There is a particular sort of failure that never makes the newspapers. No scandal. No dramatic collapse. No “black swan”. Just a slow, costly fade: timelines stretch, scope shrinks, management rotates, consultants rebrand the same workstream, and—eventually—the strategy is said to have “evolved”. In many emerging markets, this is not an execution problem in the narrow sense. It is governance friction: the cumulative drag created by misaligned institutions, incentives, and informal power structures that were never truly designed to work together.
Most commentary reaches reflexively for two labels—corruption or capacity. Both matter, but neither fully explains why projects with competent sponsors, credible finance, and technically sound designs can still underperform without obvious wrongdoing. The more accurate diagnosis is that governance is not absent; it is misaligned. Rules exist, committees convene, signatures are obtainable—yet the system’s incentives point in different directions. Strategy, which assumes a coherent operating environment, then meets an institutional reality that behaves more like an archipelago: connected on maps, separated in practice.
The economic cost of this misalignment is not theoretical. The IMF’s work on infrastructure governance argues that countries lose a meaningful share of the potential return on public investment because of weaknesses across planning, allocation, and implementation institutions—losses estimated at around 27% for emerging market economies and 40% for low-income developing countries (versus 13% in advanced economies). The same analysis highlights that stronger infrastructure governance can close a large portion of the efficiency gap. Put plainly: the same dollar of capital can produce very different outcomes depending on institutional fit. [IMF Public Investment Management Assessment (PIMA), 2019] (IMF)
Governance absence versus governance misalignment
Governance absence is easy to recognise: unclear mandates, missing laws, non-existent controls, no credible regulator, no enforceable contracts. Governance misalignment is subtler—and therefore more dangerous to boardrooms—because it wears the costume of order. Policies exist. Authorities are named. Oversight frameworks are written. Yet performance remains stubbornly mediocre.
Misalignment typically appears in three forms.
First, vertical misalignment: the centre announces a strategy, while agencies, SOEs, municipalities, and regulators carry incentives that reward something else (risk avoidance, revenue protection, political signalling, patronage stability, or simply not being blamed). Second, horizontal misalignment: overlapping mandates across ministries, regulators, and state bodies create a “multi-key safe” in which progress requires many signatures but accountability belongs to none. Third, formal–informal misalignment: official process says one thing, informal influence says another. Strategies are then implemented twice—once in documents, once in reality—with the two versions diverging steadily over time.
The World Bank’s Worldwide Governance Indicators are useful here not as moral scorecards, but as proxies for operating conditions: government effectiveness, regulatory quality, rule of law, and control of corruption each capture different aspects of how reliably a system converts intent into delivery. The point is not to worship the index; it is to recognise that “governance” is measurable as an operating variable, not merely a compliance topic. [World Bank Worldwide Governance Indicators (WGI)] (World Bank)
Institutional latency: the time constant investors forget to price
In finance we are comfortable with the notion of duration: the same cashflows behave differently depending on time. Governance has an equivalent: institutional latency—the delay between decision and effect created by process complexity, coordination burdens, litigation risk, procurement mechanics, and human incentives. Investors often model political risk as binary (stable/unstable) and execution risk as technical (can the EPC deliver). Institutional latency sits in the neglected middle: the project is allowed and yet does not move.
This is one reason “low-noise failure” is common in infrastructure, banking, energy transition projects, and ICT. Outcomes are not destroyed; they are diluted. CAPEX becomes OPEX. Returns shift from equity to contractors. Momentum becomes meetings. And because each delay has a plausible explanation—“procurement”, “stakeholder engagement”, “revalidation”, “budget cycle”—no single event triggers a reset.
The IMF’s public investment work repeatedly returns to the same practical bottlenecks: project appraisal quality, project selection discipline, procurement performance, funding availability, and project management capability. These are not glamorous topics; they are the institutional plumbing through which strategies must flow. [IMF public investment management bottlenecks, 2024] (IMF)
What “low-noise failure” looks like by sector
1) Infrastructure: the project that is always “about to start”
In parts of Africa and some island economies, the dominant pattern is not cancellation but perpetual pre-construction. Feasibility studies are refreshed every few years. Land access remains “under discussion”. Social and environmental processes restart because the design has been adjusted to match a new political mood or a new financing window. Meanwhile, inflation and FX pressures silently reprice the project.
A particularly underappreciated constraint is absorptive capacity. Scaling public investment too quickly can increase costs and reduce value for money, especially where procurement and management capacity are thin. IMF research on absorptive capacity in developing-country road projects finds that unit costs can rise non-linearly when public investment scales up rapidly, consistent with capacity constraints in implementation systems. The strategic implication is unromantic: ambitious pipelines need governance capacity built into the schedule, not assumed away. [IMF Working Paper on absorptive capacity and public investment costs, 2020] (IMF)
2) Banking and financial services: “licensed” does not mean “operationally governable”
In GCC markets, a different pattern appears. Formal institutions can be strong, capital can be available, and strategy can be backed at the top—yet friction emerges from regulatory perimeter questions, risk ownership ambiguities, and group governance complexity (particularly in cross-border structures, digital banking, and BaaS models). The failure mode is rarely a dramatic supervisory intervention; it is a gradual narrowing of permissible activity and a rising internal cost of control.
The Basel Committee’s supervisory principles emphasise that supervisors assess not only compliance but the efficacy of governance and risk management, concentrating on outcomes and risk profiles rather than box-ticking. This framing matters for investors: governance is not paperwork; it is how decisions are made, challenged, escalated, and owned—especially under stress. Where governance is misaligned, risk committees proliferate precisely because they cannot resolve underlying authority questions. [Basel Core Principles for Effective Banking Supervision] (Bank for International Settlements)
Equally, bank governance principles highlight that, in many banking systems, safeguarding depositors and the public interest sits above shareholder preference—an explicit reminder that “strategy” is conditional on the regulator’s view of systemic stability. In emerging markets where political economy and financial stability are tightly coupled, this public-interest layer is not a footnote; it is the operating environment. [Basel Committee corporate governance principles for banks] (Bank for International Settlements)
3) Energy transition: the project pipeline that looks impressive until it meets the state
Energy is the classic theatre of governance friction because it combines long-duration assets, heavy permitting, grid constraints, subsidy regimes, and SOE interfaces—often with a climate narrative layered over industrial policy. Here, low-noise failure shows up as: delayed tenders, slow grid connections, “temporary” tariff uncertainty, and an endlessly expanding list of prerequisites for final investment decisions.
The IEA’s investment analysis has repeatedly noted that parts of the low-emissions hydrogen pipeline have been delayed or cancelled, underscoring how policy design, demand certainty, and infrastructure readiness condition capital flows. The lesson is not that hydrogen is doomed; it is that governance readiness is a gating variable that can dominate technology readiness. [IEA World Energy Investment 2025] (IEA)
Similarly, the IEA’s renewables outlook highlights how shifts in policy and regulatory settings alter deployment expectations—evidence that “bankability” is often a governance artefact rather than an engineering question. [IEA Renewables 2025] (IEA)
4) ICT and digital public infrastructure: speed is easy; coordination is not
ICT strategies often fail quietly because they are fast-moving and politically popular—meaning announcements are cheap—but implementation requires sustained inter-agency coordination, data governance, procurement discipline, cybersecurity maturity, and operating budgets that are less photogenic than ribbon cuttings.
In island economies, the complication is amplified by scale: talent pools are thin, vendor dependence is high, and a single mis-specified procurement can lock the state into suboptimal architectures for years. In parts of Africa, the risk is different: large donor and vendor ecosystems can create parallel systems, each rational locally, collectively incoherent. The strategy “works” on paper while the state’s digital spine remains fragmented.
Patterns across Africa, GCC, and island economies
A useful way to compare regions is not by stereotypes, but by typical friction geometry.
In many African contexts, friction often clusters around procurement capacity, project management maturity, and political settlement dynamics—not necessarily instability, but the practical need to keep coalitions intact. The result is often a bias towards spreading projects widely, avoiding hard prioritisation, and underfunding maintenance—precisely the behaviours the IMF flags as central determinants of investment efficiency. [IMF PIMA framework and efficiency losses] (IMF)
In the GCC, by contrast, the centre can be decisive and financing can be rapid, but friction can arise from regulatory perimeter clarity, SOE interfaces, and the choreography between ambition and prudential control—especially in banking, capital markets development, and energy transition investments that require new risk frameworks.
In island economies, governance friction is frequently a matter of institutional bandwidth. It is not merely “smallness”; it is the reality that the same senior officials sit on every committee, that market depth is limited, and that the marginal cost of coordination is high. Strategies importing “large-country” governance designs can accidentally create process architectures that exceed local administrative capacity, increasing latency precisely when speed is required.
A practical taxonomy of governance friction
Below is an appendix-ready table that boards can use as a structured lens. It pairs common friction mechanisms with measurable proxies and the typical “where to look” questions. (It is designed to be expanded country-by-country in your appendices.)
Governance friction mechanisms, proxies, and sector impact
| Friction mechanism (what actually slows delivery) | Observable proxy / metric (what you can measure) | Typical consequence (“low-noise failure”) | Sectors most exposed | Primary institutional references |
|---|---|---|---|---|
| Weak investment efficiency from governance gaps across planning–allocation–implementation | Estimated efficiency losses / gaps; maturity of PIM institutions | CAPEX produces less output; projects delivered but underperform | Infrastructure, energy, social sectors | [IMF PIMA, 2019] (IMF) |
| Bottlenecks in procurement, project appraisal, selection, and project management | Diagnostics of PIM bottlenecks; procurement cycle times; re-tender rates | “Perpetual preparation”; repeated redesign; procurement restarts | Infrastructure, ICT, utilities | [IMF public investment bottlenecks, 2024] (IMF) |
| Absorptive capacity constraints during rapid scale-up | Rising unit costs beyond investment threshold; execution rates | Cost inflation, contractor concentration, quality slippage | Roads, ports, housing, grid | [IMF absorptive capacity WP, 2020] (IMF) |
| Misaligned regulatory incentives versus growth strategy | Regulatory quality / government effectiveness proxies; licensing versus effective supervision | Strategy constrained by prudential “narrowing”; activity retreat | Banking, fintech, BaaS | [WGI framework] (World Bank); [Basel Core Principles] (Bank for International Settlements) |
| Governance and risk culture weaknesses in financial institutions | Board effectiveness, accountability regimes, governance assessments | Compliance spend rises; business agility falls; risk accumulates quietly | Banking, insurance, markets | [Basel governance principles for banks] (Bank for International Settlements) |
| Policy and regulatory uncertainty affecting investment pipelines | Investment pipeline revisions; FID conversion rates | “Pipeline theatre”: announcements exceed deliverable projects | Energy transition, hydrogen, grid | [IEA World Energy Investment 2025] (IEA) |
| Shifts in policy/regulatory settings altering deployment expectations | Forecast revisions driven by policy changes | Repricing of projects; “wait-and-see” capital | Renewables, grid, storage | [IEA Renewables 2025] (IEA) |
| Procurement bottlenecks as implementation risk factor | Procurement capacity constraints; legal/regulatory complexity | Disbursement delays; contract execution slippage | Infrastructure, ICT, health | [IMF note on procurement as key element and bottlenecks] (IMF) |
How Bramston would frame the remedy: governance as an operating variable
The temptation is to respond to governance friction with more governance artefacts—extra committees, thicker reporting, and “assurance” layers that mainly assure everyone that nobody is solely responsible. The more effective response is to treat governance as an operating variable—something you design and tune for throughput, decision quality, and accountability.
In practice, this means four things.
First, map the decision rights before the technical design. If a project requires ten approvals, identify which two actually matter, and make the other eight subordinate. Second, price institutional latency explicitly: build schedules around realistic procurement and coordination time constants, not idealised Gantt charts. Third, design incentives for delivery: if officials are punished for visible mistakes but not for invisible delay, the system will choose delay every time. Fourth, separate legitimacy from throughput: stakeholder processes are vital, but if they restart with every design change, they become an infinite loop. Governance must include rules for finality.
The contrarian point—often resisted in polite policy circles—is that many emerging-market strategies do not fail because they are too bold, but because they are insufficiently specific about who must decide what, by when, and with which consequence for non-decision. Where that is not explicit, informal power fills the vacuum; and informal power is rarely optimised for delivery.
Closing thought: the quiet failures are the expensive ones
Boards are trained to watch for obvious risks: coups, defaults, fraud, litigation, commodity shocks. Governance friction rarely looks like any of these. It looks like normality. That is why it is so costly. It erodes returns without creating a single moment of truth.
If emerging-market strategy is to be more than a ceremonial document, it must treat governance not as the moral backdrop to development, but as the mechanical system that converts intent into outcome. Markets do not merely need “good governance” in the abstract. They need aligned governance—institutions whose incentives, authority, and informal realities produce forward motion rather than elegant stasis. The difference is not philosophical. It is measurable—in time, in cost, and, ultimately, in whether strategy becomes infrastructure, or merely paperwork with a budget line.
