Governments must have the right professional team in place to harness the benefits of additional investment while working to mitigate the significant risks associated with infrastructure projects;
Pakistan is forecasted to invest $335bn in its infrastructure and will have a gap of $117.9bn. Thus the difference between investment needed and the investment forecast is 35 percent.
Karachi, July 01, 2019: Infrastructure is critical for economic and social development around the world. From the transportation networks that enable people and goods to move around safely and effectively, to the utility systems providing power and services essential to survival. And these systems rely heavily on investments and funding.
ACCA (the Association of Chartered Certified Accountants) has partnered with the Chartered Professional Accountants of Canada (CPA Canada) on a report called: How accountants can bridge the global infrastructure gap. The project has produced findings and recommendations based on international good practice to help governments close their infrastructure gap with accountants playing a central, collaborative role.
The term ‘global infrastructure gap’ identifies the difference between infrastructure investment needed and the resources available to meet that need. In 2018 alone, the investment gap grew by over $400bn and it is set to grow to a staggering $14 trillion by 2040.
Respondents from the survey (based in South Asia) identified three major barriers to meeting the infrastructure needs of their respective countries:
· Eighty nine percent cited corruption as playing a major part;
· Seventy five percent of respondents quoted a lack of political leadership;
· And 48 percent said it was down to planning and regulatory barriers.
ACCA’s head of Pakistan, Sajjeed Aslam, says:
‘Pakistan still has a way to go in tackling the infrastructure challenge and China–Pakistan Economic Corridor (CPEC) is a great opportunity for the country to bridge this gap. We make a considerable contribution to our infrastructure and must do more to meet our needs.
Globally, solving the infrastructure puzzle is crucial to achieving a better more sustainable future for all, as it tackles global issues such as inequality, poverty and climate change.
Infrastructure is the foundation on which our social and economic well-being is built. All around the world – federal, provincial and local governments make decisions that serve the public and play a critical role in building and maintaining important infrastructure investments. Forces such as demographics, rising cyber threats, urbanisation and climate change are all increasing the global demand for quality infrastructure.
The accountant is well-placed to tackle many of the major challenges humanity faces in the 21stcentury and beyond.’
Arif Masud Mirza, ACCA’s Regional Head of Policy says: ‘Professionals like ACCA members working across public sector infrastructure projects can greatly help with improvements in planning, efficiencies and cost-effectiveness. Firstly through their ethical values, professionals combat bribery and corruption, secondly professionals remain objective and can provide strategic leadership vision to projects and lastly professionals anticipate and manage business, operational and financial risks to allow major projects to be delivered on time and within budget.
Accounting is central to successful decision-making and professional accountants can provide relevant analysis and guidance, especially when it comes to building accountability into the process. Having an accountant’s skills and perspectives on an infrastructure project team can mean the difference between success and failure.’
The report offers 20 recommendations to close the infrastructure gap. The top five are listed below:
· Governments should enforce effective whistle-blowing legislation and professionalise the public sector finance function to allow public servants to challenge unethical behaviour and practices that can disrupt infrastructure projects.
· Governments should direct supreme audit institutions to monitor the interaction of off balance sheet liabilities and fiscal targets in order to improve the efficient allocation;
· Governments should adopt full accrual accounting and maintain a public sector balance sheet to support decision-making on infrastructure policies.
· Governments should also separate expenditure on projects to report both maintenance and new project spend.
· Accountants can advise on the distributional impact and regional growth outcomes of selecting particular projects.