America has neglected its infrastructure for years, and the system we have today is woefully insufficient for meeting the needs and challenges of the 21st century. Instead of investing in highways, ports, high-speed rail projects, and modern utilities, the U.S. has for decades continued putting new coats of paint on the same cracked wall. As a result, Americans continue to sit in hours of traffic each day and trade is hampered by congested ports and entryways.
Coastal areas continue to be one Category 3 hurricane away from mass devastation. Major cities still rely on water pipes and sewers more than a century old that regularly leak and burst, and would certainly not fare well in a major earthquake. Aside from some forward-thinking Asian countries, the situation is even worse globally, particularly in regions with mass poverty and unstable political and economic climates.
Modern infrastructure is not just a public good, but an economic one too. Communities with modern, effective infrastructure draw new investment, and the actual construction of new projects creates jobs. Today’s political leaders have good reason to promote domestic infrastructure investment, as academic research unequivocally shows a link between the state of local infrastructure and economic development.
Unfortunately, when it comes to infrastructure projects, there is no central marketplace for sharing of opportunities. Countries and other public and private sponsors have traditionally presented opportunities in an old-fashioned word-of-mouth format, and infrastructure investors lack a point of access into bankable investment opportunities.
To date, most governments have relied on three sorts of public policy programs for accelerating infrastructure development: financing facilities, such as Brazil’s BENDES or America’s TIFIA program; PPP delivery programs, such as Ontario’s alternative delivery initiative; or investment promotion agencies, such as the Korean and Polish Investment Promotion Agencies.
While all of these infrastructure policy programs have an explicit focus on accelerating capital formation for infrastructure, they rest on the assumption that information about viable projects is readily available within the economy. Unfortunately, that assumption has been proven flawed time and time again.
Gathering project information from the market is time consuming, and it is expensive to collect and compile the data from public and private sponsors. It is also complicated by the reality that projects exist at varying states of development and with varying needs for market expertise and financing.
What governments need is a technology platform for the intake, tracking, and promotion of infrastructure opportunities—a system that in effect invites public and private sponsors to post, share, and update potential project opportunities.
In 2010, I created Zanbato, a technology platform for global infrastructure finance with several other technologists in Silicon Valley and finance industry veterans. The Zanbato platform is able to facilitate and even encourage the exchange of information between project sponsors, government agencies, advisors, capital providers, and other market participants. Unlike existing mainstream infrastructure promotion policies, which include financing agencies, delivery programs, and even promotional agencies and embassy staff around the world, ePlatforms are relatively straightforward and inexpensive to implement, and now technologically feasible.
Earlier this year, Zanbato partnered with the African Development Bank to create a version of the platform specifically tailored for African infrastructure investment opportunities. Not only will Sokoni provide a marketplace for buyers and sellers, it will enhance the speed and efficiency of asset sales and capital raises by using technology to facilitate the work of those looking to finance African infrastructure assets, as well as potential donors and global capital providers interested in investing in Africa. This is why the G20 endorsed Sokoni as an infrastructure solution for Africa at the recent meetings in Cannes, Paris.
Internet marketplaces have flourished over the past decade in sectors as diverse as real estate, heavy equipment, automobiles, collectibles, art, air travel, financial products, and legal services. That trend is taking global markets by storm, and there is no reason why the infrastructure sector should be left behind in this technological renaissance. Overall, the ePlatform concept stands to help political leaders catalyze capital formation for infrastructure with little new capital outlay, making all of the existing programs and the overall market work more efficiently. Politicians who grasp this idea early have an opportunity to be thought leaders, and countries that adopt it early have an opportunity to gain a competitive advantage in the global contest for FDI attraction.
By enhancing efficiency, transparency and connectivity in the market, America can do what Africa is about to do, and mobilize capital while sparking economic growth.
Dr. Ryan J. Orr is executive director at Stanford University's Collaboratory for Research on Global Projects and teaches classes on Global Project Finance and Infrastructure Investment to law, business, and engineering graduate students. He co-founded Zanbato, a technology platform for infrastructure finance, with a team of former students and alumni from Stanford University and serves as its Chief Executive Officer.