South Africa

Details

  • Industry: Industrials, Power & Utlities, Public Sector, Construction
  • Type: Survey report
  • Date: 2010/09/08

The Changing Face of Infrastructure: Public Sector Perspectives 

Public sector executives around the world agree with private infrastructure providers and business leaders that government effectiveness and financing are top challenges to delivering infrastructure projects, according to a survey commissioned by KPMG International. 
The Changing Face of Infrastructure
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The survey is the third in a series of global infrastructure surveys in the last 12 months from KPMG International, which has commissioned the Economist Intelligence Unit (EIU) to conduct these surveys on their behalf; the first one surveyed business executives (January 2009) and the second surveyed infrastructure providers (August 2009). Survey respondents shared similar views on most of the survey topics across regions and countries.

 

Stimulus is not enough

 

In the latest survey, 56% of respondents said lack of funds remains the largest obstacle to infrastructure development.

 

“While stimulus spending was a first step, many government officials are clearly telling us that they need a long-term infrastructure investment strategy to meet the needs of their country,” said Nick Chism, Head of KPMG’s Global Infrastructure practice, and partner in the UK firm."

 

“Modernising the world’s infrastructure will require massive investment and cooperation by the public and private sectors for many years to come. But those countries that find ways to make the necessary infrastructure investments now are likely to be the leaders of tomorrow.”

 

Government effectiveness and need for additional financing cited by all players

 

81% of public sector respondents believe that government effectiveness is a significant barrier to delivering infrastructure.

 

This sentiment was shared by respondents in the earlier KPMG surveys, with 68% of business executives and 69% of private sector infrastructure providers voicing similar concerns.

 

All three groups also cited the availability of financing as a leading barrier to infrastructure development, including 69% of public sector respondents, 56% of business executives and 60% of infrastructure providers.

 

The public sector officials surveyed also identified other issues hampering infrastructure development:

 

  • Half of the respondents cited the slow approval process for stimulus funds as the greatest challenge in spending this money quickly and effectively in their jurisdiction.
  • After the need for additional funding, politicization of priorities (33%) and a lack of a sense of urgency (21%) are named as the greatest impediments to infrastructure delivery.
  • Echoing the views of the private infrastructure providers, 58% of public sector respondents said they are concerned that the political environment impedes them from delivering needed infrastructure.

 

Solutions: working together, increase transparency

 

Interestingly, there was relative agreement among the three surveys in how to solve the infrastructure impasse; 65% of public officials, 80% of business executives and 40% of infrastructure providers respectively surveyed said governments should work more closely with the private sector to improve the infrastructure delivery process.

 

“Clearly all groups are telling us that forging greater collaboration between the private and public sectors is crucial,” said Stephen Beatty, head of infrastructure advisory for KPMG’s Global Infrastructure practice in the Americas region and a partner in KPMG in Canada. “We have been the beneficiaries of infrastructure innovations made by our parents and grandparents, but if we don’t work together to find solutions soon, we’re leaving our children and grandchildren an unfortunate legacy.”

 

However, public sector officials also recognize that there are barriers to working more effectively with their private sector counterparts, most notably cultural differences between the two, which were cited by 45% of respondents.

 

When specifically asked about ways to de-politicise the infrastructure process, the leading solution among public sector respondents was to increase transparency in infrastructure project selection (41%), followed by improving the public private partnership procurement process (37%).

 

The public sector respondents also indicated that better training of public sector officials (37%), depoliticizing the infrastructure public policy process (35%) and greater use of public private partnerships (34%) are the leading ways to improve infrastructure development in their jurisdiction.

 

“Today there is a rare opportunity to achieve non-partisan consensus on how we can make strategic investments in infrastructure,” said Beatty. “Infrastructure investments can pay dividends immediately and for years to come, boosting the economy through long-term job creation, attracting and retaining businesses, and improving living standards.”