Building up: Rapid population growth has highlighted the need for infrastructure development

The rapidly expanding population presents Bahrain with a number of challenges, including the need to provide more housing, transport infrastructure, utilities, educational opportunities, health care and food over the coming years. The kingdom will not have to meet these needs alone, however, as several of its neighbours in the GCC are providing significant development funding. The population has already grown substantially in the past several years. According to the most recent information published by the Central Bank of Bahrain (CBB), released in June 2012, the kingdom’s population increased by nearly 24% between 2006 and 2011, from about 960,000 people at the end of 2006 to almost 1.2m six years later. Estimates made by the World Bank put Bahrain’s 2011 total population over 1.32m. And while the expatriate population has grown at a quicker pace than the Bahraini population, the number of Bahrainis living in the country still expanded by close to 16% between 2006 and 2011, according to the CBB.

Moreover, the number of residents is expected to increase to 1.5m by 2020, according to the Ministry of Education (MoE). This jump in the population will not be entirely due to greater numbers of expatriates moving to the kingdom. Indeed, the MoE reported in 2012 that Bahraini nationals should account for about 690,000 of the total by 2020, compared to 585,000 in 2011, according to CIO figures. The MoE has also noted that the Bahraini working-age population should expand by over 40%, reaching more than 400,000 people by 2020.

FEEDING GROWTH: To feed the growing population, the government is helping to shift farmers from traditional methods to new technology. The objective is to improve food security by investing in technologies and firms in agriculture, as well as purchasing agricultural land outside of Bahrain. Waheed Al Qassim, the secretary-general of the National Initiative for Agricultural Development, told OBG, “Farmers are being trained to adopt new technology such as hydroponic machinery because Bahrain has a finite amount of water and land. As a country we are trying to increase production while simultaneously keeping costs low for local farmers.”

As Bahrain has undergone significant population growth in recent years, the economy has also expanded quickly. Despite some difficulties due to unrest in early 2011, the economy recorded real GDP growth of 3.4% in 2012 – a substantial increase when compared to growth of 1.9% in 2011. Yet, while the country’s economic strength should help to meet many of the challenges anticipated in the coming years, Bahrain does not have as much oil wealth as some of its neighbours, and external financial assistance over the coming decade should be a significant benefit to the kingdom’s economy. The CBB recently reported that Bahrain recorded a deficit of over 5.5% of GDP before being rolled over in 2010 and a deficit of 0.3% of GDP in 2011. The government’s 2013-14 budget includes a slight deficit in each year as well.

GCC SUPPORT: Saudi Arabia, the UAE, Kuwait and Qatar, however, have joined together to provide a total of $20bn of development funding for Bahrain and Oman. Each country will receive $10bn over the next 10 years, according to the Economic Development Board (EDB). The Bahraini part of the scheme is officially known as the GCC Support Programme for Bahrain (GCC SPB). The Ministry of Finance (MoF) reported in February 2013 that the GCC SPB will supply the kingdom with $1bn of funding each year, beginning in 2013. The four contributor countries will distribute the donations equally, with each country contributing $2.5bn over the 10-year period.

The funding will not be counted as part of the Bahraini government’s budget and will be exclusively linked to projects, which will cover a broad range of needs. For example, Saudi Arabia recently announced that it will be funding housing, education, infrastructure and water projects for its first phase of financing. According to recent EDB figures, $336m of this first phase of funding has been allocated to housing and infrastructure projects, and another $85m has been set aside for various education projects. Water-related developments will receive a further $27m of funding. According to the EDB, Saudi Arabia’s first phase of funding to the GCC SPB totals $448m, which was provided to Bahrain after the MoF and the Saudi Fund for Development, Saudi Arabia’s foreign assistance body, signed six agreements in January 2013.

Education projects backed by Saudi Arabia include a primary school and two intermediate schools for girls, as well as primary, intermediate and secondary schools for boys. The schools will be at various locations, including the western village of Malkiya and the small town of Busaiteen on the north-eastern Muharraq Island. According to the CBB, there were 269 public and private schools in Bahrain during the 2010/11 academic year and government schools accounted for over 70% of the total.

ROAD WORKS: The EDB reported that Saudi funding will also be used to build 1560 housing units in the south-eastern town of Al Dur. In addition, GCC SPB funding from Saudi Arabia will be used to repair the Shaikh Khalifa bin Salman Interchange, as well as to construct the first phase of the Muharraq Ring Road. This second project involves converting a one-way road to a double road, which will connect a number of areas near the Bahrain International Airport on Muharraq Island. The road will stretch 2.5 km and provide two lanes in each direction, according to the Ministry of Works (MoW). The project also includes upgrades of two interchanges in the area. Issued by the MoW, the tender for the project closed in mid-March 2013. The importance of transport projects such as the Muharraq Ring Road is not surprising considering the increase in registered vehicles. The CBB reported in 2012 that the number of registered vehicles in use in Bahrain rose by nearly 29% between 2007 and 2011, from about 367,000 to more than 472,000, while that of registered private vehicles and lorries both went up by about 24% over the period. However, the number of registered vehicles for private hire rose by close to 72%.

MAXIMISING UTILITY: Further Saudi funding has been allocated to two utilities projects. The Tubli Water Pollution Control Centre (TWPCC) has been undergoing an expansion project for some time, and Saudi Arabia will provide partial funding for the fourth phase of the project. Located in a village south-west of the capital, the entire TWPCC project was 75% completed as of January 2013, according to a report by the MoW. The TWPCC currently operates with a daily capacity of 200,000 cu metres; however, a total of 300,000 cu metres of wastewater flows to the facility each day. As a result, the MoW aims to increase the TWPCC’s daily treatment capacity to 300,000 cu metres a day. The project’s consultant is the German engineering firm p2mberlin Middle East.

With water demand expected to increase significantly over the coming years, additional Saudi contributions to the GCC SPB will be used to partially fund work on Bahrain’s water transmission network. According to one estimate by the kingdom’s Electricity and Water Authority (EWA), demand for water will rise to approximately 220m imperial gallons per day (IGD) by 2020, representing an increase of more than 57% when compared to the roughly 140m IGD of blended water consumed in late March 2013.

The kingdom maintains a water production capacity of between 205m and 215m IGD, according to data provided by the EWA in September 2012, and 90% of this capacity is supplied by desalination facilities. Capacity increased considerably with the commissioning of the Al Dur Power and Water Plant, which became operational in early 2012. An independent water and power plant (IWPP), the Al Dur facility has added an additional 48m IGD to Bahrain’s water generation capacity – an increase of around 28-30%, according to the Al Dur Power and Water Company, the owner of the new IWPP.

SHARED CONTRIBUTIONS: While details on how contributions from the other GCC SPB contributors will be used are less clear than the investment schedule of Saudi Arabia, Kuwait has noted that it is providing $250m to partially fund a power installation upgrade project, and an additional $23m from Kuwait has been allocated for an integrated centre for handicapped individuals, according to the EDB. The funds from Kuwait are being administered by the Kuwait Fund for Arab Economic Development, the country’s foreign aid body. Funding from the GCC SPB has also revived a formerly shelved project to revamp the Manama Central Market. Originally announced in January 2008, the project was suspended due to the financial downturn. However, the Municipalities and Urban Planning Affairs Ministry and the Manama Municipal Council plan to start the project using funds from the GCC SPB. Alongside a new central market – the Capital Trade Centre – the project has a hotel, residences, office, retail and recreational space.