New Markets Investor

Q3 2015The Private InfrastructureDevelopment GroupAn innovative, multi-donor organization thatencourages private infrastructure in developingcountries with 37 projects in AfricaInfrastructure is the vital foundationupon which people start businesses,transport goods to new markets, createemployment, boost tax revenues, andgrow economies. The effective developmentof infrastructure transformed thefortunes of Europe and America in the19th and 20th centuries and has been vitalto Asia’s recent economic ascendancy.With a population of over 1 billion,a growing middle class, and naturalresources surpassing every other continent,Africa has enormous potentialfor economic growth. The past 20 yearshave seen improvements in governance,transformative mobile technologies, andglobal demand for natural resourceswhich has powered African economicgrowth. However, sustaining or acceleratingthis growth is only possible withsignificant investment in infrastructure.In particular, Africa needs to invest inenergy and transport to fuel growth andbetter integrate with the global economy.The African Development Bank hasestimated that addressing Africa’s infrastructuredeficit requires investment ofalmost US$ 100 billion every year for thenext decade and that the current annualshortfall in funds is more than half thatamount. While greater efficiency in theuse of public funds could help to addressthe financing gap, it will not sufficientlymeet all of Africa’s future infrastructurefunding needs. Private financing needsto be mobilized if Africa is to achieve itsvast economic potential.Bridging the gap is a core commitment ofthe Private Infrastructure DevelopmentGroup (PIDG). For more than a decadeit has built on the insight and belief thattackling poverty sustainably requireslong-term investment in infrastructurein order to allow economies to grow andprosper. Its founders (a group of publicdevelopment agencies) understood, andyear after year have sought to demonstratethat economic growth is criticalto lifting individuals and nations out ofpoverty.PIDG comprises of eight national developmentagencies and the IFC, one of theWorld Bank Group’s private sector arms.Together they commit funds, which areinvested through a portfolio of eightFacilities run by private sector managers.Each of these Facilities has a distinctremit but with shared aim to mobilizeand increase flows of local, regional, andinternational investor capital; to lend; andto bring expertise and resources neededfor infrastructure investment.The Group actively encourages innovation,creativity, and entrepreneurialspirit to respond to prevailing marketconditions. With its focus solely on infrastructuredevelopment (concentratingon low-income and fragile countries), ithas established a strong track record indeveloping and funding projects infrontier markets. It has consistentlyrisen to the challenge of attractinginvestment to countries with thegreatest need for infrastructure butwhere perception of risk has frequentlydeterred private sector investors.In these under developedmarkets, its members invest publicfunds to leverage domestic andcross-border private sector financein infrastructure projects whichare expected to stimulate pro-pooreconomic growth and improve theaccess to services of those living insome of the poorest countries.While PDIG seeks to tackle majorinstitutional market obstacles hinderingprivate sector participation,its projects demonstrate to theprivate sector that investment inlow- and middle-income countriesis commercially viable and able todeliver real benefits to those livingwithout access to basic infrastructureservices like power, transport,water, sanitation, and communications.To date, group members havecommitted public funds in excessof US$ 1 billion and PIDG Facilitiesleveraged that to mobilize US$27 billion from other DevelopmentFinance Institutions (DFI) and theprivate sector. More than 100 proNew Markets Investor30