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maximizing finance for development

Infrastructure: Times Are a-Changin’

Laurence Carter's picture

Photo: Reychelle Ann Ignacio | Marketplace Designers 

Sometimes change creeps up on us. And we can step back and realize that the world is different. This rings true currently in the infrastructure space. Here are three examples:
  1. It’s now commonly agreed that we won’t achieve the Sustainable Development Goals without the involvement of private sector solutions: management, financing, and innovation. Involving the private sector is no longer an “if” question. We’re beyond ideology and calls for more aid transfers. Now we’re looking at “how”—and under what circumstances—crowding in private solutions help deliver better access to infrastructure services while being fiscally, environmentally, and socially sustainable.

    This is what the World Bank Group’s Maximizing Finance for Development initiative is about, for infrastructure and other sectors as well. Cameroon’s power sector is a good example, where sector reforms have been supported by public loans, which in turn have helped crowd in private and financing from development finance institutions (DFIs) for large investments like the 216 megawatt Kribi gas project.

Yes they can: SMEs filling the infrastructure gap in fragile countries

Yolanda Tayler's picture


Photo: Trocaire | Flickr Creative Commons

In war-torn post-1991 Somalia, running water was a scarce commodity, to the misfortune of millions of people. Members of local communities rose to the occasion, “pooling” consortia of companies to fill the gap in water provisions. Eight public-private partnerships (PPPs) were formed through these consortia, benefiting 70,000 people in the Puntland and Somaliland regions of the country.  

As demonstrated in the Somalia case, infrastructure needs are substantial in fragility, conflict and violence-affected (FCV) contexts—especially for recovery and reconstruction in war-torn areas. Yet often there is insufficient public sector funding to address such needs, compounded by lack of interest on the part of large private sector firms, who may not even be on the scene. In such FCV contexts, small and medium enterprises (SMEs), making up a substantial share of the private sector, may be critical to filling the infrastructure services gap.

Last things first — knowing the problem at hand is key for blended finance

Morten Lykke Lauridsen's picture



Solutions to problems

are easy to find:
the problem’s a great
contribution.
 
So wrote the Danish poet, inventor, and mathematician Piet Hein. Development finance wasn’t on his mind when he wrote those words. Neither was private sector development. Yet the observation is unmistakably true for the field: To formulate solutions, we must first understand the nature of the problems we are trying to solve.
 
There is no silver bullet for the complex challenges of development. But blended finance — which involves combining public concessional funds with private capital — is an important part of the solution. It helps crowd in private investment to create markets in difficult places. In an era of limited government resources and donor funds, this is key to achieving sustainable development.

Shifting the paradigm: Three routes to maximizing infrastructure finance for development

Frédéric Blanc-Brude's picture

Photo: Andreas Wecker | Flicker Creative Commons

By promoting better standards, methods and benchmarking, development finance institutions can move the mountain that is preventing institutional capital from flowing into infrastructure.
 
The World Bank Group's initiative to Maximize Finance for Development (MFD) aims to find solutions to crowd in all possible sources of finance, innovation, and expertise in order to achieve the Sustainable Development Goals (SDGs). In the case of infrastructure investment, a significant contribution to long-term sources of private finance is expected from institutional investors such as pension plans, life insurers, and sovereign wealth funds.
 
These investors have become increasingly interested in infrastructure investment in recent years, in search of new sources of returns, diversification, duration and inflation hedging. However, they cannot be expected to make a substantial and durable contribution to the long-term financing of infrastructure without three important changes:

The road to sustainability: modernizing Croatia’s largest infrastructure asset

Prajakta Chitre's picture


Photo: HAC/Croatian Motorways

The state of Croatia’s road sector poses a unique challenge compared with more typical World Bank projects where road assets either need to be developed or require significant rehabilitation. If you've ever had the chance to experience Croatian roads you'll quickly realize the country has a well-developed motorway and state road network, in relatively good condition. This begs the question: how can the World Bank help improve a sector with already high-quality assets in a middle-income country like Croatia?

Mind the gap: How bringing together cities and private investors can close the funding gap for urban resilience

Marc Forni's picture

Image: World Bank

By 2050, two-thirds of all people will live in cities. Each year, 72.8 million more people live in urban areas. That’s the equivalent of a new San Diego appearing every week.
 
But fast growth, and a high concentration of people and assets, makes cities vulnerable to climate change and disasters. By 2030, climate change alone could force up to 77 million urban residents into poverty.

As we celebrate Earth Day 2018 and continue the fight against climate change, cities are striving to become more sustainable, investing in ways to reduce their vulnerability to disasters and climate change. Achieving resilience is the goal – and the good news is that cities aren’t alone on the team.

Amp up your 2018 Spring Meetings experience

Bassam Sebti's picture


Our 2018 Spring Meetings is just around the corner and it’s time to get organized. Mainstage speakers include representatives from top-notch institutions such as LinkedIn, Oxford University, Financial Times, Brookings Institution — in addition to influencers Bill Gates and Jeff Weiner.

Connect, engage and watch to take full advantage of everything the #WBGMeetings has to offer. 

The World Bank as hummingbird: Leveraging knowledge for development finance

Otaviano Canuto's picture



My admiration for hummingbirds began in my native Brazil.   The hummingbird’s flight patterns may seem a mystery as they shift from one flower to the next.  But hummingbirds are immensely purposeful, agile, and proficient pollinators – among the most hard-working members of many thriving ecosystems.  And they can be found from Alaska to the southernmost regions of South America.  
 
The Bank’s efforts to transfer knowledge, germinate ideas, and catalyze change sometimes put me in mind of the hard-working hummingbird.  My visit to the World Bank’s Global Knowledge and Research Hub in Malaysia last year is a case in point.  As I learned about the Bank’s partnership with Malaysia and the origins of the Hub, I was struck by the broader relevance for our work with upper middle-income countries, and our efforts to share global lessons and leverage knowledge to maximize financing for development.  The visit sparked three main observations.  

Maximizing finance for safe and resilient roads

Daniel Pulido's picture


Around the world, roads remain the dominant mode of transport and are among the most heavily-used types of infrastructure, accounting for about 80% of the distance travelled for individuals and 50% for goods.

Despite this intensive use, the funding available for road maintenance has been inadequate, leaving roads in many countries unsafe and unfit for purpose.

To make matters worse, roads are also very vulnerable to climate and disaster risk: when El Niño hit Peru in 2017, the related flooding damaged about 18% of the Peruvian road network in just one month.

It is no surprise then that roads are the sector that will require the most financing. In fact, the G20 estimates that roads account for more than half of the $15 trillion investment gap in infrastructure through 2040.

Railways are the future—so how can countries finance them?

Martha Lawrence's picture
Photo: Kavya Bhat/Flickr
As a railway expert working for the World Bank, I engage with many client countries that are looking to expand or upgrade their railway systems. Whenever someone pitches a railway investment, my first question is always, “What are your trains going to carry?” I ask this question because it is fundamental to railway financing. 

Railways are very capital intensive and increasingly need to attract financing from the private sector to be successful. That is why the World Bank recently updated its Railway Toolkit to include more information and case studies on railway financing. Here, in a nutshell are the key lessons about railway financing from this update. 

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