This is how Africa can pay for its infrastructure gap

By Chris Bishop

Carbon should be priced into infrastructure projects, not only to help protect the environment but also to attract more private money towards filling the world’s one trillion dollar-a year infrastructure gap.

Infrastructure dominated one of the first sessions of the World Economic Forum at Davos, Switzerland, that got underway, in earnest, Tuesday. More than 60 heads of state and thousands of business and investment experts from around the world will gather in the ski resort this week to discuss how to fix a broken world, deal with new technology, and tackle climate change.

“Carbon should be priced into infrastructure projects and that will act as an economic trigger for private money to come in because not only will it mean more revenue it will help us put more money into saving the environment,” says Gregory Hodkinson, the CEO of one of the world’s biggest infrastructure companies, Arup, that turns over more than a billion pounds a year.

“The money is there. Investors sank six trillion dollars into Untied States junk bonds last year. If investors are prepared to roll the dice on  junk bonds what about infrastructure investment?”

One of the stumbling blocks for infrastructure investment, in everything from roads and power to water, is securing government backing. The panel discussion heard that 65% of world infrastructure projects are unbankable without government guarantees and support. It can often be a fractious relationship between investor and government officials, the session heard. Heng Swee Keat, the Cambridge-educated finance minister of Singapore, said the relationship between the public and private sectors could be “lumpy.”

“I remember a man coming to me and saying he was never going to invest in infrastructure in your country again, I asked him ‘why’ and he said, because the last time we invested and made money the government came back to us and asked: ‘Why are you making so much money!’’’ says Swee Keat, who used to be Parliamentary Private Secretary to the late father of infrastructure, on the island, premier Lee Kuan Yew.

Hodkinson, who has been working in infrastructure for 40 years, said investment could no longer ignore the future, nor the environment, otherwise next generation would suffer.

“Even if someone is building a car parking garage I ask what else can they do with it because they won’t need it one day”,” says Hodkinson.

“We need political leadership in this fractured world…otherwise we are going to get easy political leadership preying on people’s fears.

Smart cities – tailor-made for people with the help of information about their needs gathered from the interest – was touted as one popular answer to the infrastructure gap.

“We asked people if they were happy to provide personal information to this end. Even in this world where people are frightened of sharing their personal information, 47% said they would to get better infrastructure,” says Michael Burke, the CEO of the NYSE-listed AECOM in the United States that turns over more than $18 billion a year.   

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