The drive to deliver greater infrastructure investment moved into higher gear yesterday as the G20 group of advanced and emerging economies endorsed the creation of a platform that will act as a central, co-ordinating point for information and expertise for infrastructure, to be called the Global Infrastructure Initiative (GII).
The move came just a day after the World Bank launched its own Global Infrastructure Facility (GIF), a similar platform that will use public money to mobilise private sector investment to help fill the estimated $1tr shortfall in infrastructure spend.
With the field becoming increasingly crowded with infrastructure players — including the proposed Brics Bank and the Asia Infrastructure Investment Bank, alongside the World Bank and regional development banks — the G20 is seeking a global co-ordinating role.
The G20 will launch a Global Infrastructure Hub at its summit in Brisbane next month to encourage co-operation among governments on what Australian Treasurer Joe Hockey said was an $80tr financing challenge over the next 30 years.
This hub — to be located in either Sydney or the capital of next year’s G20 chair country, Istanbul — was likened by Hockey to a “cloud” for managing data and expertise on infrastructure, so that different institutions complement rather than compete with each other.
The Global Infrastructure Initiative is a “multi-year set of actions to increase the quality and quantity of infrastructure across the G20 and beyond,” according to the G20, while the GIF is a “multi-institution platform of public and private sector institutions aimed at “unlocking billions of dollars for infrastructure in the developing world,” according the to World Bank.
BANKABLE PROJECTS
Embracing some of the world’s biggest banks and institutional investors as well as regional development banks among its “partners”, the GIF is designed to focus global expertise on making infrastructure projects “bankable”, according to the World Bank.
The GIF, which aims to begin operations this year, “offers the first global partnership platform focused on the preparation, design and financial structuring of complex infrastructure projects,” head of the facility Jordan Schwartz told Emerging Markets.
“It is a new way of collaborating to crowd in untapped sources of capital for infrastructure finance, bringing together institutional investors and other private financiers, multilateral development banks, and key bilateral agencies.”
Partners in the GIF include banks such as Citibank, HSBC, Standard Chartered and Development Bank of Singapore, as well as the Japan Bank for International Cooperation, Blackrock Alternative Investors and the Institute of International Finance.
World Bank president Jim Yong Kim said the GIF aimed to mobilise the private sector to help tackle the massive infrastructure deficit now facing developing countries and emerging markets.
“We estimate that these countries need $1tr a year in extra investment through to 2020,” said Kim. This is additional to the $1tr a year already being invested in infrastructure by developing nations, most of it by governments.