What gets measured gets done: 50 countries reform their PPP regulations

I think we can all agree that, today more than ever, countries need to find ways to do more with less. Both the infrastructure deficit and country debt levels were already large before the pandemic; now COVID-19 is exacerbating debt crises and creating an even more challenging path to financing infrastructure services that boost people’s quality of life.

Governments have many tools under their control to improve efficiencies in infrastructure investments. Some more cost effective than others. One tool is the creation of clear rules of the game that encourage private actors to participate in a sector that is often considered risky. Establishing these rules is invaluable to getting more resources devoted to infrastructure development. But just as important is the consistency and implementation of those rules.

The good news is that, in the past two years, 50 countries introduced regulatory changes in their legal frameworks to adopt good international practices in the preparation, procurement, and management of PPP contracts.  We measure this in the Benchmarking Infrastructure Development 2020 report recently released by the World Bank. Here we see that countries like Chad, Georgia, and Lebanon enacted new PPP laws and regulations that resulted in significant improvement in their enabling environments for infrastructure development. While these countries still need to show they’ll capably enforce those rules, the changes are a strong step in the right direction.

We’ve seen other significant changes in these past two years since we last assessed developing countries’ regulatory capacity to prepare, procure, and manage large infrastructure projects. In particular, we observe that the project preparation phase is the area where more countries have introduced changes to adopt good international practices. These improvements in the regulatory framework of 33 countries make a very welcome change as they directly address one of the crucial barriers identified by the private sector: the lack of a pipeline of well-prepared projects to consider for investment.

While PPPs are important to develop infrastructure and broaden countries’ available sources of finance and expertise, we know that traditional public investments still account for a significant majority of infrastructure projects. Despite important progress, the preparation phase remains the area with the most room for improvement for both PPPs and traditional public investments.  These findings provide food for thought on where governments should concentrate their efforts if infrastructure investments are to play a stimulus role in the path to recovery from the COVID-19 pandemic.

While Benchmarking Infrastructure Development 2020 allows us to understand the global landscape of adoption of international good practices and many countries will naturally measure themselves against their peers; the most important tool yet to be used by countries is to benchmark against their own development in this area and measure progress over time. We’ve made this easier with actionable indicators accessed on the BPP 2020 website and hope to kickstart more and better attention here.

Governments can and should find better ways to deliver high quality infrastructure services at a lower cost.  Taking the time to assess their own performance during each stage of preparing, procuring, and managing infrastructure projects is a huge step towards that goal, as efficiencies can be gained at each stage.

This is meticulous work, but we feel the World Bank’s role in compiling and tracking how countries fare now and over time goes far to help governments take it on. There are established, good international practices and countries can learn from them—and each other. While I do want to emphasize again that these efforts must be accompanied by de facto enforcement of the rules, most practitioners recognize that the adoption of regulations is a vital measure to harness more capabilities and capacity.

We hope that Benchmarking Infrastructure Development 2020 can contribute to accelerating the longed-for changes in the quality of infrastructure governance around the world. Happy reading and browsing the data. Please reach out below with any comments and questions that contribute to this work.

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