Photo: Burst | Pexels Creative Commons
Australia’s involvement in the Global Infrastructure Facility (GIF)—as a founding member, and co-chair of the advisory council over the past year—underscores our commitment to lift investment in global infrastructure, which is a critical component to ensuring economic growth and poverty alleviation.
Strong economic infrastructure underpins human development, enables movement of people and goods, provides access to and expands markets and services, facilitates innovation, and enhances competitiveness.
Photo: Deutsche Welle | Flickr Creative Commons
As in many regions, countries in Latin America and the Caribbean are underinvesting in infrastructure—spending in the sector is only about half of the $300 billion needed annually to encourage growth and reduce poverty. Addressing this issue involves the successful interaction between public officials and leading infrastructure actors, particularly in the private sector. Stimulating such public-private dialogue is a priority for the Inter-American Development Bank (IDB) Group, a technical partner of the Global Infrastructure Facility (GIF). Along with other partners, our recently established PPP unit supports governments, international financial institutions, and the private sector to develop infrastructure projects.
It was therefore a privilege for me to moderate a panel on country infrastructure programs in Latin America at the GIF’s annual Advisory Council meeting in April 2017. We covered three countries—Colombia, Argentina and Peru—at different stages of PPP market development. The findings were encouraging and illustrate a path forward for other countries in the region:
Photo: Munish Chandel | Flickr Creative Commons
This is the final blog in a three-part series on traffic risk in PPPs
As explained in the previous two blogs – Traffic Risk in Highway PPPs, Part I: Traffic Forecasting and Traffic Risk in PPPs, Part II: Bias in Traffic Forecasts – traffic risk is inevitable, given our imperfect ability to predict traffic and revenue a long way (often several decades) into the future. And what makes it harder is that there are often biases at play in the typical project environment, which can cause a skewness towards over-estimation rather under-estimation of traffic flows. This, of course, can then result in financial losses and distress for the project, as manifested in a number of high profile bankruptcies, renegotiations and bailouts in the toll road sector.
In the new PPIAF and GIF publication, Toll Road PPPs: Identifying, Mitigating and Managing Traffic Risk, we outline various ways in which governments, bidders and financiers can take important steps to reduce the amount of traffic risk in projects. But we also acknowledge that the use of, for example, industry-standard forecasting techniques, better due diligence and a more stable policy environment will only go so far in reducing traffic risk. The reality is that there will always be some risk in any project, regardless of the best endeavors taken by the project parties. So, the key question is, what should we do with traffic risk and who should be responsible for bearing that risk?
Photo: paulisson miura | Flickr Creative Commons
It is well-established that the lack of infrastructure is one of the main problems facing developing countries. Good infrastructure is one of the most important drivers for development and competitiveness. The question that follows is straightforward: how can we mobilize private financing for high-quality infrastructure investment in these countries?
Editor's Note: Join us April 22nd at 10AM ET for the 2017 Global Infrastructure Forum when the Multilateral Development Banks (MDBs), the United Nations, the G-20, and development partners from around the world meet to discuss opportunities to harness public and private resources to improve infrastructure worldwide, and to ensure that investments are environmentally, social and economically sustainable. Check out the event site to view the livestream on April 22.
Nearly two years ago, the Global Infrastructure Facility, or the GIF, began its mission to develop bankable, sustainable infrastructure projects in developing countries that are attractive to investors. Being a partnership of multilateral development banks, private sector partners, donors and beneficiary countries, we have the knowledge and resources to make that happen.
It has been my honor, as the representative from Japan, to serve in the last year as co-chair of the GIF’s Governing Council together with the World Bank. As my term draws to a close, I would like to reflect on our accomplishments and share some observations with those who believe that developing infrastructure is a key element of reducing global poverty.
Nothing about infrastructure is quick, easy or cheap. Every step—conceptualization, feasibility studies, design, financing, construction, operations, maintenance, and stakeholder communications—takes a lot of time, money, coordination and planning. Unfortunately, in most cases, no single institution has the capacity to handle such complexity on its own, while at the same time private sector investors and financiers who have trillions to invest have not been able to find pipeline of bankable or investment ready projects. In this reality, pulling off a successful infrastructure project requires a great deal of knowledge and expertise that is best found through collaboration.
Developing viable infrastructure projects is tough in the best of circumstances. And over the last few years I’ve learned, first-hand, that developing them in emerging markets and developing countries is even tougher. That’s the main reason I joined the small-but-dedicated team of the Global Infrastructure Facility (GIF).
The GIF – which was formed only two years ago – looks to attract private finance to infrastructure projects in those countries that most need it. We serve as a platform where governments can collaborate with international financial institutions and private sector investors to design, structure and implement these complex projects. The potential is big – funding from GIF can lead to multi-million dollar projects at close.
The idea of “Inclusive growth” and how to achieve it was talked about a lot in the days ahead of the 2014 World Bank-IMF Annual Meetings. Among the solutions on the table was a new initiative that could help unlock billions of dollars for infrastructure and improve the lives of many.
About 1.2 billion people live without electricity and 2.5 billion people don’t have toilets. Some 748 million people lack access to safe drinking water. The Global Infrastructure Facility (GIF) announced by World Bank Group President Jim Yong Kim this week hopes to lower these numbers by developing a pipeline of economically viable and sustainable infrastructure projects that can attract financing.