Like other countries in Latin America, Colombia has been expanding its road network over the years using a variety of public-private partnership (PPP) models and contractual structures. However, many of these projects were not properly prepared and structured, which in some cases has led to contract renegotiations. In addition, these projects attracted very limited participation from international investors.
with research contributions from Zichao Wei
At conferences, in meetings, and even during casual work conversations, I am asked the same two questions: “Which countries are ideal for investments in infrastructure? Where should the investors invest and what new opportunities should they look toward?”
While sitting in the World Bank gives us a bird’s-eye view of emerging markets and developing economies (EMDEs), it doesn’t offer the up-close-and-personal perspective that investors demand in order to answer these questions in a succinct way. Not that there’s any shortage of synoptic responses. Any number of “market gurus” can assess projects in a second, gathering all the low hanging fruits which are out there in EMDEs. If there is a private deal to be made, then the deal is already done.
Welcome to the “10 Candid Career Questions” series, introducing you to the PPP professionals who do the deals, analyze the data, and strategize on the next big thing. Each of them followed a different path into PPP practice, and this series offers an inside look at their backgrounds, motivations, and choices. Each blogger receives the same 15 questions and answers 10 or more that tell their PPP career story candidly and without jargon. We believe you’ll be as surprised and inspired as we were.
Birdwatchers and nature enthusiasts already know that a field guide is a book designed to help the reader identify wildlife or other objects that occur naturally, like minerals. It’s meant to be carried into the “field” to help distinguish between similar objects.
At the Global Infrastructure Hub, we thought it was time for a field guide to infrastructure, pointing out the different resources that populate the landscape and helping them connect better. The Global Infrastructure Hub’s Field Guide to Infrastructure Resources (Field Guide) collects together existing resources and helps the user establish connections among them.
It is estimated that in order to close the gap in infrastructure, the Latin America and Caribbean (LAC) region requires an additional investment of $120 –$150 billion a year. However, given the current low levels of public investment, coupled with the fiscal challenges faced by the region and limited funding available from Multilateral Development Banks (MDBs), it is clear that private investment will play an important role in future years.
In 2014, the G-20 strengthened MDBs’ mandate to take concrete and practical steps to ensure that MDB-based project preparation facilities (PPFs) and other related initiatives collaborate to support governments by developing prioritized pipelines of economically viable and bankable infrastructure projects that can attract the private sector.
Saturday’s Global Infrastructure Forum was full of firsts: this unprecedented daylong gathering in Washington, DC brought together the leaders of the multilateral development banks (MDBs), as well as development partners and representatives of the G20, G-24, and G-77, the OECD, the Global Infrastructure Hub and the United Nations. All shared the goal of enhancing multilateral collaboration to improve infrastructure delivery globally.
Conversation may be an art, but the best conversations spur action, too – and the upcoming Global Infrastructure Forum 2016 will focus on strengthening and formalizing collaboration among multilateral development banks (MDBs) to improve infrastructure delivery around the world. This unprecedented daylong gathering in Washington, DC brings together the leaders of the MDBs, as well as development partners and representatives of the G20, G-24, and G-77 and the United Nations, with the aim of enhancing multilateral collaborative mechanisms to improve infrastructure delivery globally.
Back in 2000, a research assistant and I received a request from a multilateral development bank that wanted a model for how much money was needed for them to invest in Latin America. I put together a very simple model – it was actually more of a benchmarking exercise – asking what kind of infrastructure in roads, energy, and water/sanitation that countries had at that time, based on income, economic structure, and urbanization. Then I created projections in terms of income and urbanization. I thought, “Well, assuming countries grow this way and follow the patterns of the past, it’s quite easy to deduce an investment pattern and an investment amount.” I called this final figure the “infrastructure gap.” Little did I expect it, but the term caught on and a subset of literature of infrastructure investment was born. We’re still talking about the infrastructure gap today, and it is a focus of the upcoming Global Infrastructure Forum 2016.
But a lot has changed in 16 years, and it’s time to re-cast our conversation about the infrastructure gap. In fact, it’s imperative to change the conversation if we want to achieve our goals. And the Forum is the right place to start.
Business management requires the collection of a set of indicators — for instance, financial indicators (including full reporting on costs and revenues) and marketing indicators (including volume of demand and its trend, and non-financial performance indicators such as clients’ perceptions). Those indicators will inform day-to-day managerial decisions and strategic options.
But curiously, . Public sector information systems typically focus on how much was spent on infrastructure (i.e., on roads, airports, ports, hospital building, school buildings), but rarely present data on the performance of that infrastructure. Only a few jurisdictions collect data on the quality of infrastructure, typically addressing more “visible” types of infrastructure, such as highways (levels of service) and bridges (structural soundness).
Editor’s Note: Renowned engineer and historian Henry Petroski, author of the just-published The Road Taken: The History and Future of America’s Infrastructure, has a unique perspective on public-private partnerships (PPPs). He spoke to the PPP Blog about why the U.S. is at a much earlier stage of PPP development than the rest of the world, how America’s infrastructure PPPs are different than other countries’, and which European PPP models are influencing American progress. It’s an especially timely issue for PPP Blog readers who were reminded of the state of American infrastructure by the sudden closure of the Washington, DC Metro (subway) system earlier this month.
Q: Why is the U.S. so much “younger” than the rest of the world when it comes to PPPs?
Henry: In the U.S. during the 19th century, almost all our large infrastructure projects, like railroads, were created through private investment. If someone wanted to build a bridge, a corporation would be formed, find financing, and proceed on that basis. Owners might need a government concession so that they could put the bridge where they wanted, but aside from that it was a purely private enterprise. The Ambassador Bridge, which has linked Detroit, Michigan, and Windsor, Ontario, since 1929, is a good example; it was privately financed and remains wholly privately owned.