Transparency is key to unlocking infrastructure investment

Global Real Estate Transparency Index, 2020-Transparency is key to unlocking infrastructure investment

Among the greatest challenges facing our urban environments is the provision of adequate public infrastructure, not only transport, telecommunications and power supplies, but also to respond to increasing demands for sanitation and healthcare facilities, which the COVID-19 pandemic has brought into sharper focus.

With government finances stretched, many governments are actively pursuing private sector participation in infrastructure investment. From an investor perspective, infrastructure tends to be less impacted by volatility and uncertainty, so is attractive as a defensive sector with long-term income stability. But private capital deployment still requires a high level of transparency and access to reliable and high-quality metrics to reduce risk.

Attracting private capital in infrastructure in MENA

The ambitions and experience of the Middle East region highlight the importance of transparency in unlocking private capital in infrastructure. The various development plans launched over the past couple of years by countries in the Middle East have all emphasized the need to increase private participation and investment, in particular for the execution of large-scale infrastructure projects.

However, private investors have cited a lack of available and reliable data, as well as an absence of regulatory frameworks, as barriers to involvement. To successfully promote private investment, it is imperative to put in place proper guidelines supported by revised regulations that clearly set out the roles, responsibilities and returns of different participants in the process. While an economic crisis may not be the best time to increase mobilization of private capital, the lack of data further inhibits understanding the performance of projects and the risk factors.

Given the uncertainties that lie ahead, we expect to see countries across the region reassess their business models, calling on more private participation in the execution of infrastructure projects. To make room for this, governments need to roll out efficient regulatory models and adopt mechanisms to collect and make available data that will allow for a better assessment of the risk and reward profile of projects. This will lead to further innovation, greater effectiveness, and more accountability and transparency in the sector.