A.2 Deciding if public investment is required
Implementing broadband and digital technology projects often requires a combination of ‘in-kind’ contributions (non-financial) and ‘cash’ contributions (from funds), which seek to fill a range of funding gaps. Historically, connectivity-service providers (telecommunication network operators), digital-infrastructure providers (tower companies and wholesale fixed broadband companies), and IT-infrastructure users in the wider economy (businesses, in the case of data centres) have driven funding of digital technologies, specifically investment in infrastructure. However, a range of other actors can be considered as part of the financing mix including banks (from microfinance to private equity) on the debt side to philanthropists, non-governmental organisations and development agencies on the funding side providing ‘friendlier’ funding and technical assistance more for impact and less for profit. Finally, to close any funding gaps, public funding seeks to ensure that no one is left behind as the world races into a digital age.
Public funding, as a last resort, is a key tenet of the UAS financing landscape. As described in the figure below, when public funding is required, funds should consider the following questions:
- Will the funding make a material difference or impact that would not have been achieved without the funding being made available?
- Will public investment stimulate further investment by the private sector? If not, then it risks ‘crowding out’ investment and should not be introduced.
- Have all alternative funding and financing sources and types been considered?
- Have costs and benefits of public intervention been assessed?
- Have transparent and non-market distorting policy and regulatory incentives been put in place to reduce the costs of investment and any perceived investment risks to facilitate private investment?
These questions need a positive response before using public funds.
Public Investment Process
Public investment principles
Once public funding has been decided upon, the key principles of effective public investment must be taken into account by policy-makers and public fund managers. The Organisation for Economic Co-operation and Development (OECD) Principles on Effective Public Investment Across Levels of Government report groups 12 recommendations into 3 pillars representing what have been identified as the systemic multi-level governance challenges for public investment – these pillars are the basis for the checklist below.
OECD public investment principles: Tips for UAS funds and other public funds
| Pillar 1: Coordinate across governments and policy area |
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| Focus on the different types of governance arrangements and incentives than can help coordination. In the context of universal service and access, this coordination and collaboration is central to ensuring the effective implementation of programmes and projects by all public, private, and funding stakeholders. It requires that the following questions are answered positively, and where not, actions are taken to change this” |
✅ Has the country adopted a digital agenda or digital transformation policy? ✅ Has the country adopted an integrated UAS strategy? ✅ Has the country coordinated among the various government entities involved? ✅ Has the public investor coordinated across sub-national and national levels? ✅ Has the public investor ensured that the investment is at the relevant scale? |
| Pillar 2: Strengthen capacities for public investment and promote learning |
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| This pillar highlights key public management capacities that should be present to bolster conditions for effective investment. This is important in terms of understanding the investment mix, the implications and risks of public funding (not only fiscal, such as contingent liabilities, but also financial, political, social and environmental risks), engaging stakeholders, leveraging private funding, and maximising local skills and inputs. It requires that the following questions are answered positively, and where not, actions are taken to change this. |
| ✅ Does the public investor understand the implications and risks? ✅ Is there a plan in place to engage stakeholders at every step? ✅ Is there a strategy to include private actors and institutions (e.g. co-investing, blending)? ✅ Does the plan build expertise in local partners? ✅ Is there a focus on results? ✅ Is there a mechanism to capture lessons from experience? |
| Pillar 3: Ensure sound framework conditions at all levels of government |
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| This pillar focuses on the key framework governance conditions for public investment. The governance of the universal service strategy and fund is critical. This pillar is important in that it considers the alignment of budgets and fiscal frameworks with the strategic objectives, it promotes the strategic use of public procurement, and facilitates leveraging and pooling of funds. An important element of this is the coordination of overlapping and sometimes contradictory digital and ICT regulations which increase costs, reduce efficiency and deter investors. It requires that the following actions are taken: |
| ✅ Develop a fiscal framework aligned with objectives. ✅ Insist on sound, transparent financial management. ✅ Promote strategic use of public procurement. ✅ Strive for consistent, quality regulation. Source: Adapted from the Organisation for Economic Co-operation and Development (OECD) Principles on Effective Public Investment Across Levels of Government |