Economic Growth Continues to be Thwarted by Lack of Infrastructure

By an IPS Correspondent Reprint | | Print |

UNITED NATIONS, Apr 27 2017 - The economic growth of developing countries continues to be thwarted by the lack of sustainable and resilient infrastructure.

The statistics are staggering: more than 1.2 billion people in the developing world still have no access to electricity; about 783 million people lack access to clean water; 2.4 billion do not have adequate sanitation; 2.8 billion people still cook their food with solid fuels; and one billion people live more than two kilometers from an all-weather road.

Pointing out these major deficiencies, Ambassador Horacio Sevilla Borja of Ecuador and chair of the Group of 77, said the breakdown in infrastructure is due primarily to serious financing challenges facing developing nations caused by insufficient access to resources, both from the public and private sector, and resulting in a wider global infrastructure gap.

Speaking on behalf of the G77, joined by China, Ambassador Borja said there was an urgent need to bridge this financing gap, including the US$1 trillion to US$1.5 trillion annual gap in developing countries.

In this context, he said, multilateral development banks have a critical role to play in providing financing resources and enhancing access to, and improving quality of, infrastructure services which are environmentally, socially and economically sustainable.

Addressing a meeting of the 2017 Global Forum on Infrastructure in Washington DC, he said infrastructure is a powerful driver of economic growth and contributes to economic, social and environmental development.

The participants in the Forum included the Inter-American Development Bank and the European Investment Bank.

The Group reiterated that international development cooperation, especially North-South cooperation, remains a fundamental catalyst to sustainable economic growth.

“We urge developed countries to urgently fulfill their unmet Official Development Assistance (ODA) commitments. In the same vein, and underscoring the increasing recognition of the central role of tax systems in development, we reiterate our concern over illicit financial flows and related tax avoidance and evasion, corruption and money -laundering, with negative impacts for the world economy, in particular for developing countries,” he declared.

The Group also stressed the importance of eliminating safe havens that create incentives for the transfer abroad of stolen assets and illicit financial flows — and the importance of scaling up international tax cooperation and combating illicit financial flows in order to mobilize domestic resources for inclusive and sustainable infrastructure.

At the same, the Group also recognized the important contribution that private investment can make to sustainable development, particularly in infrastructure, through tools and mechanisms such as public-private partnerships.

“In this regard, we acknowledge that impediments to private investment in infrastructure exist on both the supply and demand side.”

Insufficient investment, he said, is due in part to inadequate infrastructure plans and an insufficient number of well-prepared investable projects, along with private sector incentive structures that are not necessarily appropriate for investing in many long-term projects, and risk perceptions of investors.

“We further call for enhanced roles of the multilateral development banks to provide the soft infrastructure through technical support and capacity building programs.”

This calls for the strengthening and increased state-private sector risk alignment of mechanism such as the Multilateral Investment Guarantee Agency (MIGA) and development of more context-responsive investment risk assessment and guarantee mechanisms.

He singled out six categories of developing nations that require special attention: least developed countries, African countries, small island developing States, landlocked developing countries, countries and peoples under colonial and foreign occupation, and middle-income countries facing specific challenges.

These are the most affected developing countries by lack of adequate infrastructure and disaster-risk, particularly in terms of sustainable and resilient infrastructure, in view of their higher vulnerability and risk levels which often greatly exceed the capacity to respond to and recover from disasters.

In this regard, he said, the Group also encourages the Forum to identify and address infrastructure needs and capacity gaps to enhance preparedness in countries affected by the El Niño/ La Niña phenomenon.

In order to enhance coordination between this Forum and the UN System, the ambassador said, the reporting mechanism of the Forum to the annual ECOSOC Forum of Financing for Development follow-up needs to be strengthened.

“We are looking forward to an annual exchange of ideas to improve alignment and coordination among multilateral and national development banks, United Nations agencies, national institutions, development partners and the private sector,” he declared.