Investible, inclusive, resilient: Infrastructure in the post pandemic world
Earlier this month, WBEF joined Marie Lam-Frendo, CEO of Global Infrastructure Hub, to discuss the central role of infrastructure in global economic recovery efforts.
Is ESG investment just a passing fad? What is the future of China’s Belt and Road Initiative? And does the Covid-19 pandemic mean we must reassess climate change targets? Global Infrastructure Hub CEO Marie Lam Frendo answers your questions on the future of infrastructure.
World Built Environment Forum
2 July 2020
Marie Lam Frendo: In 2018, we conducted a survey that showed that when investors were asked about ESG, 36% responded that it was a first order question, even at the expense of performance. This percentage doubled from the 2016 survey. So, the change is happening and happening at a fast pace. We’re now in a situation where many investors, through their leadership and/or governance, are increasingly required to invest in assets with minimum ESG criteria.
Covid-19 will cause investors to demand even greater certainty around the sustainability of projects, with an emphasis on technology, contingency planning and crisis management, leading us inevitably towards a new green economy. We now have an enormous opportunity to transform our economy and create a better version of normal, supported by a sustainable infrastructure-led economy. In other words, we can build back better.
MLF: Short term effects are quite apparent with many of the flagship BRI projects being delayed, especially in Southeast Asia, where they are being hampered by the irregular flow of Chinese workers and construction material supplies. There are also a number of BRI projects that are entering into default as a result of the crisis, and a few countries, including Egypt and Tanzania, are postponing or cancelling BRI projects.
In a post Covid-19 world, the level of indebtedness for emerging countries will be at new and record highs. Many countries have now applied for debt suspension or forgiveness from creditors and are seeking support from the IMF and Development Finance Institutions. For example, African leaders have called for emergency debt forgiveness from sovereign creditors including China – which is owed about $8bn this year alone in repayments on about 145 loans to African countries. Many of these loans involve BRI projects. Moving forward, and in order to keep indebtedness at reasonable levels, viability of BRI projects will be key as much as their sustainability.
There are a number of Belt and Road Initiative projects that are entering into default as a result of the Covid-19 crisis. Furthermore, a few countries, including Egypt and Tanzania, are postponing or cancelling BRI projects.
Marie Lam Frendo, CEO
Global Infrastructure Infrastructure Hub
MLF: Vulnerable groups, whether low income, rural or remote communities, or minority ethnic groups, are particularly impacted in these sorts of cases. Our research on inclusive infrastructure shows that the needs of, and impacts on, these vulnerable groups are particularly poorly addressed throughout the infrastructure project life cycle.
One essential approach which is often missing from infrastructure projects is broad stakeholder consultation. There is a need to improve community engagement and use those processes to find appropriate and practical solutions for relocation of impacted groups, and to realise the additional benefits that could emerge for local communities as a result of the infrastructure project – this could include, for example, revenues from land value capture that can be used to deliver services or community infrastructure, or the development of SMEs to deliver ancillary services which provide employment opportunities.
Supportive regulatory frameworks to deal with legal rights to land, potential expropriation and compensation are also critical. Multilateral Development Banks have a key role to play in the jurisdictions in which they are active to help governments understand and apply best practices. In that regard, some international and national development agencies have been developing environmental and social frameworks including Resettlement Policy Frameworks and Indigenous People Planning Frameworks that should be applied and/or endorsed widely (e.g. The French Government’s Agence Française de Développement’s Environmental and Social Framework).
Special edition webinar: Investible, inclusive, resilient Infrastructure in the post pandemic world
In this special edition webinar, RICS CEO Sean Tompkins interviews Marie Lam-Frendo, CEO of Global Infrastructure Hub (GIH), to explore how we can ensure infrastructure development efforts are at the centre of global recovery efforts. They probe the role of infrastructure professionals in the delivery of an inclusive and resilient sector under the current economic pressures, as well as delving into the future outlook of the sector and opportunities the pandemic will bring.
The Cairo Metro case study in our Inclusive Infrastructure Tool provides a good example of the way comprehensive stakeholder engagement can be used to inform the development of approaches to resettlement and the response to the economic displacement of certain groups.
MLF: According to the GI Hub’s Outlook report, there remains an infrastructure financing gap of around US$15 trillion. But the carbon dioxide impact of closing this gap has not been estimated.
With fiscal constraints at their highest level in post WWII history, governments across the globe have a unique opportunity to look at their infrastructure plans and reassess how they can be delivered to align with the green economy vision most world leaders and their communities are calling for.
The European-led Green Deal programme is a good example of a program which clearly demonstrates such a commitment. Strong government leadership, as well as dedicated capacity and capability within governments to critically review infrastructure plans and align them with the green objectives are imperative if we are to see delivery and real change.
In the midst of the global reset, the window of opportunity is open, but it will only be there for a short time as the return to a (new?) normal may see the emergency calls to transition to a green economy drowned out by other voices.