Infrastructure services provide the foundation for the development of any country and contribute to poverty reduction and growth, both directly through improving access to vital resources such as water and energy, and indirectly by enabling access to other key resources such as schools, hospitals and markets. In partnership with governments, business has an important role to play in building infrastructure for development.
That being said, much of the funding invested in infrastructure construction in developing countries does not benefit contractors, suppliers and workers from those countries. Increasing the input of local labor, goods and services (‘local content’) in the delivery of infrastructure projects in low-income countries could make a major contribution to economic growth. At the same time it would open up opportunities for the poor to participate in the growth process through the creation of jobs in the construction and supply industries. A recent briefing note (pdf, 32 pages) by Engineers Against Poverty and the Institution of Civil Engineers argues that the procurement process can serve as a powerful tool to promote local content in infrastructure construction.
The immediate benefits are more employment in the construction and supply industries, opportunities for local consultants, increased work for local contractors and market openings for suppliers of materials and components. The contributions to development outcomes are inclusive growth, poverty alleviation and more sustainable infrastructure services.
However, few countries have a clear policy for the promotion of local content in infrastructure provision and those that do often have difficulty implementing it. A number of challenges are identified in the report, notably the preference of clients, donors, engineers and the business community for expensive, high-tech and large scale projects which are not within the capability of the local industry, as well as the failure of international agencies to balance objectives. Moreover, some suggestions are put forward for overcoming the challenges and promoting local content through minor changes to procurement at each stage of the project cycle.
More information:
- Briefing note Increasing local content in the procurement of infrastructure projects in low income countries (pdf, 32 pages)
- For contextual information on infrastructure, including facts and trends, see this briefing note pdf, 2 pages), originally published in the context of the report Doing Business with the World – The New Role of Corporate Leadership in Global Development by the WBCSD in October 2007.
I agree that "much of the funding invested in infrastructure construction in developing countries does not benefit contractors, suppliers and workers from those countries." I was informed by U.S. government officials that the U.S. will begin procuring infrastructure supplies and labor from locals in Afghanistan and surrounding countries such as Uzbekistan.
Although high-tech and large scale projects may not be within the capability of the local industry, there should be a more concentrated effort to build local capacity to meet market demands.
Posted by: Aaron Rose | March 17, 2009 at 07:28 PM