The International Monetary Fund (IMF) has insisted that only a strong infrastructure governance can end waste in public investment.
Over time, there have been calls on government’s in less developed and developing countries especially in Sub Sahara Africa to be prudent in the management of funds meant for the development of infrastructure.
According to the Bretton Woods Institute, countries waste on average of about 1/3 of their infrastructure spending due to inefficiencies.
“COVID-19 has had a profound impact on people, firms, and economies all over the world. While countries have ramped up public lifelines to individuals and firms they will face enormous challenges to recover from the pandemic, amidst low economic activity and unprecedented levels of debt.
“Public infrastructure investment will play a key role in the recovery. But with resources tight, governments need to spend taxpayer money wisely on the right projects. For this, countries need good infrastructure governance—strong institutions and frameworks to plan, allocate, and implement quality public infrastructure,” IMF said.
All too often, public investment results in expensive and poor-quality infrastructure with limited benefits for people and the economy. It tends to involve projects that are large, long-term, and complex—all fertile ground for corruption, delays, and cost overruns. Strong infrastructure governance is key to cutting this waste,” IMF said.
For the multilateral lender, countries waste anywhere from 30 to 50 per cent of the money they spend on infrastructure. “The loss can surpass a staggering 50 percent in low-income countries. Unlocking this potential should play an important role as countries recover from the pandemic.”
Despite the waste, the Fund is confident that efficiency losses and wasteful spending in infrastructure are not inevitable. “Our estimates show that over half of these losses could be made up through better infrastructure governance.
“The economic recovery from COVID-19 presents a unique opportunity for countries to build a bridge to the future through well-designed and well-implemented public infrastructure.
“Done right, public investment to stimulate weak aggregate demand can help boost more inclusive growth, reduce inequalities, and create economic opportunities for all. Investment in health systems, digital and environmentally-conscious infrastructure can improve people’s lives, connect markets, and improve the resilience of countries to climate change and future pandemics. Countries will also need to increase public investment to attain the Sustainable Development Goals (SDGs), while advanced economies need to tackle aging infrastructure like roads, bridges, and healthcare systems.
“But every dollar spent has to count, and when spending more on infrastructure, countries also need to spend better and smarter to get the most bang for the buck,” it added.