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A new World Bank report evaluates how well developing-country governments fare in setting the regulatory stage to prepare, procure, and manage large infrastructure projects.

World Bank Assesses Governments’ Regulatory Capacity to Prepare, Procure, and Manage Large Infrastructure Projects
Research supports strategic, efficient resource use in fiscally constrained environments
A new World Bank report evaluates how well developing-country governments fare in setting the regulatory stage to prepare, procure, and manage large infrastructure projects. It finds that—while many countries have made progress towards better regulatory quality that helps ensure infrastructure projects deliver good services at a reasonable cost—practices still lag behind in many countries. 
By providing actionable indicators and a country-by-country assessment, the report supports evidence-based reforms to improve enabling environments for quality infrastructure projects.
Building on previous reports in the series, Benchmarking Infrastructure Development 2020 assesses publicprivate partnership (PPP) regulatory frameworks in 140 economies, expanding coverage to include a pilot assessment of 40 economies’ use of traditional public investment for infrastructure development.
Appropriate, effective regulatory frameworks and institutional capacity are crucial for ensuring that investments in infrastructure are carried out strategically and efficiently. A supportive regulatory framework also reduces the costs and risks of carrying out individual projects, which provides the private sector with a more predictable and safe environment to invest. This is particularly important as all hands on deck—public and private—are needed to fill the acute infrastructure financing gap faced by most developing countries.
Yet, despite the need to mobilize all kinds of finance to meet people’s needs for basic infrastructure services, the report notes that most developing countries still rely primarily on traditional procurement methods and are not sufficiently adopting more innovative ones, such as competitive dialogue, that could better fit the features of a PPP. 
The World Bank emphasizes that, while traditional public investment plays an important, dominant role in infrastructure investment, governments around the world should consider PPPs when suitable to bring increased resources and expertise to bear in ensuring broad access to infrastructure services.
As the COVID-19 pandemic affects the delivery and use of infrastructure worldwide, Imad Fakhoury, Global Director for Infrastructure Finance, PPPs & Guarantees at the World Bank, makes an important link to the report: “The key finding is unsurprising: there’s more room for regulatory improvement in both PPPs and traditional public investments. While many countries have recently reformed their regulatory framework, we still need significantly more progress.” Fakhoury adds, “With governments facing severely reduced fiscal space, this point is timely—as the experience of past crises shows that many will use infrastructure spending as an economic stimulus measure in COVID-19’s wake. This investment—in addition to bringing economic growth—must be more transparent and target key areas of sustainability in terms of social benefits and inclusion, including gender, job creation, as well as climate and environment. The global pandemic shines a spotlight on the need for a new generation of investments that gets countries closer to achieving their development goals efficiently, without wasting resources.”
Indeed, many regulatory aspects directly affect the ability of governments to respond to crises like pandemics, including the adoption of international good practices with respect to modifications and renegotiations of contracts to avoid opportunistic behaviors, regulation of specific circumstances like force majeure clauses, dispute resolution mechanisms, addressing grounds and consequences of contract termination, and the use of modern monitoring systems for tracking progress and addressing concerns.
Moreover, properly regulating other aspects of the infrastructure project cycle—such as planning, prioritization and budgeting; adequate social and environmental impact assessments; and appropriate valuefor-money evaluations of procurement modality options—will also support the good use of resources to foster sustainable infrastructure during any recovery phase.
Some of the report’s most interesting findings include:
• Less than 25% of countries assessed require a procurement strategy; only 4% require market sounding.
• Project preparation international good practices seem to be followed in practice even when not regulated.
• Low-income economies see the largest gap between legal and practice scores in the procurement phase, indicating they face major challenges in implementing regulatory requirements.
• 14 international good practices in contract management are adopted by more than half of economies surveyed; still disclosure of performance information is rare.

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