Global Agenda Council on Infrastructure 2012-2013
Infrastructure refers to the basic physical structures needed for a society to operate and the services and facilities that are essential for the functioning of an economy. Infrastructure consists of transport facilities, utilities, catastrophic risk management and telecommunication networks, which are all key elements of economic growth. The availability and the quality of the infrastructure landscape in a given country or region impacts the success of its manufacturing and agricultural activities. By reducing logistical costs and increasing productivity, it is a key pillar of international competitiveness. Investments in infrastructure, particularly in water, sanitation, energy, housing and transport, contribute to poverty reduction and improved quality of life. Recent advances in information and communication technology infrastructure, for example, have been recognized as a way to help alleviate poverty and improve livelihoods, advance the provision of health services electronically, expand the reach of education, and support social and cultural progress.
In almost all parts of the world, the need for new infrastructure assets, or to modernize existing assets, is stark, and investment is urgently required. Indeed, the combination of economic and demographic growth with severe underinvestment in infrastructure has created a deficit that some estimates suggest would require an annual worldwide investment of more than US$ 2 trillion over the next 20 years.
Given the ongoing pressure on government budgets, increased private-sector contributions in infrastructure will be essential in the future. Public-private partnerships (PPPs) in infrastructure have been identified as a successful way to combine the skills and resources of the public and private sectors to enable the sharing of risks and responsibilities. Such collaborations enable governments to benefit from the expertise of the private sector by delegating day-to-day operations while focusing, instead, on policy, planning and regulation.
- Across the world, more than1 billion people lack access to roads, 1.2 billion do not have safe drinking water, 2.3 billion have no reliable source of energy, 2.4 billion lack sanitation facilities and 4 billion are without modern communication services.
- The rapid industrialization of emerging Asia and the integration of Sub-Saharan Africa into the world economy create ample demand for infrastructure investment in the developing world. The World Bank estimates that the core needs of developing countries amount to 7-9% of their annual GDP, or approximately US$ 400 billion.
- In the Asia-Pacific, the infrastructure financing gap is around US$ 180 billion every year. In Latin America, 3% of GDP (about US$ 71 billion) would need to be invested in infrastructure to satisfy demand. In Africa, to reach the 7% annual growth calculated to be required to meet the Millennium Development Goals by 2015, infrastructure investments of about 15% of GDP (US$ 93 billion a year) would be needed.
The Global Agenda Council on Infrastructure strives to raise awareness about the importance of infrastructure for development and economic growth. The Council aims to promote the development of public-private partnership approaches and to identify specific mechanisms that would make such partnerships successful. Moreover, the group will explore new ways of fostering private financing solutions for infrastructure.
Recognizing that private-sector participation in the delivery of infrastructure services in emerging markets is a critical factor for improving outcomes, the Council aims to promote the development of a framework involving both governments and private companies in a way that each stakeholder’s resources can be used in an efficient and complementary way. Looking beyond traditional forms of PPPs, the Council believes that to build infrastructure, governments in emerging markets could substantially improve efficiency by outsourcing certain activities like the design, construction, operation and maintenance of large infrastructure projects to the private sector on a much larger scale.
The group intends to help create such frameworks, primarily focusing on the issue of how to make these outsourcing settlements as transparent, time-efficient and cost-effective as possible. The Council will work on helping emerging markets’ governments develop systems that meet international standards. It will also help them put in place processes, criteria and templates for evaluating, selecting and overseeing private infrastructure companies.
Further, the Council considers exploring how more sophisticated financial markets and entrepreneurial talent could attract private financing solutions to the poorest as well as in middle-income countries. Building upon the recommendations of the G20 High-Level Panel on Infrastructure, the group will examine how multilateral and bilateral agencies act as meaningful catalysts for mobilizing private financing, without necessarily deploying much of their own capital.
Research Analyst: Vanessa Lecerf, Global Agenda Councils, firstname.lastname@example.org
Council Manager: Hanseul Kim, Senior Community Manager, Engineer and Construction Industry, Hanseul.Kim@weforum.org
Forum Lead: Alex Wong, Senior Director, Head of Basic & Infrastructure Industries, email@example.com