The Global Infrastructure Facility convened its partners for a roundtable in October where commercial banks, investors, multilateral development banks (MDBs) and donors discussed how to promote more infrastructure investment in emerging and developing economies (EMDEs). A key takeaway from the high-level meeting is that the GIF fills a critical gap in the market by focusing on project preparation and creating a pipeline of shovel-ready projects. More resources are needed to take scale this work even further to reach the public and private investment levels required to achieve the SDGs and Paris climate goals.
The session further highlighted critical challenges preventing more investment arising from global and local issues. At the global level, high interest rates, uncertainty, and growing country risks, combined with attractive returns in OECD countries are influencing factors. At the local level, infrastructure projects are often long-term and extend beyond political cycles, which exposes investors to greater risk of projects falling through or not making it to completion when governments change.
Institutional investors currently allocate less than 1% of their assets under management to infrastructure, with a preference for real estate portfolios. GIF partners proposed several solutions to drive more of these funds toward infrastructure in EMDEs:
• Programmatic Approaches: Increase investor engagement by standardizing project development so it can be replicated in multiple countries.
• Data Access: Reduce perceived risk in project development by leveraging historical performance data (such as the GEMS database).
• Standards and Labels: Reassure investors by using recognizable standards and labels, such as QII or FAST-Infra, that indicate strong local presence, capacity, PPP frameworks, legal foundations, and sustainability standards.
• Financial Solutions: Level-out risk-adjusted returns through de-risking instruments such as guarantees, asset recycling, blended finance, and structured finance.
Above all, one additional message was clear. Participants recognized that collaboration, combined with innovative financial solutions, is the key to unlocking private investments and fostering growth in EMDEs. As the only global, public-private collaboration platform for sustainable infrastructure in EMDEs, the GIF plays a vital role in making this happen.
