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After decades of private sector growth, private capital holds most available global finance. The rise of private wealth coincided with the decline of public wealth in developed countries, which now hold zero or even negative shares in total wealth due to significant public debt burdens, according to the 2022 World Inequality Lab Report. Moreover, the 2023 IMF Global Debt Monitor revealed that global public debt reached 90% of GDP in 2022, a dramatic increase from the 30% recorded in the early 1970s.
Last month, Jane Jamieson, the Program Manager for the Quality Infrastructure Investment (QII) Partnership and the Public Private Infrastructure Advisory Facility (PPIAF), along with Khafi Weekes, Climate Infrastructure Specialist at PPIAF, and Helen Gall, Monitoring and Evaluation ETC at QII, participated in the Understanding Risk Global Forum in Himeji, Japan. Initiated in 2010, this year’s Forum was the largest yet, attracting over 1,700 Disaster Risk Management (DRM) and Climate Change Adaptation (CCA) experts and practitioners from across the globe. PPIAF and QII had a strong showing at the Forum, participating in five events, including three plenaries and two workshops.
The Public-Private Infrastructure Advisory Facility (PPIAF) held its Partnership Council Meeting in Vienna, Austria this June. This meeting brought together PPIAF’s esteemed donors and welcomed the Kingdom of Saudi Arabia as the newest donor to PPIAF with their contribution that has supported the integration of the Global Infrastructure Hub (GI Hub) into the PPIAF family. Over the two days, PPIAF engaged in a packed agenda where donors expressed appreciation for the impactful and relevant programs PPIAF delivers.
The G20 Brazilian Presidency and the Australian Co-Chair held the third Infrastructure Working Group (IWG) meeting in Foz do Iguaçu, Brazil, in June, which consisted of five sessions: Linking Infrastructure and Poverty Reduction, Delivering Cross-Border Infrastructure, Financing Climate-Resilient Infrastructure, Infrastructure Global Trends, and Mitigating Exchange Rate Risks. Henri Blas, Program Lead for the Global Infrastructure Hub, participated in session four of the meeting focused on Infrastructure Global Trends.
Non-private institutions, such as multilateral development banks, play a critical role in catalyzing private infrastructure investment in low- and middle-income countries (LMIC). One avenue of support is through the direct co-financing of projects, with over half (55%) of total LMIC investment involving non-private co-financing in 2022. However, the share of LMIC investment financed by the private sector alone has been increasing over time. This has been driven by the renewables sector, reflecting increasing investor confidence in a maturing market as well as relatively smaller project sizes. In general, private sector investors are less likely to require co-financing support from non-private entities in larger LMIC markets, such as Brazil, Russia, India and South Africa.
Infrastructure Monitor insights
60% of infrastructure assets reporting to GRESB in 2023 currently have a greenhouse gas (GHG) emissions reduction target aligned to net zero. However, these net zero targets may not be ambitious enough. Only a third of assets have a target that is science-based or aligned to a net zero-targeting framework. Further, targets tend to capture only Scope 1 and 2 emissions (omitting Scope 3 emissions) and be location, rather than market-based. However, regional variances exist, with Europe leading the way in Scope 3 and market-based net zero targeting.
In low- and middle-income countries (LMICs), around three-quarters of private investment in infrastructure is conducted in foreign currencies, most commonly USD, and only a quarter in local currencies. Brazil dominates local currency transactions in LMICs and has driven a trend increase in the share of local currency transactions in LMIC investment since 2016.
Regional private investment in infrastructure has seen divergent trends in the post-COVID era, with Western Europe and North America emerging as the two strongest performers, followed by Latin America. Meanwhile Asia, while maintaining relatively stable investment as a share of regional GDP, has experienced the sharpest decline in its share of global private investment in infrastructure, as Western Europe and North America expand their shares. Other regions have seen weaker investment in the post-COVID era (Africa, Oceania, Middle East), or remained stagnant (Eastern Europe).
Climate change poses a significant threat to infrastructure, with rising sea levels, extreme weather phenomena, and escalating temperatures posing substantial physical risks. These hazards can lead to the degradation of crucial infrastructure assets, undermining social, economic, and environmental stability. Recent analysis by EDHECInfra, as featured in the Global Infrastructure Hub's Infrastructure Monitor report, underscores the scale of the situation. Projections based on current climate and policy scenarios indicate that by 2050, infrastructure assets could see a net value decline of 4.4% on average, and up to 26.7% in the most severe scenarios. This depreciation is a direct consequence of the lack of resilience of global infrastructure to the effects of climate change. The consequences of inaction are far-reaching, affecting not just the financial performance of assets, but also the economic, environmental, and social fabric of communities worldwide. One promising strategy to mitigate these risks involves the adoption of a systemic resilience metrics (SRM) framework tailored specifically to infrastructure.
The Global Infrastructure Hub is negotiating new, long-term partner hosting of its activities to deliver enduring impact.
The number of primary private infrastructure transactions increased by 18% in 2022, the strongest annual growth since 2017, largely driven by strong investor appetite for projects supporting the clean energy transition. However, growth was mostly being driven by high-income countries in North America and Western Europe, with private investment activity in middle- and low-income countries seeing a lot less momentum with volumes on par with pre-COVID levels.
Today we released two new supplements to our Infrastructure Monitor report, focusing on the role of blended finance and environmental, social, and governance (ESG) factors in infrastructure investment. These latest updates, developed in partnership with Convergence and GRESB, offer a comprehensive examination of both areas, providing valuable insights for infrastructure professionals.
The Global Infrastructure Hub is negotiating new, long-term partner hosting of its activities to deliver enduring impact.
The GI Hub’s Rory Linehan outlines three critical infrastructure-related areas to watch for at COP28.
This report of the Independent Expert Group (IEG) of the G20 recommends a triple agenda of reforms to multilateral development banks (MDBs).
G20 Roadmap for the Implementation of the Recommendations of the G20 Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks
Independent Review of MDBs' Capital Adequacy Frameworks
Strengthening Multilateral Development Banks: The Triple Agenda Report of the G20 Independent Experts Group
An summary of the key takeaways of G20 and World Bank-IMF Annual Meetings in Marrakech in October 2023.
The GI Hub's Director of Knowledge Mobilisation, Sam Barr, has been featured on the Competitive Contractor podcast with host Shivendra Kumar.
This study examines how institutional change affects public-private partnership (PPP) market maturity.
Public management research contains little analysis on procurement cancellations – i.e. when contracts fail to make it through procurement, resulting in termination during the pre-award tender phase. Combining theoretical perspectives on administrative capacity and transaction costs, the authors investigate both the propensity and reasons for public procurement cancellations.
