The global demand for infrastructure investment is estimated at about $3.7 trillion annually. In developing countries, it is driven by growing population, economic growth, urbanization, environment constraints and industrialization. Population growth, migration from rural to urban areas and the rise of a middle class of consumers will in combination create vastly greater needs for transportation, energy, water, waste management and telecommunications. The high demand is not being met, not due to the enormous financing need, but to the lack of institutional capacity and poor project preparation. IISS is an effective way of addressing this issue.
Historically, much of the initiative and the funding for infrastructure have been considered to be the responsibility of government. Today, the debt burden is limited to government investment capacity but investment capital is currently abundant (institutional, sovereign wealth funds, permanent funds, family offices and private equity firms). How can the investment needs and the constraints of lenders and fund providers be matched? By preparing better projects, to acquire the confidence of investors and lenders. Interest alignment between users, concessionaires and owners is essential to successful outcomes. The private parties engaged in infrastructure financing and development need to understand the peculiarities of each local project and institutional context, and how policy and regulatory frameworks both enable and circumscribe the value that these projects can deliver over their life cycle. This is where guidelines for better project preparation and stakeholder information are needed. Not only is there a direct need for better educating the public sector and policy-makers at large about the realities of infrastructure development, but also the importance must be emphasized of having informed owners who are technically sophisticated and have the ability to think ahead through the entire project life cycle. This underscores the crucial importance of effective project preparation and the role it plays in project bankability.
The idea – International Infrastructure Support System (IISS)
IISS offers governments a global standard – reliable, secured and user- friendly project preparation software to maximize public-sector user financing options – including PPPs – by providing well-prepared projects in a consistent and transparent way to the international community of contractors, investors and lenders.
IISS was first developed by the Asian Development Bank (AsDB) in 2010 and, since 2013, has been further refined and managed by the Sustainable Infrastructure Foundation (SIF). IISS today is a global platform supported by major MDBs and international financial institutions (IFIs). Its Strategic Partners Committee consists of the International Monetary Fund, the Organisation for Economic Cooperation and Development, the World Economic Forum and other global life cycles.
IISS gives public-sector agencies an unmatched and tailored software service that integrates:
- Online workspace (including data storage/life cycle and communications)
- Project management tools
- World-class, sub-sector specific infrastructure project preparation templates
The IISS integrated web-based software service was designed and piloted by the MDBs so that it could help public-sector agencies to:
- Capture, manipulate, share and manage early project concept data in a scalable and effective manner
- Identify and inform about gaps to be addressed in project planning and preparation
- Identify and inform about project risks that governments will need to mitigate
- Provide a scalable approach for project development and preparation methodology that is systematic and consistent across locations and sectors
- Provide links to marketing and funding resources to help facilitate project investment
- Provide a forum for engaging market participants and project stakeholders
- Present shovel-ready infrastructure projects pipelines to the market
Since the global launch in January 2016, IISS has been focusing efforts on developing its user database by training more than 100 government officials from over 10 developing nations. IISS continues to exceed all expectations with now more than 260 active users, 54 projects currently on IISS for a value estimated at over $15 billion and 18 governments using the platform. It contains over 30 templates that address different sub-sectors of infrastructure, covering detailed questions on governance, technical, legal, financial, environmental and social aspects, among others.
The barriers to innovation
The key barriers for implementing the proposed solution to the global dilemma include language, IT developments and the limited capacity of SIF to respond to the high user demands for new features, templates, available languages and rising demand for more training and support to governments.
SIF is currently operating at limited financial capacity (slow-growth case). It is estimated that by 2020, a total of 550 projects will be uploaded and published on IISS. This does not meet the demand from MDBs and users to upload a minimum of 2,000 projects on IISS by 2020, translate IISS into a further 12 languages, develop 50 extra sub-sector templates and train up to 80 more countries on the use of IISS software.
Solutions to overcome the barriers
To overcome these challenges, SIF must aim to operate at an accelerated rate (accelerated roll-out case), whereby sufficient financing must be provided to SIF to meet the growing number of user requests, develop more templates, features, training and a provide a higher level of support to governments.
Possible solutions developed include:
- MDBs, having already collaborated and provided seed capital to design and launch IISS, are now seeking bilateral partners and/or donors to provide financial support for SIF, to continue the development of IISS at an accelerated rate.
- SIF is currently developing a number of revenue models to become self-sustainable in the long-term. One such model is private-sector user access; provided via sign up/registration functionality to access published projects and other features such as, but not limited to, alerts highlighting projects of interest; ability to search by sector, location, specific stage, third-party reviewer and estimated capital cost; and email alerts during the project preparation phase. In addition, SIF is developing the licensing model for users and an online/onsite training model.
The way forward
IISS has proven to be a rapidly evolving tool that has radically improved the quality of public-sector project preparation outputs and increased the chances of well-prepared projects securing financing from a wider set of sources. In the next financial year, SIF aims to train more governments on the use of IISS, grow the IISS user database from 260 users to 500, upload and publish more projects on IISS.
 Multilateral Development Banks: African Development Bank, Asian Development Bank, Banco de Desarrollo de America Latina, European Bank for Reconstruction and Development, Inter-American Development Bank, Islamic Development Bank, and World Bank Group
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