A major factor hindering infrastructure implementation and delivery is the absence of good governance, according to the 130 delegates from 27 countries who came together for the first Regional Roundtable on Infrastructure Governance in Cape Town in November.
There’s no denying infrastructure is crucial to Africa’s growth prospects. Nor can one ignore the ever-growing need for infrastructure on the continent—in Sub-Saharan Africa, only 35% of the population has access to electricity, and 23% still lack access to safe water and sanitation. Despite an estimated shortfall of nearly $100 billion in infrastructure investment in Africa, lack of financing is not the biggest problem.
The landmark Roundtable brought together representatives from African governments, the global private sector, multilateral and international organizations, civil society organizations and other development partners, for a discussion on the challenges and practical solutions to the governance impeding successful infrastructure delivery in Africa.
Photo: VahanN / Shutterstock.com
Downtown Yerevan. Gusty winds, frosty air. Inside a hotel in the town square, cocktails and canapés, speeches and signatures. On this evening in November 2016, representatives of the State Committee for Water Economy (the Armenian water authority) and Veolia (a large international water operator) gathered to celebrate the signing of a new partnership: a 15-year national lease to provide water and wastewater services for the whole country. The lease began in January 2017, thus marking the start of a “second generation” of water PPPs in Armenia. Solid gains had already been made under the “first generation” between 2000 and 2016. At this crucial juncture, a World Bank study reviewed Armenia’s experience so far and analyzed the way forward under the new national lease.
Photo: User 377053 | Pixabay
The Argentinian presidency of the G20 opens this month and will be marked by a focus on infrastructure investment. The G20 and Organisation for Economic Co-operation and Development (OECD) have already announced a widescale data collection initiative to create benchmarks to monitor the risk-adjusted financial performance of private infrastructure debt and equity investments.
It’s about time.
Investors have hit a roadblock when investing in infrastructure. Until now, none of the metrics needed by investors were documented in a robust manner, if at all, for privately held infrastructure equity or debt. This has left investors frustrated and wary. In a 2016 survey of major asset owners by the EDHEC Infrastructure Institute (EDHECinfra) and the Global Infrastructure Hub, more than half declared they did not trust the valuations reported by infrastructure asset managers. How, under such conditions, can the vast increases in long-term investment in infrastructure by institutional players envisaged by the G20 take place?
Public-Private Partnerships (PPPs) require the coordination of an impressive number of stakeholders to mobilize the commercial financing needed to achieve sustainable, inclusive growth in challenging environments. A great deal of analysis, negotiation, and hard work goes into every project. And each one presents an opportunity to encourage investors to venture into countries and compete for projects they wouldn’t have considered before and, ultimately, to create new markets.
While the commercial and legal challenges involved in structuring PPPs are well known, the efforts that go into conducting rigorous technical due diligence are less well known. For example, projects that aim to provide utility scale solar PV on short order, like the World Bank Group’s Scaling Solar program, require a team of experienced engineers from IFC’s Energy and Water Advisory working hand in hand with our PPP transaction advisors, legal experts, and environmental and social specialists to make them a reality.
One of my favorite songs when I was growing up was John Lennon’s “Imagine.” A few months ago, UNICEF created a project around it to highlight the plight of millions of refugee children. As 2016 drew to a close, I couldn’t help but imagine a world with high-quality, affordable, sustainable, well-maintained infrastructure services for everyone.
I’m not sure a video of infrastructure projects set to “Imagine” would fire people up as much as the UNICEF video does. But there is value in reflecting on what we have accomplished in 2016, and what we might hope for and imagine in 2017, to bring this vision closer to reality for millions of people.
- Public Private Partnerships
- Public private partnership
- Labor and Social Protection
- Agriculture and Rural Development
- Climate Change
- Financial Sector
- Global Economy
- Information and Communication Technologies
- Law and Regulation
- Private Sector Development
- Public Sector and Governance
- Urban Development
- The World Region
En Panamá, un entorno económico saludable y un apoyo institucional entusiasta proporcionaron el terreno de prueba ideal para el Marco de Priorización de Infraestructuras (IPF) del Banco Mundial. El crecimiento del PIB del país y el dinamismo económico en 2014 motivaron un ambicioso programa de inversión pública, acompañado de un gran número de propuestas de proyectos de infraestructura presentadas al Ministerio de Economía y Finanzas. Aunado con el compromiso político de reducir el déficit fiscal, Panamá decidió implementar proyectos seleccionados durante un período estratégico de cinco años.
In Panama, a healthy economic climate and enthusiastic institutional support provided an ideal testing ground for the World Bank’s Infrastructure Prioritization Framework (IPF). The country’s GDP growth and economic buoyancy in 2014 motivated an ambitious public investment program, accompanied by a high number of infrastructure project proposals to the Ministry of Economics and Finance. Coupled with political commitment to narrow the deficit, Panama moved to implement select projects for a five-year strategic period.
Just fourteen projects in energy, transport and water/sanitation. In only eight countries. Totaling $2.7 billion.
There are 56 IDA countries (excluding three “inactive” and a few rich enough to count as “IDA blend”) defined as having per capita income under $1,215. This 2.7 billion in IDA countries compares to total private infrastructure investment commitments of $111.6 billion in all emerging markets in 2015 per the recently released Private Participation in Infrastructure database.
In recent years, the number of projects and investment amounts of private infrastructure in IDA countries hasn’t increased. If people living in the poorest countries are to get better access to energy, transport and water services, and if we believe that the innovation, management capacity and financing of the private sector working together with governments is essential to help make that happen … well, then we need a step change.
We know to make a difference requires dedication and a long term vision. One part of that ambitious change is the Global Infrastructure Facility (GIF). The GIF is a global open platform to help partners prepare and structure complex infrastructure public-private partnerships (PPPs) in emerging markets, and to bring in private sector and institutional investor capital. The GIF platform integrates the efforts of multilateral development banks (who as Technical Partners choose which projects to submit for GIF funding), private sector investors and financiers, and governments to bring infrastructure projects and programs to market. No single institution can achieve these goals alone. The GIF’s Advisory Partners, which include insurers, fund managers, and commercial lenders, and which together have $13 trillion in assets under management, provide feedback to governments on the bankability of projects.
As water specialists, we care a lot about our clients being able to provide good water service to their customers on a sustained basis, but many utilities in the countries we work for struggle to provide consistent service. Imagine how much more challenging this will become in the next two decades, when two-thirds of the world’s population will live in urban areas.  
Non-Revenue Water (NRW) is water that is placed into a water distribution system and not billed because of leaks or commercial failures. Efficient management of NRW offers significant financial benefits to utilities while bringing economic and environmental benefits to societies around the world. Why, then, does NRW still present governments with such intractable problems?
Translations available in Chinese and Spanish.
Many of you are already familiar with the PPP (Public-Private Partnerships) Group’s Private Participation in Infrastructure (PPI) Database. As a reminder for those who aren’t, the PPI Database is a comprehensive resource of over 8,000 projects with private participation across 139 low- and middle-income economies from the period of 1990-2015, in the water, energy, transport and telecoms sectors.
We recently released the 2015 full year data showing that global private infrastructure investment remains steady when compared to the previous year (US$111.6 billion compared with US$111.7 the previous year), largely due to a couple of mega-deals in Turkey (including Istanbul’s $35.6 billion IGA Airport (which includes a $29.1 billion concession fee to the government). When compared to the previous five-year average, however, global private infrastructure investment in 2015 was 10 percent lower, mainly due to dwindling commitments in China, Brazil, and India. Brazil in particular saw only $4.5 billion in investments, sharply declining from $47.2 billion in 2014 and reversing a trend of growing investments over the last five years.
- private sector
- Private Sector Development
- Global Economy
- Financial Sector
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- El Salvador