrastructure finance in Egypt : an explorative outlook

  • Genève : Haute école de gestion de Genève

58 p.

Bachelor of Sciences HES in International Business Management: Haute école de gestion de Genève, 2023

English As the topic of sustainable development is becoming increasingly central in all matters of international cooperation efforts, one element in particular can arguably be singled out as the core around which the concept revolves: infrastructure. Indeed, be it to process food, generate energy or distribute water, relevant infrastructure needs to be built and operated in order for society to function.

However, some of the regions that need infrastructure the most find themselves unable to conduct enough projects, as they struggle with a growing population, an increasing exposure to climate-related issues and a lack of funding. At the forefront are Emerging and Developing Economies, that tend to suffer from all three simultaneously, at unprecedented scales.

This raises questions regarding what can be done in order to ensure adequate resources are available to all regions of the world, and more specifically what can and should be optimized to reach this goal. One common denominator being the need of all infrastructure endeavors to have access to funds, this research aims to explore and understand the forces that influence how such projects are financed in these regions – so as to create the baseline that will be necessary to craft a definitive answer.

In order to illustrate how these forces interact with each other and what types of underlying entities affect them, this paper focuses on two specific types of infrastructure, those of irrigation and wastewater treatment, in one country in particular: Egypt. Indeed, both this State’s geographical conditions – namely its arid climate and dependency on one main source of freshwater – and macroeconomic conditions – mainly its relative lack of funding, dependency on an exposed agricultural sector and national strategies steered towards sustainable development – make for an interesting combination, that renders these particular types of infrastructure key to its development.

For this research to be as holistic as possible, various axes are explored, from the basics of project finance to the interests of investors when developing infrastructure ventures in Emerging Economies. Then, the case of Egypt is analyzed empirically, so as to afterwards be able to both illustrate the conceptual findings and determine the extent to which they are applicable to its landscape – in addition to insights regarding what tendencies are observable and what forces appear to be most prominent for the realization of water infrastructure endeavors.

Throughout this report, it becomes increasingly clear that the main element that determines how such ventures are financed is linked to the underlying source of funding, i.e. whether the main financiers are public or private entities. Their interests being quite vastly different, so too are the types of returns they seek and financing instruments they use – as well as, consequently, the types of infrastructure projects they are willing to endow. Water infrastructure providing mostly public goods, public entities tend to be by far the most prominent source of funding. Additionally, the various risks (and costs) that come with such projects also play a major role, and likewise mainly draw in public finance. Interestingly, for such particular ventures all three aforementioned dimensions go beyond the simple financial aspect, as both the benefits and challenges they are linked to are quite unique to the water sector and are deeply entangled with the wider macroeconomic and geopolitical landscape.

Access to water and the management of this resource are a key part of any country’s well-functioning. As such, understanding what determines the financing of the relevant infrastructure linked to it, especially in a state as exposed to risks of shortages as Egypt, provides important insights regarding the impact each factor has, and to what extent the current framework can be optimized – thus hopefully contributing to the creation of a basis for the improvement of living standards across the developing world.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • International Business Management
  • hesso:hegge
Persistent URL
https://sonar.ch/hesso/documents/327655
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