Also available in: Français
Investing in infrastructure relies on well-designed, solid projects that both governments and private sector investors can confidently support. But globally, the pipeline of such projects is weak. No surprise, then, that actual infrastructure investments fall far short of demand—the resulting infrastructure gap is estimated to be $1 trillion annually. In the poorest developing countries, the situation is worse: since 2012, they have seen overall private investment in infrastructure fall leaving billions without basic services such as electricity, clean water, or sanitation.
How PIDG helps governments develop viable infrastructure projectsThere is overwhelming evidence of the catalytic role that infrastructure investment can have on economic and social development. That is why the Private Infrastructure Development Group (PIDG) —whose members include governments from seven countries and the World Bank Group—is taking aim at the infrastructure pipeline problem.
PIDG is made up of eight companies operated independently to develop and help finance commercially sustainable infrastructure projects in developing countries involving various forms of private participation. PIDG companies like InfraCo Africa, InfraCo Asia, Emerging Africa Infrastructure Fund, GuarantCo, and Green Africa Power do the work of identifying potential investment opportunities and, in some cases, conducting the necessary feasibility studies.
Reaching the poorest countriesBut to develop viable projects in the world’s poorest countries, additional studies, capacity building and subsidies are often necessary. The scale and complexity of this additional work goes well beyond the limits of normal project preparation.
- The Technical Assistance Facility (TAF) addresses issues such as legal and regulatory reforms through early-stage grants, but also provides grants that help PIDG companies carry out important and often expensive research, provide capacity building, support institutional and policy reforms, or in special cases help governments cover up-front capital subsidies.
- DevCo uses grant funding to offset the costs of developing Public-Private Partnerships (PPPs) in the poorest countries. Managed by the International Finance Corporation’s (IFC) PPP Advisory, it covers the expenses of helping countries assess potential projects, structure viable PPPs, and provide post-transaction support and capacity building.
This is difficult and expensive work (we’re talking about technical, legal, economic, social, and environment studies, baseline studies among others – all of which are necessary for every major project). But in the poorest countries, government counterparts also need help with transaction structuring, contract negotiations, stakeholder communications, market outreach, legal and regulatory reforms, and more.
This is why grant funding is so important. It helps countries fill capacity gaps that are vital for successfully implementing infrastructure projects that will deliver economic and social development. Since the end of 2015, TAF and DevCo have been working more closely together to help the other PIDG companies identify viable project opportunities in the poorest countries and get them to financial close.
Global collaborationPIDG is not alone in these efforts. This includes the World Bank Group’s Global Infrastructure Facility, a strategic partner of PIDG, the Global Infrastructure Hub and the Sustainable Development Investment Partnership, which is sponsored by the World Economic Forum. And later this month, PIDG will join a conference hosted by the UK’s Department for International Development (DFID) and the World Bank Group that will bring together governments, development institutions, and the private sector to look at new ways to unlock investment opportunities and de-risk infrastructure investments in challenging markets.
, and requires governments, NGOs, development banks, the private sector, and other multilateral institutions working to make sure everyone is connected to the key infrastructure and services needed to jump start economies and end poverty once and for all. But having a solid pipeline of bankable projects ready for investment will certainly help the process and deliver sustainable development results for more people, more quickly.
PIDG will be highlighting the work of its technical assistance companies TAF and DevCo over the next week. Follow @pidgorg on Twitter for the latest updates and sign up to receive their quarterly development impact newsletter. The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.
To skip or not to skip (the grid): larger and smaller energy PPPs
Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.