Attracting investment for infrastructure

Attracting investment for infrastructure

How does good governance impact on the delivery of capital infrastructure projects?

Facts and trends

  • There has been increasing concern about governance issues in the development debate, with the most consistent recommendation of UN world conferences being that countries must take full responsibility for their development
  • The capacity of the institutional environment, in which citizens interact among themselves and with government, is becoming important in determining the impact of capital projects
  • Irrespective of the precise set of economic policies that find favour with a government, good governance is required to ensure that capital projects are delivered with low transactional costs and contribute to the local, social and development agenda
  • The inability of governments of developing states to transform radically their procurement strategies, both at the national and sector levels, is impeding their ability to deliver projects that have fitness of purpose and which are fit for purpose

Measures aimed at removing corruption and providing policy certainty at the macroeconomic level will go a long way to removing perceived constraints to investment.

Reference

Development Management. Manila: Asian
Development Bank.

Create an enabling environment that is conductive to investment

  • Design the right policy and institutional framework, to create conducive conditions for private investments that support the development of infrastructure, ensuring political stability and absence of violence
  • Ensure accountability. This means creating mechanisms that ensure that people to whom responsibility and authority for service delivery has been given can actually be held accountable for performance
  • Use targeted procurement in the delivery of capital infrastructure projects to ensure that the benefits of economic growth are equitably distributed across the society

For next steps, see: Watermeyer R (2000): The use of targeted procurement as an instrument of poverty alleviation and job creation in Infrastructure projects. Public Procurement Law Review, No. 5,pp 201-266

References:

Wiafe K (2007) Promoting Private Sector Investment in Energy through Regional Cooperation: The Case of West Africa

References

Kaufman et al (2007) Governance Matters VI: Governance Indicators for 1996-2006, Washington: World Bank.