GPI 2019 special report: Infrastructure

Global infrastructure: Investors wanted

 
The global demand for infrastructure will only continue to grow. The investment environment around it must mature for the private sector to close funding gaps.

Around the world, populations are rising and urbanisation is accelerating, but built assets are inadequate. In more developed countries, aging infrastructure networks demonstrate the importance of continuous maintenance and upgrades.

The OMFIF GPI Survey 2019 asked respondents from central banks, sovereign funds and public pension funds whether they were allowed to invest in real assets, which includes infrastructure. Of these, 60% indicated that they were not permitted to, either because of prevailing laws and regulations or because their fund mandate did not allow it. Among those currently barred from investing in real assets, 59% said that they would not consider it even if the relevant rules changed positively.

Private sector participation in infrastructure is not new, but the need for it is greater and much more apparent now than before.

Private sector participation in infrastructure is not new, but the need for it is greater and much more apparent now than before. The World Bank maintains a database of nearly 7,000 projects in low and middle-income countries that were funded either completely or partly by private investment over the last three decades. From 1990-2016, these projects amounted to $1.6tn of investments. While this does not include private investment in high-income countries, it is a miniscule amount compared to the $94tn needed to fill the world’s infrastructure needs by 2040 based on the Global Infrastructure Hub’s estimates.

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