Multilateral banks, private sector agree to boost infrastructure investment

Leaders of the top multilateral development banks (MDBs) have agreed to deepen their collaboration to encourage private sector investment in vital infrastructure needed to support sustainable and inclusive economic growth throughout the world.

Under the theme of “Delivering Inclusive, Sustainable Infrastructure,” the Global Infrastructure Forum 2017 provided a venue to discuss how MDBs can best work with countries and the private sector to create markets for infrastructure projects.

The Forum in its outcome statement noted the need the need for enhancement of private sector involvement and finance by creating an enabling environment, which includes:

– Market development and deployment of instruments for efficient leverage; risk mitigation; securitization; mobilization and catalyzation of private finance

– The enhancement of the use and effectiveness of Public-Private Partnerships (PPPs) and blended finance where appropriate;

– The major expansion of private sector involvement and finance including by attracting long-term institutional investors into infrastructure as an asset class.

The outcome statement also stressed the need for enhancement of the catalytic role of MDBs, which have long acted as a bridge between the public and private sectors including:

– The continuous development of specialized financial products and programs, as well as through knowledge sharing, policy advice and development of capacities of public and private sector clients;

– Domestic resource mobilization including through development and better use of public resources; and greater international collaboration including on concessional finance.

The forum brought together potential investors, representatives of the United Nations and the G20 with the heads of the African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development.

In addition it also includes  leaders of European Investment Bank, Inter-American Development Bank, Inter-American Investment Corporation, International Finance Corporation, Islamic Development Bank, New Development Bank and the World Bank.

Basic infrastructure services – like roads, water and sewage lines, and electrical power – are scarce in many developing countries.  Over one billion people live without electricity, more than 660 million people don’t have access to clean drinking water, and one in three people lack access to flushing toilets and sewerage infrastructure. In addition, countries face the urgent need to invest in climate-resilient infrastructure and renewable, efficient energy sources.

With trillions of dollars in capital sitting on the sidelines earning low or even negative returns, deeper engagement with the private sector can create win-win scenarios where investors earn better returns on long-term investments and developing countries get much needed investment and expertise.

In order to fulfill commitments that countries throughout the world made to meet the ambitious Sustainable Development Goals, the MDBs pledged not only to leverage their resources by joining forces to co-finance projects, but also to help generate interest among private sector investors in Public-Private Partnerships and the development of infrastructure as an asset class for institutional investors.

These pledges are included in the MDBs’ Outcome Statement, issued today at the Forum, which will be accessible at the 2017 Global Infrastructure Forum.

Among the speakers at the day-long event were Amina Mohammed, Deputy Secretary General of the United Nations, and Wolfgang Schäuble, Finance Minister of Germany, which currently chairs the G20.

The eight parallel sessions explored the following subjects:
•       How to ensure that infrastructure meets environmental and climate change standards;
•       How to help cities meet their infrastructure needs and climate objectives;
•       The role of national development banks in implementing renewable energy and energy efficiency programs;
•       Mobilization of private and concessional resources;
•       Special challenges faced by least developed countries, small island developing states and landlocked developing countries;
•       Risk mitigation for emerging market infrastructure;
•       Infrastructure as an asset class for institutional investors;
•       How to prepare projects with an eye on costs and quality control; and constraints and opportunities for energy and economic development in Africa.