International finance institutions critical to Covid recovery

26 May 2020

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The 13th FIDIC Covid-19 webinar took place on Tuesday 26 May 2020 with an event looking at how the activities of international financial institutions, including the multilateral development banks, can play a vital role in financing infrastructure and social initiatives in the wake of the Covid-19 crisis, writes FIDIC communications advisor Andy Walker

“The role of international finance institutions and the exit from Covid-19” was attended by 501 attendees and looked at what more could be done to support countries and projects across the globe as the world emerges from the coronavirus pandemic. 

Moderated by FIDIC CEO Nelson Ogunshakin, the speakers at the event included FIDIC board member Gavin English, Victor Escala, lead procurement specialist at the Inter-American Development Bank, Manish Kothari, president of US consultancy Sheladia, Jan Jackholt, director of procurement at the European Bank for Reconstruction and Development, Jeff Taylor, procurement director at the Asian Development Bank and Enzo de Laurentiis, chief procurement officer at the World Bank. As ever, FIDIC president Bill Howard was also on the speaker panel.

Kicking off the event, FIDIC board member Gavin English said that there were massive social and economic impacts from Covid-19 that were having a profound effect in the developing world. These threatened to undo all the gains in theses regions over recent years, he said. Going forward, “the recovery needed to be green,” said English and resilience needed to be at the heart of this to ensure that economies were resilient against future shocks. He also said that Covid-19 had highlighted more than ever how interconnected the world was and that “we are only as strong as our weakest link,” he said. English also called for a renewed focus on the UN’s Sustainable Development Goals as countries came out of the current crisis. “There is a lot more that can be done in this area and we need to keep a focus on that,” he said.

Next speaker, Enzo de Laurentiis, chief procurement officer at the World Bank, said that there had been a massive disruption to supply chains and this was posing some series challenges to projects. Virtual bidding had been taking place with people not being able to travel, he said. He said there was also a big challenge with the overall infrastructure priorities facing the world as these were not going away and in fact they were becoming even more critical as a result of the Covid crisis, de Laurentiis said. Like Gavin English, he also highlighted the importance of sustainability in rebuilding economies in a way that could attract the best companies and investors to speed up the recovery process. He said that the World Bank had a key current focus on health projects and other social infrastructure that was likely to increase as the recovery phase continues.

Victor Escala, lead procurement specialist at the Inter-American Development Bank, said that the bank was still in the “immediate response phase” of its actions to address the challenge of the pandemic and was providing continuing support to countries across the region. The bank was responding rapidly to funding requests and in some cases was able to approve requests within 24 hours. He said that the bank was expecting to face new challenges over countries’ economic productivity and fiscal challenges as the region entered the recovery phase from the pandemic.

Jan Jackholt, director of procurement at the European Bank for Reconstruction and Development, said that in abnormal times like the current crisis, the international developments banks were working much more in partnership than previously. The bank had introduced a solidarity package in response to the crisis and was supporting companies in a number of ways, he said. “As a bank which is a project financing bank we are going to see more effort to support infrastructure in the future,” Jackholt said. He said that the bank was likely to look at how it defines projects going forward and this would have implications for the infrastructure sector. The bank had stepped up to the plate during the current crisis and was providing more financial support than ever before, he said. Digital was playing an increasingly important role in the bank’s work and its e-procurement platform had really come into its own during the recent period. Jackholt also highlighted the importance of the transition to a green economy in the bank’s work and praised the work of the World Bank for their response to the crisis.

Jeff Taylor, procurement director at the Asian Development Bank (ADB), highlighted the $20bn in new money for infrastructure that had been made available by the bank in response to the crisis. The ADB was also working closely with the other multilateral development banks and sustainability was high on the agenda, he said. Taylor said that digital infrastructure was crucial to recovery as this was an enabler but there was huge divergence in the way that countries had responded to the crisis. There were challenges around countries being isolated because of the break down of supply chains as a result of the pandemic. The mitigation of Covid-related infrastructure would become ever more crucial going forward, he said. Taylor also highlighted the importance of transparency in the governance management of flexible procurement systems. 

Manish Kothari, president of US multidisciplinary consultancy Sheladia, said that the current crisis had highlighted the need for people and businesses to be more connected. “These are very uncertain times and we are continuing to adapt and share experiences and talking to our competitors a lot more than we have been,” he said. He thought that 2021 would be a tough year for construction with increased uncertainty for countries and companies but one thing was certain and that was that the crisis would pass and the industry needed to be aware of that, Kothari said.

The discussion and questions from the floor covered a range of a wide range of issues including how the international financial institutions will deal with the lack of cashflow in the infrastructure sector, whether bank-funded projects will be cancelled in order to use that money against Covid-19, will rating agency downgrading of the sector affect the process of loans and investments? and whether MDBs’ procurement and project implementation methods will be changed forever by the crisis with increased electronic submission of clarifications, bids, meetings, documents, less travelling etc. 

Closing the webinar, FIDIC president Bill Howard said that “shovel-ready projects”, especially in the areas of sanitation and health, would be even more important in a future where there were bound to be pressures on financing and investment. Ensuring that infrastructure development was aligned to the Sustainable Development Goals was also crucial as the world economy recovered from the Covid-19 crisis.

The next FIDIC webinar in the series is “Covid-19: Clients, investors and developers’ perspectives on the fragility of the construction and infrastructure sector” which takes place on Thursday 28 May at 12 noon CET. Please register your place as soon as possible as another large turnout is expected for this event.

Click here to book your place on the clients, investors and developers perspectives webinar.

Click below to view a recording of the role of international finance institutions and the exit from Covid-19 webinar.

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