How to incentivise transparency in the infrastructure sector

No one doubts the enormous challenges ahead in recovering from the pandemic, as low economic activity and levels of debt mount. The role that infrastructure plays in meeting these challenges has been recognised by financial institutions. Its value to meeting the UN Sustainable Development Goals (SGDs) and the climate crisis is also gaining prominence.

To effectively meet these challenges however, the governance of infrastructure must be improved. Approximately 10 – 30% of investment in infrastructure is lost to corruption, mismanagement and inefficiency, with recent estimates from the International Monetary Fund emphasising that in low-income countries inefficiency leads to a 50% loss.

Means of improving infrastructure governance are ever more important now following the emergency procurement measures resorted to during Covid-19 which heighten corruption risks.

Since its establishment, with support from the Institution of Civil Engineers in 2008, CoST – the Infrastructure Transparency Initiative has promoted better governance of infrastructure projects through an approach centred on transparency, participation and accountability.

This includes incentives which encourage better performance from public sector clients, such as legal mandates on data publication and subjecting projects to an ‘assurance process’. The latter incentive helps to highlight and put issues and gaps in the data in the public domain.

Building on our experience, members of CoST have been using a new tool, the Infrastructure Transparency Index. This has massive incentivising potential for clients to improve their transparency by ranking entities based on robust indicators.

In addition to this ranking, the Index also promotes understanding and action across government, private sector and civil society on the relative strengths and weaknesses of infrastructure transparency, participation and accountability in their country, region or city.

Measures of transparency

The Index uses four dimensions which generate a score ranking for a sample of procuring entities - organisations procuring the goods or sourcing the services - who are assessed. The individual scores are used to generate an Index that compares those sampled. Through this comparison, the procuring entities are encouraged to improve their performance in ‘a race to the top’. A score is also provided for the country or sub-country level.

The four dimensions provide a broad interpretation of transparency, with the first looking at the national or sub-national context and the remainder focusing on the client. They include:

• the enabling environment for transparency and the client’s
• capacity and processes to publish data
• ways of engaging citizens
• level of data publication

The dimensions take onboard key considerations, for example:

• to assess the enabling environment, they look at the extent to which legislation in the given country requires data disclosure
• to assess the client’s level of data publication they consider things such as their access to effective tools to publish the information

The scores will not only incentivise better client performance, but it will allow stakeholders from government, private sector and civil society to examine the specifics of the score as part of their efforts to improve transparency, accountability and participation. They can ask and act on questions such as 'why are entities not meeting basic legal requirements?' or 'how can the legal requirements be better implemented?'

Initial results

Over the past months we have been working with CoST members in Afghanistan, Costa Rica, Ghana, Uganda and Ukraine to implement the Index. On 14 June 2021, Costa Rica and Ukraine published their results, which reveal interesting insights across the four dimensions.

In Ukraine, among its recommendations, CoST Ukraine highlighted the need for greater disclosure across the entire project cycle. This draws on the fact that its national level score was 62.8 (out of 100), in project preparation it scored just 22, while execution of contract procurement scored the highest mark, 100.

In Costa Rica, the overall national score was 47.51 (out of 100); it noted the lowest-performing area was the enabling environment. At its event, officials from CoST Costa Rica focused on recommending greater institutionalisation of data disclosure to address this.

Through these scores, showing clear markers and relevant recommendations, we expect to prompt change and see improved environments of transparency and resulting accountability in both Ukraine and Costa Rica in the near future.

Next steps

Beyond CoST member countries implementing the Index, we welcome any other interested parties to apply the Index. Using their results, we will improve our methodology, and, in due course explore the possibility of the Index providing an international comparison of countries.

With the challenges ahead innovative tools and approaches will play an increasingly important role in ensuring that the transparency, participation and accountability safeguards often sidelined to speed up Covid-19 response do not stay there. As the experience of CoST shows when placed centre stage they deliver significant impact.