KPMG survey: Private sector is concerned over infrastructure

As if addressing the infrastructure challenge wasn’t already a big enough task for many national governments around the world, some nagging doubts persist amongst the private sector about those governments’ ability to get the job done, according to a research released by KPMG recently.

Bearing in mind the key role that private sector infrastructure providers will likely have to play in delivering the infrastructure improvements demanded by society, the survey suggests that some governments may have something of a battle on their hands to get the private sector providers fully behind them.

Therefore, infrastructure providers have concerns over government effectiveness, the politicization of the infrastructure debate, bureaucracy, transparency and even the lack of a sense of urgency.

All of these are seen as factors which could inhibit the providers’ own ability to contribute towards tackling the infrastructure challenge – or which may impede further investment being made in infrastructure.

Topping the list of concerns, 69 percent of respondents stated they are concerned that government effectiveness would inhibit their own ability to deliver new infrastructure assets that would support the growth of their national economies. Such is the strength of the skepticism around government effectiveness that economic conditions (63 percent) was only ranked second.

When asked about the greatest public sector impediments to increased infrastructure investment, 42 percent said it was the politicization of infrastructure projects. This was followed by frequent changes in public policy, lack of appropriate public policy and a lack of urgency (all at 28 percent).

“Romanian government should not meet the challenge of providing 21st century infrastructure alone. Much has been spoken about the role of public-private partnerships in delivering the necessary infrastructure improvements and squeezing every last drop of efficiency out of investments from the public coffers. However, partnerships tend to work best when both sides have faith in the other’s ability to deliver what is expected of them. These survey results suggest that governments in general and private sector infrastructure providers are not yet on the same page and getting there will likely require substantive actions, not more talk,” said Daniela Nemoianu (photo), Head of Advisory and a partner in KPMG in Romania.

KPMG survey does also provide something of a wish-list in terms of what private sector providers believe might produce the greatest improvements in governmental effectiveness. Top of that list – supported by 45 percent of respondents – is the wish to depoliticize the infrastructure process.

Transparency also features heavily with providers keen to see greater transparency around infrastructure planning and project selection (44 percent). Forty percent of respondents also advocated greater use of public-private partnerships; an encouraging response which suggests that – despite all the perceived problems – the appetite to partner with governments still remains.

Respondents also voice a number of options which they believe would help to ease the obvious financing issues which continue to hamper infrastructure development in the current economy. Direct government contributions or co-lending is the most popular choice (37 percent), followed by more favorable risk allocations (36 percent) – i.e. where the public sector takes a greater share of the risk – and government loan guarantees (35 percent).

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