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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.
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.
Infrastructure Monitor 2023 report
The PPIAF team recently participated in the annual #Infra4Dev Conference in Rabat, Morocco. Henri Blas, Ludovic Delplanque, and Luciana Guimaraes Drummond e Silva each engaged in panel sessions during this two-day event, sharing knowledge insights and resources on various topics, including the global infrastructure financing landscape, PPP project preparation, and integrating gender into PPPs.
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.
The World Bank and the Global Infrastructure Hub (GI Hub) are pleased to announce that the GI Hub will soon be joining The World Bank's Infrastructure Practice Group as an associated trust fund to the Public Private Infrastructure Advisory Facility (PPIAF)
The World Bank and the GI Hub announced the GI Hub will join The World Bank’s Infrastructure Practice Group as an associated trust fund to the Public Private Infrastructure Advisory Facility (PPIAF) . In connection with this shift, the Global Infrastructure Hub will cease to operate as a standalone not-for-profit organisation.
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).
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.
Birkdale is a coastal locality in the City of Redland, Queensland Australia. Jacobs was engaged by Redland City Council to provide social impact and social value measures for input into the Master Plan for the 62-hectare Birkdale Community Precinct.
In a new research publication from the EDHEC Infrastructure & Private Assets Research Institute, entitled "Low Tide, Benchmarking Risks in Infrastructure Investments: What the data showed about Thames Water," we ask what investors in Thames Water in the UK would have learned about the risk of their investment and its likely market value had they compared its characteristics to market and peer group data.
The GI Hub has today published Infrastructure Monitor 2023. This year’s edition reveals the mixed state of private investment in infrastructure, where positive trends like strong investment, growing use of sustainable finance, and resilient financial performance exist alongside challenges like low levels of capital raised and persistent disparities between high-income countries and other countries.
This week, the GI Hub joined nine other global organisations in issuing a call to action to heads of state, policymakers, and multilateral development bank (MDB) officials to scale up private investment in emerging markets and developing countries (EMDCs) to fight climate change and deliver on Sustainable Development Goals (SDGs).
We recently spoke with the GIIA’s new CEO, Jon Phillips, who shares his priorities, his thoughts on opportunities and challenges facing the infrastructure sector, and how the GIIA is responding.
The GI Hub’s Rory Linehan outlines three critical infrastructure-related areas to watch for at COP28.
The GI Hub’s Sam Barr has authored an article that looks at the US Inflation Reduction Act, its explicit shift toward protectionism, and how it may provide an opportunity for the US to be a global leader in a just green energy transition.
This report of the Independent Expert Group (IEG) of the G20 recommends a triple agenda of reforms to multilateral development banks (MDBs).
