Governance

Definition

Governance, institutions (including rule of law and corruption prevention), and legal environment required to support infrastructure investment.

What Does Good Look Like?

Robust governance, leadership and capable institutions that support the rule of law, transparency and consultation, and effective and independent decision making structures for infrastructure investment.

Best Practice Guidance:

Well Spent: How Strong Infrastructure Governance Can End Waste in Public Investment (IMF)

Enhancing Government Effectiveness and Transparency: The Fight Against Corruption (World Bank)

OECD Framework for the Governance of Infrastructure (OECD)

Fighting Bid Rigging in Public Procurement (OECD)

Top Performers

Rank Country

Score /100

1 -

Singapore

83.4

1 -

Singapore

83.4

83.4/100

2 1

Denmark

82.6

2 1

Denmark

82.6

82.6/100

3 1

Netherlands

82.3

3 1

Netherlands

82.3

82.3/100

4 2

Canada

81.9

4 2

Canada

81.9

81.9/100

5 1

Austria

81.3

5 1

Austria

81.3

81.3/100

Go To Full Ranking

Guidance

Metric

Metric Importance

Weighting
(% Of Driver)

Best Performer

Source

Best Practice

Recovery rate

The recovery rate is recorded as cents on the dollar recovered by secured creditors through reorganisation, liquidation or debt enforcement (foreclosure or receivership) proceedings.

This reflects the strength of creditors' protections. Countries with higher recovery rates will find it easier and cheaper to obtain debt for infrastructure investments. Those countries will be viewed as less risky for debt as investors on average receive a higher percentage of their investment back even when the investments fail.

28.2%

Japan

Doing Business Survey, World Bank (2020)

Resolving Insolvency best practices (World Bank)

Rule of law

World Governance Composite Indicator reflecting perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence. The rule of law reflects whether the law imposes limits of power on the state, private sector and individuals.

The rule of law is the foundation of the rules to resolve disputes, prevent violence and deter corruption. Weak enforcement and corruption decrease the security of infrastructure investment. An investor would not be attracted to a country with corruption and ineffective means to settle disputes, due to the risk of investment being lost without delivering the infrastructure required to create returns and investors being unable to enforce rights to recover investment from counterparties or the state.

20.7%

Finland

Worldwide Governance Indicators, World Bank (2018)

OECD Recommendation on Public Integrity

Post-completion reviews

Whether the country conducts post-completion reviews on infrastructure projects to ensure the forecast outcomes are being achieved.

Ensures procurement and asset valuation risks are managed appropriately by the government through quality and compliance checks. In some cases, these assurance measures also ensure project funding (government grants) are appropriate and that the intended benefits are being realised, allowing proponents to take corrective action if benefits are not being delivered. The threat of an audit or post-completion review encourages project proponents to deliver the project well, obtain value for money and manage probity and other risks effectively.

18.1%

See all...

Deloitte in-country survey (2020)

Framework to review programmes (UK National Audit Office)

Shareholder governance

Measures the governance practices that protect shareholders through three dimensions: the extent of shareholder rights index (shareholders’ rights and role in major corporate decisions), the extent of ownership and control index (governance safeguards protecting shareholders from undue board control and entrenchment), and the extent of corporate transparency index (corporate transparency on ownership stakes).

Setting and enforcing the duties of disclosure and transparency for the operations of companies provides confidence to invest in them. This applies both to entities that fund, finance or own infrastructure as well as those that deliver infrastructure

15.1%

See all...

Doing Business Survey, World Bank (2020)

Doing Business: Good Practices for Protecting Minority Investors (World Bank)

Political stability and absence of violence score

Measures perceptions of the likelihood of political instability and/or politically-motivated violence, including terrorism. Estimate gives the country's score on the aggregate indicator, in units of a standard normal distribution i.e. ranging from approximately -2.5 to 2.5.

Lack of political stability can provide a strong disincentive for investments in long-term project due to changes of political agenda and the consequent uncertainty regarding the policy and funding support for a project. Policy uncertainty would deter investors from investing, and too frequent changes in priorities may use up money on pet projects that may not proceed instead of improving infrastructure outcomes.

12.8%

New Zealand

Worldwide Governance Indicators, World Bank (2018)

Justice Rights and Public Safety (World Bank)

Infrastructure or PPP agency

Whether an infrastructure agency exists to coordinate an integrated approach to infrastructure delivery and policy.

Dedicated infrastructure agencies/PPP units can be knowledge centres, ensuring that all the appropriate steps are taken in developing infrastructure projects and facilitating PPP activities. As a dedicated body, they can also promote PPPs within government, and develop and manage effective PPP frameworks. Some bodies can also provide a communication channel to investors, helping bidders and financiers with information and opportunities, as well as provide contract management after financial close.

See all...

Deloitte in-country survey (2020)

Public Private Partnership Units: Lessons for their design and use in infrastructure (World Bank)

Best performer

Best practice

Recovery rate

Japan

Doing Business Survey, World Bank (2020)

Description

The recovery rate is recorded as cents on the dollar recovered by secured creditors through reorganisation, liquidation or debt enforcement (foreclosure or receivership) proceedings.