August 22, 2014
ConnectAmericas Infrastructure Community
Boosting private, sustainable infrastructure investment in Latin America and the Caribbean
By Francisco Estrázulas
Latin American and Caribbean governments are paving the way for increased private investment in infrastructure. The region is expected to invest at least US$1.5 trillion in infrastructure projects over the next decade, offering huge opportunities for investors and companies in the engineering and construction fields, as well as the myriad of other sectors involved in the infrastructure supply chains.
Brazil alone plans to invest up to US$900 billion to reconstruct its rail and road networks and develop energy projects over the next six years. Mexico foresees investments of US$300 billion over the next four years, particularly in the power generation and telecommunications sectors. Colombia is set to build 8,000 kilometers of roads, at a cost of US$25 billion over six years. Peru estimates investments of US$80 billion to fill the country’s transportation and sanitation gaps.
This pace of investment has to be sustained – and ideally should be doubled, to reach 5% of GDP annually – if the region’s countries hope to bring their infrastructure up to international standards. In light of this need and the widespread fiscal restraint across the region, governments are proactively working to make their investment conditions more attractive to the private sector.
Over the past five years, most countries in Latin America and the Caribbean have approved new laws and regulations governing Public-Private Partnerships (PPPs) and set up PPP Units to put them into practice—El Salvador and Paraguay being the latest nations to do so. As this trend continues, its impact becomes more evident. For example, in 2013 Private Equity Funds invested more than US$3.5 billion in infrastructure in the region, more than doubling the US$1.7 billion they invested in 2012. This is also reflected in the number of PPP projects, which grew from 69 in 2010 to more than 118 in 2013.
However, even if conditions are improving for private investment in infrastructure, countries aren’t yet deriving the maximum benefit because competition for these projects remains relatively low.
Why? In part, because international infrastructure developers and investors don´t submit bids on projects, due to a lack of up-to-date, accurate information about the local providers and partners they need to carry out these projects—such as construction material suppliers, machinery maintenance and repair companies, transportation companies, security services companies, and so on. Also, in many countries, these local companies are small and medium-sized enterprises (SMEs) that lack the skills, certifications and expertise that the international developers and investors are looking for.
To bridge that information and skills gap, the Inter-American Development Bank has created an Infrastructure Community on its innovative business social media platform: ConnectAmericas. The site is designed to support companies, especially SMEs, connect with potential clients, suppliers and investors around the world.
The ConnectAmericas Infrastructure Community is a special group within the site aimed at any companies, large and small, interested in doing business related to infrastructure. It will disseminate information about infrastructure tenders in the region, and attach to each tender a list of local partners and providers. For each of these local companies, the platform will provide contact information, a detailed description of the good and services it offers, rating and reviews from previous clients, and references.
Membership in the Infrastructure Community is free of charge, and members will have access to online courses, advisory services, virtual discussion forums, information on available financing from a variety of sources, to help local companies build the skills that large international clients are seeking.
The Infrastructure Community will be launched at The Trade Americas & ConnectAmericas Expo: Building the Americas, organized by the IDB and Latin Trade Group at the JW Marriot Marquis Hotel in Miami, FL on September 3 – 4, 2014. The event features presentations by regional experts on the latest trends and opportunities in energy, logistics, and urban infrastructure; best practices for government entities and firms; as well as a business matchmaking event that will give attendees the opportunity to hold one-on-one meetings with potential clients, partners, suppliers, and financiers.