The need for infrastructure transparency

Around one third of infrastructure spending worldwide is lost due to inefficiencies and corruption

Pakistani decision-makers have an enduring fascination with visible infrastructure projects. Well-planned and well-executed infrastructure development can help accelerate economic progress, advance development goals and strengthen resilience to climate change. Yet, the governance of infrastructure projects often falls short of these aspirations.

As per Global Infrastructure Hub estimates, the world needs around $94 trillion in infrastructure investment by 2040. Given current trends, there is an investment gap of approximately $15 trillion. Closing this gap is not simply a matter of mobilising additional financing. It also requires addressing the significant losses associated with weak infrastructure governance, especially those resulting from corruption.

Infrastructure is widely recognised as being particularly vulnerable to corruption. Infrastructure projects are often large, technically complex and difficult to monitor. Project costs are not easily comparable, procurement processes involve numerous stakeholders, implementation can stretch over many years, and information is not readily made accessible. Such factors combine and create ample opportunities for not only corruption, but nepotism and wastage as well.

The IMF suggests that around one-third of infrastructure spending worldwide is being lost due to inefficiencies and corruption. In low-income countries, these losses may be as much as 50 per cent.

Pakistan has not managed to deal with such problems despite the creation of formal infrastructure planning, procurement and oversight mechanisms. According to Transparency International's Infrastructure Corruption Risk Assessment Tool (ICRAT), Pakistan scores 6.34 out of 10 points, placing it in a 'high-risk' category. This ranking suggests that project identification, approval, authorization and procurement processes within the country require significant strengthening.

Tools such as ICRAT are useful for identifying institutional vulnerabilities and highlighting areas where reforms are needed to increase accountability. Yet, since such assessments rely on expert judgments and governance indicators, they are not direct measures of corrupt activity. Entities like Transparency International, which created ICRAT as well, assume that corruption is primarily a domestic governance problem. Such a perspective overlooks the broader international political economy in which major infrastructure projects are conceived, financed and implemented.

After all, infrastructure investments are also shaped by the geostrategic priorities of powerful states, the commercial interests of multinational corporations, and the incentives created by international financial institutions. Foreign firms often use lobbying, political connections and intermediaries to shape regulatory outcomes and secure lucrative infrastructure contracts. Foreign governments and development financers also favour large and visible projects which advance strategic and commercial objectives.

Corruption and governance failures arise through the interaction of domestic and international actors whose incentives, priorities and influence shape how infrastructure projects are conceived, financed and implemented. Therefore, external actors must also share responsibility for addressing governance failures and for mitigating all social and environmental harm caused by infrastructure projects.

As Pakistan increasingly relies on diverse sources of infrastructure finance, governance reforms should establish uniform standards for transparency, procurement, environmental safeguards and public oversight, regardless of whether projects are funded by China, multilateral development banks or other bilateral donors. Without such a comprehensive approach to accountability, infrastructure investments risk entrenching inequality, eroding public trust and undermining the very development goals they are intended to advance.