How Privatisation Can Transform Economic Growth and Sustain FDI: Insights from WGS-EY Report

The World Governments Summit (WGS) Organisation, in collaboration with EY, has unveiled a pivotal report titled ‘Cultivating Confidence Towards Attracting and Retaining FDIs’. This document serves as a roadmap for governments aiming to enhance their economic growth and financial stability by drawing and maintaining foreign direct investments (FDIs). The report delineates three fundamental principles crucial for the successful privatization of sectors: effective corporate governance, transparent and reliable financial reporting, and strong environmental, social, and governance (ESG) factors. These principles are designed to foster the development of a resilient and sustainable economy.

Firas Qoussous, EY MENA Government and Public Sector Leader, emphasized the significance of privatization in the global economic landscape. He noted that governments that have excelled in transforming their economies share a common strategy of privatization. Qoussous highlighted the necessity for governments to revamp their governance frameworks to promote sustainability, agility, and resilience. He stressed the importance of creating sustainable environments that attract FDI while eliminating obstacles.

Mohamed Al Sharhan, Managing Director of the World Governments Summit Organisation, pointed out the need for governments to be proactive in forging new paths to withstand economic shocks. He mentioned the importance of sharing experiences and models to attract FDI, especially in an era where investors prioritize ESG factors. The report aims to guide policymakers in adopting new frameworks that align with these evolving investor priorities.

The Evolving Investor Mindset

The traditional focus on return on investment (ROI) is shifting towards incorporating ESG factors into decision-making processes. The report also underscores the role of Internal Controls Over Financial Reporting (ICFR) in achieving transparent and reliable financial reporting. Hisham Dally, EY UAE Financial Accounting Advisory Services Director, remarked on the criticality of establishing robust regulatory frameworks for attracting FDI and fostering economic growth.

ESG Initiatives Driving FDI

The success of ESG initiatives is contingent upon the collaborative efforts of governments, market players, and investors. This synergy generates confidence and attracts FDIs, contributing significantly to national GDP and economic expansion. By adhering to ESG principles, governments not only facilitate privatization but also create an environment conducive to sustained FDIs.

WGS 2024: A Confluence of Global Leaders

The WGS 2024 witnessed participation from over 4,000 individuals across public and private sectors in 110 interactive sessions. The event featured 200 speakers from 80 international, regional, and intergovernmental organizations including prominent entities like the UN, World Bank, IMF, WHO, IAEA, and the Arab League. It also hosted eight Nobel prize winners and facilitated 23 ministerial meetings with more than 300 ministers in attendance. Alongside these discussions, the Summit launched over 25 strategic reports in partnership with select knowledge partners, focusing on key practices and trends across vital sectors.

This comprehensive approach by the WGS Organisation and EY underscores the evolving landscape of global investments. By prioritizing sound governance, transparency, and ESG principles, governments can unlock new avenues for economic prosperity through FDIs.

With inputs from WAM