May 6, 2015
Abstract: The extant model for infrastructure development i.e., Public Private Partnership, has not worked, as evidenced by stalled projects, and rising non-performing assets on the balance sheets of banks. The 2015 Budget created a new entity, the National Infrastructure and Investment Fund (NIIF), to channel funds into stalled projects, and to ease the pressure on banks from infrastructure NPAs. Three additional strategies are critical, namely:
- Prioritization of projects based on “network externalities”, or “mission criticality”;
- A “going concern” bankruptcy model, which allows a project to be implemented while limiting stakeholder conflict, to manage ownership and control; and
- NIIF should act as a ‘serial entrepreneur’, divesting its equity stake in sequence as projects near completion and investor appetite broadens.
Keywords: infrastructure; Development Economics; public policy