Dynamics - December 2012
Partnering for infrastructure
Bill Banks, our Global Infrastructure Leader, explains that governments need to work with other organizations in the private and development sectors to address the infrastructure challenge.
“Governments are increasingly keen to stimulate the economy by investing in “nation building” infrastructure.” – Bill Banks, Global Infrastructure Leader, Ernst & Young
For developed countries, the priority is upgrading existing networks and systems to meet the need for higher-quality services.
Developing countries need new infrastructure to support power, transport, water and communications. Enabling local institutions and governments to take more effective ownership of and improve their service and policy delivery functions through capacity building and technical assistance is vital.
Governments are increasingly keen to stimulate the economy by investing in “nation building” infrastructure, while also having the benefit of kick-starting the local infrastructure delivery market.
There is a need to be focused around a key set of priorities. Sourcing the necessary funding is an important first step. In many economies, especially in the developed world, poor economic performance has been aggravated by a lack of previous investment, especially in roads, rail and ports.
The more government can invest in establishing robust policy and procurement framework for infrastructure delivery, the better. Clients need to be aware of the key phases of the infrastructure transaction life cycle.
The private sector, development banks and other multilaterals have important roles, but governments can assist this process, too. Policy-makers are becoming more innovative in using their own balance sheet to invest in infrastructure.
This can be through co-funding mechanisms and vehicles such as sovereign wealth funds. There is also an increasing role being played by international donor agencies.
The combined resources of government, the private sector and multi-lateral organizations offer the potential to deliver tangible cross-border progress.