Friday, 3 June 2011

Promoting the dirtier side of development

By Stephen Spratt

When most people in the UK think about aid, I imagine they think of things like disaster relief, health and education, or perhaps human rights. And a lot of money is spent on these things. But many may be surprised to discover, however, that more than any of these issues, the UK spends 18.4 per cent of aid on infrastructure – water, electricity and transport systems – and for all donors the figure is above 20 per cent.

For the past six months I have been researching the relationship between infrastructure and development, with the Private Infrastructure Development Group, looking at the contribution made by national and international development finance institutions (DFIs), particularly their ability to leverage private investment. I have taken five broad lessons from this:
  1. Infrastructure is of fundamental development importance – without things like clean water, reliable power supplies, communications, and at least basic transport services, many other aspects of human development will be impossible to achieve.
  2. Infrastructure is of fundamental environmental importance – public transport and renewable energy investments underpin all ‘visions’ of sustainable, low-carbon economies.
  3. Increasing private investment into the infrastructure sectors in developing countries is essential – the World Bank estimates that the infrastructure funding gap in Africa alone is $93 billion per year.
  4. Private investment alone cannot meet the shortfall.
  5. The development community needs to engage with infrastructure issues far more than they have done to date.
Given the importance of infrastructure I have been struck by how little is actually known about it. Everyone knows it is hugely important of course, but not which aspects are most important. Private investment needs to play a key role, but where this is most needed (and appropriate) and where a different approach would work better is still not clear.

Part of the problem is the private sector itself. For companies, commercial confidentiality is a major concern – even when there is no reason why it should be. As a result, the same rules of transparency that apply to other parts of national and international aid spending do not apply to public-private-investments (PPI). What we tend to get is a cherry picking of the best examples to be showcased in annual reports, rather than a balanced picture of what is happening on the ground. This is very bad for research and evidence-based policy.

If we cannot rigorously compare different approaches and examine what works, where and why, we have no choice but to muddle through, unsure of whether the tens of billions of public money devoted to PPIs around the world are achieving the best outcomes possible. This does not mean they are not – we simply do not know.

This brings me back to public perceptions of development spending. Politicians have a role to play here – we hear lots about helping people in need, or even promoting the UK’s national interest, but nobody mentions the dirtier side of development – roads or power plants – despite the fact that huge resources are devoted to these areas.

It is not just the private sector and politicians that explains the lack of knowledge, however, it is the lack of focus on these issues by my colleagues in the development community. Given the importance of the subject, the resources that are already devoted to it, and the resources that need to be, this is very difficult to understand. The fact that the UK public and its leading politicians are not talking about infrastructure and development is not that surprising. Neither are most of those working in development.

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