CREDIT financial markets are more open than ever to investing in local infrastructure and redevelopment infrastructure if investible projects can be identified within the setting that consent LGAs to source financing that could help to venture revenue generating ventures within their jurisdictions districts.
Right financing for right project in terms of size and value, sources of finance are fundamentally unrestricted and if well supportive mechanism is in place, ventures developed will provide councils with a unique opportunity to unlock their local potential areas' and raise revenue for themselves and for their principal.
Increasing levels of investment in infrastructure in the future should reflect anticipated population and economic growth, because infrastructure projects play a critical role to support local communities and the local economy.
Infrastructure can untangle LGAs potential, enable residents to access new education, skills, and work opportunities, support local retail and business areas, and increase the viability of new industries, which can also increase bases for tax base.
The role of LGAs and what is anticipated on these institutions is shifting than ever before. New roles and powers for LGAs that is emerging is generating a business setting which is making it more feasible to access up-front investment for infrastructure assets that can be repaid or serviced by revenue streams from taxes, services, infrastructure use or enhanced land values.
Bank's credits for certain type of projects are particular source of private investment, which has been efficaciously in other countries used in the past for right infrastructure projects as it typically invests large sums, over long time periods, at stable interest rates to enable the development on infrastructure.
Productively engaging with private investors and seeking credit from mandated financial institutions can not only bring investment but also critical skills and capabilities to support councils in bringing an infrastructure project on-stream, but to have the best chance of success councils need to reflect on few things such as why would they borrow, how to borrow, when to borrow and which financial institutions are likely to be appropriate for the nature of the envisioned projects.
For example, based on my experience, for the right investments there is no shortage of available finance. For an investor, especially were attracting private sector is an option, to regard a local investment prospect as a serious proposition, they must have long-term trust in the governance and capability of the local authority concerned.
This, among other things, needs to be demonstrated by leadership, local vision, administrative steadiness and access to managerial and technical capability and capacity. For most council, how to transform project idea or concept to make the commercial model in my opinion given the dearth project preparation capacity at certain councils remains a tall order.
Thus, for councils, understanding investors and the type of investments they undertake will lead to councils to get the most appropriate investor.
Investors yearning to partner with councils, in my view will only work with councils on the detailed business model, that provide clear roles and responsibility before committing on the type of investment relationship viewed to be appropriate and above all payback mechanisms to enable investor generate returns on their investment.
Amidst contested debate on when should a council talk to potential investors with or without blessing from treasury, my acumen, is that investors can be brought into council's project at various stages and through a variety of mechanisms.
Central thing to remember is that, private investors can be a useful source of expertise and capacity i.e. people and expertise and projects can benefit from early commitment. As an appeal to attract private capital investment into local infrastructure gain momentum on projects that are not social in nature, it is important for councils to two types of investors.
While a passive investors tend to provide finance only, though likely to be interested to be involved in governance, particularly for significant projects, active investors on the other hand tend to have a hands-on starring role, providing experience and expertise to shape the project.
My advice to councils, as at the contemporary era overwhelmed by value for money are not allowed to seek direct loans from financial institutions, without an approval from trea sury, need to know that there is often no need to go through complex attaining processes for investors as they would delivery partners, as value for money requirements, for the treasury and for the councils in my opinion can be fulfilled via alternative methods.
In my judgment this can be a complicated area and councils through their LGLB can seek advice from mandated policy financial institution whose objective isn't profit but creating opportunities for further economic engagements urgent needed at LGAs levels to help spread the wealth.
To successfully deliver an infrastructure project, councils need to be aware that there are a range of skills, capabilities, resources and stakeholders that need to be involved and coordinated.
In an attempt to attract an investor, key partners can include councils, expert advisors, subnational organisations, local or regional bodies, and, if seeking finance from mandated financial institutions the ministry responsible to grant sanction on borrowing has to be involved.
If councils can get the why, How, when, who to partner with right, will radically increase their access to new sources of finance and right partners to deliver the new infrastructure council need to help unlock economic potential.
When an infrastructure of whatever type is build and functional, based on my experience, will supports the operational of communities and their local economies.
Any infrastructure directly and indirectly unlock an area's potential and this will enable voters to access new social services, skills and work opportunities and make sites for vibrant economic power house and jobs more viable and more likely to be generated.
Managed well, council's infrastructure can create new income for councils and deliver efficiencies in some services. Infrastructure requires a significant up-front capital investment, and may require specialist knowledge and experience, as well as the capacity to deliver the construction segment then manage assets and services for a long period of time.
Looking at our councils environment, there are four basic methods by which I am convinced councils may use capital investment for infrastructure creation. My proposal isn't exhaustive but includes the following. Capital loan-to provide loan funds, or investment capital for infrastructure or other developments that will be paid back over time; or through managed asset- where capital stock purchased and managed on behalf of public sector.
To provide investment capital into a special purpose vehicle that builds and manages a public asset, and they are paid back their investment plus a return over time. This could be an appropriate but highest level of transparency need to prevail.
Direct investment can also be an option but processes to attract capital to invest in designated plots of land for infrastructure such as warehouse for crop storage deeded to facilitate this era of commodity trading, gas storage facilities, clean bulk water storages constructions or other assets that can be part of a regeneration plan or investment context.
Lending to or shareholding in public commercial establishment is further an option for rich councils. Here councils can use capital for investment as part of a local authority owned asset or service that operates commercially to deliver delivery efficiencies or increase return to councils.
There are a wide variety of investors who could be keen to work with councils on infrastructure projects. But one of the critical drivers of success that would help councils to be able to attract serious investors is the council's ability to identify and approach the most appropriate investors.
Circumnavigating attracting investment and investors scenery, where investors, be local and international to invest or to partner can be complex and will require in-house knowledge, a track record and building relationships with right investors and financial institutions.
Views articulated above take cognisant of the fact that the capability and capacity of LGAs to deliver services and exploit untapped economic opportunities are entering into the development debate that centres on revenue mobilization, spending controls and sourcing financing to help execute further revenue generation ventures.