Spending More and Better: Essential to Tackling the Infrastructure Gap

April 16, 2016

  • The Global Infrastructure Forum defined steps for multilateral development banks and development partners to leverage more public and private investments in infrastructure.
  • Bridging infrastructure gaps in developing countries is key to reducing extreme poverty. At least 663 million people lack access to safe drinking water while 1.2 billion people live without electricity.
  • Besides promoting financing for infrastructure, proposed actions include improving data on infrastructure, supporting compatible approaches, and strengthening project preparation.

Countries will need to spend resources better—by improving efficiency and building capacities—in order to support high-quality infrastructure projects that can achieve significant development results to meet the Sustainable Development Goals.

Increasing coordination among development institutions to support planning and development of infrastructure projects is one of the objectives of the Global Infrastructure Forum 2016. In its inaugural gathering, on Saturday, in partnership with the United Nations (UN), the Forum brought together, for the first time, the heads of Multilateral Development Banks (MDBs) as well as development partners and representatives of the G-20, G-24, and G-77,

“We can get the most of every dollar of infrastructure capital by helping countries improve governance, local planning, preparation, and administration capacity,” said World Bank Group President Jim Yong Kim, during the opening plenary. More efficient spending should also encourage more investment from the private sector—which is seen as a key source of financing for infrastructure projects.

Addressing the world’s infrastructure challenges is critical to achieving the goals of ending extreme poverty by 2030 and ensuring prosperity for all. At least 663 million people lack access to safe drinking water while 1.2 billion people live without electricity. More than one-third of the world’s rural population is not served by an all-weather road.

Increased collaboration

The creation of the Forum was mandated by the Addis Ababa Action Agenda—an outcome of the UN’s International Conference on Financing for Development that took place last year.

“If we are to achieve our goals and leave no one behind, we must address large infrastructure gaps in developing countries,” said UN Secretary General Ban Ki-Moon, also at the opening of the event. “The forum will allow for a great range of voices to be heard. Developing countries, especially the most vulnerable, need international support to bridge their infrastructure gaps.”

Countries and development partners are expected to use the forum to jointly build on existing multilateral collaboration mechanisms and coordinate efforts with multilateral and national development banks, UN agencies, and the private sector.

The space should also help partners identify and address infrastructure and capacity gaps, as well as highlight opportunities for investment and cooperation—while ensuring investments are environmentally, socially and economically sustainable.

As part of a statement issued at the end of the day-long meeting, MDBs and development partners agreed on some actions, including:

-          Promote compatible, efficient approaches to key infrastructure bottlenecks. This should help reduce transaction costs of building and implementing projects;

-          Strength project preparation, to develop sustainable project pipelines;

-          Promote financing for infrastructure. MDBs and partners will explore increasing the level of private sector participation, pursuing new approaches to collaboration, and fostering the secondary market for infrastructure equity and debt. Other possibilities are developing new tools to leverage MDBs’ balance sheets and bring in new private sector capital, and further increasing MDB’s financial capacity through the use of risk-sharing instruments such as political risk insurance;

-          Help countries improve their data on infrastructure. This should enable public and private sectors to make more informed decisions, better plan projects, and prioritize investments. Improving accountability in service delivery and raising levels of transparency are also objectives.

The actions will serve the basis for the next meeting of the Forum, expected to take place in 2017.