Soren Kirk Jensen, EAP Senior Policy Advisor

June 2017

Ahead of next month’s G20 Summit, EAP’s Soren Jensen reflects on the need for greater focus by G20 leaders on infrastructure as a means of supporting social and economic development across the globe.

On 7 and 8 July 2017, Heads of State and Government from the world’s leading industrialised and emerging economies will gather in Hamburg for the 2017 G20 Summit under Germany’s presidency. As a driver of development and economic growth worldwide, infrastructure has often featured as a central theme for G20. Just last year for example, leaders reaffirmed their commitment to promote investment with a focus on infrastructure. However, under the German G20 presidency, infrastructure has not been a priority despite being widely seen as a rapidly emerging policy area expected to foster growth and development through what has been coined the billions to trillions infrastructure agenda. With a new and fairly unpredictable administration in the US and elections in key member states such as France and the UK before the Summit, as well as Germany after the Summit, it is a time that could prove decisive for setting the G20 agenda for years to come. It is therefore essential that there is greater recognition amongst these economies of the role of infrastructure in supporting both social and economic development.

Given its reach and influence, the G20 is a key forum for promoting the delivery of efficient and well governed infrastructure that maximises the social and economic return on investments and contributes towards the elimination of poverty, which is at the heart of Engineers Against Poverty’s (EAP) mission. If carefully planned and executed, investments in public infrastructure can deliver a double dividend of benefits. Firstly, infrastructure is of course a fundamental component in the delivery of public services which are vital to improve standards of living and sustained poverty reduction. Secondly, but of equal importance, the construction of infrastructure also represents an opportunity to directly promote social and economic development by creating decent and long-term jobs, engaging local contractors and addressing social impacts upfront.

As specialists in the field of enhancing the social, economic and environmental impact of investments in public infrastructure, EAP has been working closely with the Civil 20 (C20) – official G20 engagement group of international civil society – to reintroduce the issue of sustainable infrastructure to the G20 agenda. Specifically, EAP was requested to lead C20 work on infrastructure through a sub-working group under the broader working group of responsible investment. The sub-working group was established in response to the importance EAP and other organisations assigned to this issue despite it not featuring as a German G20 priority. The working groups are tasked with providing concise policy briefs targeting the G20 Sherpas [the personal representatives of the G20 heads of state], providing a strong platform to influence the agenda.

Within the infrastructure sub-group, EAP’s priority was to ensure that one of the recommendations of the C20 Responsible Investment working group for Sherpas was squarely focused on sustainable infrastructure. This was achieved by narrowing in on Public-Private Partnerships (PPPs) and the significant risks such arrangements can pose to governments. The policy brief includes four clear recommendations for the G20:

• Require proactive disclosure of all Public-Private Partnership (PPP) project and contract data throughout the planning and delivery of the PPP in an open data format;
• Guarantee that pre-feasibility studies for PPPs are independently assessed to calculate the true costs and benefits of PPPs over the lifetime of the project;
• Ensure that the full cost and contingent liabilities of the PPP are reported on-budget and registered as government debt; and,
• Support the launch of an Observatory on Infrastructure and the Sustainable Development Goals (SDGs) to help provide the information that civil society needs to engage meaningfully in improving the public governance of infrastructure.

EAP believes that civil society concerns regarding infrastructure delivery should not be focused exclusively on PPPs but on all modalities of infrastructure delivery including traditionally procured projects. Across the board, there is scope for improved transparency, accountability, stakeholder engagement and improved social, economic and environmental outcomes in infrastructure delivery. Urgent attention should be given to the increased interest of institutional investors to finance government debt, such as special bonds for mega-infrastructure investments. The new Mexico City Airport is a good example where US$2 billion has been raised through issuing “green” bonds despite major concerns locally about the social and environmental impacts. Efforts to mobilise private resources for public infrastructure and service delivery come with serious risks, including those of private returns being prioritised over the public interest. In response to the interest from institutional investors, the Multilateral Development Banks (MDBs) have turned disproportionate attention towards making public infrastructure projects “bankable”. However, it is beyond imagination to conceive how investments in urban slum sewage systems around the world could or should provide financial returns on investment.

EAP will continue pushing for the G20 to recognise its shared responsibility of guaranteeing the delivery of sustainable infrastructure, not only under the 2017 German presidency but also the 2018 Argentinian presidency. In partnership with Transparency International and the Heinrich Boll Foundation, we will be hosting a workshop at the C20 Summit on June 18-19 in Hamburg to strengthen support amongst civil society organisations for the role of infrastructure in tackling global poverty. For further information on EAP work on sustainable infrastructure within the C20 and beyond, please contact Senior Policy and Research Advisor Soren Kirk Jensen or follow @EAPGlobal.