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Farewell 2017; Hello to More and Better Infrastructure in 2018

Jordan Z. Schwartz's picture


Photo: auphoto / Shutterstock.com

As Washington, D.C.’s infrastructure braces for its first winter freeze and 2017 draws to a close, this feels like the right moment for a recap on what the year has brought us in terms of closing the infrastructure gap across emerging markets and developing economies; policy directions within and outside of the World Bank Group; new instruments, tools, and resources; and—the proof in the pudding—actual investment levels.

There may not be one blog that can capture all of those themes in detail, but here is a brief overview of what 2017 has meant and what is on the docket for 2018 and beyond.

Doubling down on crowding in

The world’s capitals as well as the international organizations and fora that give voice to global public goods, trends, and needs, have raised to a deafening crescendo on the need for more investment in infrastructure. The vocabulary differs by announcement: close the infrastructure services gap, diversify forms of financing, maximize finance for development, move from billions to trillions, match savings with long-term investment needs. But they all share the same imperative: government, bilateral, and multilateral institutions must cascade our way through a decision-making process that values scarce public resources and brings the private sector into infrastructure finance and/or operations, wherever practicable, affordable, and sustainable.

After a year’s breather, the G20 brought back infrastructure as a primary topic demanding attention from the world’s major economies. The new presidency of the G20, Argentina, stated in its G20 priorities declaration:


Mobilizing private investment toward infrastructure is crucial to closing the global infrastructure gap. […] We will seek to develop infrastructure as an asset class by improving project preparation, addressing data gaps on their financial performance, improving the instruments designed to fund infrastructure projects, and seeking greater homogeneity among them.

This is a growing part of the agendas of the Bank Group, our client governments, and our stakeholders—both donors and beneficiaries.

Instruments, tools, and resources 

As the Bank Group, working with our MDB partners, build on experience in working with governments to prioritize investments, prepare projects, bring investments to market, and regulate contracts and services, a growing set of tools and resources have emerged to help standardize approaches and help financiers recognize the assets they are putting their capital into as a “class” of investments. Here is a preliminary snapshot:


Not to worry if this seems hard to decipher; the PPP Knowledge Lab provides a description and link to many of these tools.

…and the actual investments?

In terms of infrastructure investments with private participation that have come to financial close, the latest data from the World Bank’s PPI Database shows the first half of 2017 saw a bump up from 2016—a 24% increase in investment volume from the same months of 2016, representing $36.7 billion across 132 projects. These numbers are still lower than 2014 levels and represent somewhere around 10% of total investment in infrastructure in emerging markets and developing economies’ (EMDE). About half of the financing of PPPs comes from private sources. This year’s research shows PPPs have lower likelihoods of cancellation when MDBs are involved, and when there has been a program of multiple PPPs in a country

One shift worth noting in recent years is toward the dominance of renewable energy generation among PPPs. Today, nearly 90% of all private power projects are wind, solar, or hydroelectric power plants.  Still, that represents only about half of all new installed capacity. This is a ratio that hasn’t changed in recent years, as the ability of power systems to benefit from the availability of cheaper wind and solar will demand even more advances in storage technology to allow renewables to displace thermal baseload generation in the years ahead. 

Of course, the medium term seems to be coming quicker and quicker with technological advances, a theme that will confront us in the years ahead.

In terms of our New Year’s resolutions, what more can we do?  As far as New Year’s resolutions go, that may not be the sexiest list you have ever seen. But for those of us working to close the infrastructure gap so as to meet the needs of the poor and the demands of a growing economy—both for today’s consumers and for future generations—what more can we possibly strive for?
 
 

Related posts:

Coming together is the way forward: Maximizing Finance for Development

Scaling up World Bank guarantees to move the needle on infrastructure finance
 
G20 – Principles of MDBs’ strategy for crowding-in Private Sector Finance for growth and sustainable development
 
Slight bump in half-year private investment in infrastructure: a sign of recovery?
 

Comments

Submitted by Dr. Mohamed Taher Abdelrazik Hamada, Ph.D on

We all say Farewell 2017 , we expect a better 2018, the most challengable part of
achievements in infrastructure by PPPS (public private partnership projects)in 2017
are attracting to some extent the private sector to play additional efforts to
share in development encouraged by the World Bank in regard to emerging economies.
With the growth of wide world technology in rewnewable energy generation among PPPS , it is expected that the ultimate share of the private sector in different fields of development in the infrastructure of the developing countries will increase in 2018 , this is clear in the cotinuous positive efforts of the World Bank in this critical issue.

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Submitted by Makinde Adegboyega Charles on

I have gone through the year resolutions and of course assimilated the progress of the percentage of the growth of ppp in 2017.Commendable! Permit me to be sentimental.There is a stadium in Ibadan,Oyo state of Nigeria Lekan salami sports stadium complex that will be needing a huge finance to complete and put shape its sports infrastructure that is near abandonment. If these are revived the youths of oyo state will benefit tremendously through sports development with a career evolving for the youths. All I am calling for is help to develop these infrastructure and make them functional.It's my office,Oyo state Sports Council but with a main bowl,swimming pool,amphitheatre,indoor sports hall,playing courts for Basketball,Tennis,Volleyball to mention but a few.We need help.Tell me how to go about it.Thank you.

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