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Financing Infrastructure Challenges Faced By Developing Countries

By Author: Irvan Yaowita
Total Articles: 2

Every country needs excellent financing infrastructure strategy to ensure the stability of their country’s development. However, it can be very challenging for poor and developing countries that have very minimum infrastructure budget. Here are some challenges faced by developing countries that obstruct them from developing an infrastructure.

It Doesn’t Look Attractive for Private Investors
The best way to start an infrastructure project for a developing country is by inviting private sector’s participation. However, in reality it is not that easy to attract private sector to invest in an infrastructure project. The biggest worry of the private sector is usually the investing regulations of a country. It is necessary for the government to impose such regulations to protect their citizens and assets. However, it can raise insecurity for the private sector, especially when the investment doesn’t seem to be very profitable.

Private Sectors Don’t Want to Fund Public Projects
In most cases, private sectors and foreign investors don’t mind to fund an infrastructure project in a developing country. However, they only have their eyes on sectors that generate fast profit such as telecommunication or energy, especially electricity sector. While the reality is, what that country needs the most is investment in public infrastructures such as school. It is actually very normal for private sectors because making profit is their main goal. Therefore, the government has to make some incentives that will attract the privates to invest in public infrastructure as well.

The Government Fails to Prioritize
Inviting private sector in financing infrastructure is definitely a good way to accelerate the country’s infrastructure development. However, governments in developing countries often fail to prioritize which infrastructure they should build first. This is actually the biggest challenge of all. There are so many infrastructures that needs to be build that it is hard to see which one will have the most positive impact. If the government makes a wrong decision, the country’s economy will not develop even with a new infrastructure.

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