SUSTAINABILITY: INFRASTRUCTURE
Mobilising investments for sustainable infrastructure amid global crises
Jane Jamieson, program manager, Public-Private Infrastructure Advisory Facility and Quality Infrastructure Investment Partnership, World Bank Group
D eveloping countries are grappling with cascading crises, making the need for infrastructure investment more urgent than ever. Climate change, escalating debt, persistent inflation, high interest rates, depreciating currencies and conflict are undermining development outcomes, including for education, food security and disaster resilience. Despite a global economic recovery, the pace is sluggish, and inflation remains above pre-pandemic levels. The rising cost of capital and fiscal constraints exacerbate the already high costs of financing infrastructure projects. Central banks in major economies have increased lending rates to levels not seen since 2006. To overcome these challenges, increasing capital flows to developing countries for sustainable infrastructure projects is crucial. Meeting global infrastructure needs and providing essential services require an investment equivalent to 4.5% of gross domestic product annually. The scale of these requirements is too vast for any single entity to manage alone. Private investment in infrastructure for low- and middle-income countries, although slowly recovering, has not returned to pre-pandemic levels. In 2023, investment in primary markets with private infrastructure participation fell by 5% from 2022, totalling $86 billion, according to the World Bank’s annual Private Participation in Infrastructure database. Private investors seek viable opportunities in emerging markets, but mobilising capital effectively remains challenging. Countries that are leveraging private investment at scale into their infrastructure sectors, including India and Brazil, are establishing sound enabling frameworks, building strong institutions and advancing programmatic approaches. Therefore, it is not just a matter of matching available finance to bankable investment opportunities but also building the capacity of institutions and people to unlock those opportunities at scale. The global Public-Private Infrastructure Advisory Facility, focused on early-stage market development and project preparation, works with countries to strengthen institutions to realise sustainable infrastructure. By helping governments improve policies, regulations and institutional frameworks, PPIAF plays a crucial role in enabling private participation in infrastructure projects. This support has been instrumental in catalysing over $28 billion in infrastructure investment and $1.6 billion in sub-national commercial borrowing. Building this critical upstream capacity requires knowledge and data to inform country governments. The recent integration of the Global Infrastructure Hub
Developing countries urgently need increased private sector investment for sustainable infrastructure, which governments can facilitate by establishing enabling frameworks and institutions
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G20 BRAZIL: THE RIO SUMMIT — 2024
globalgovernanceproject.org
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