BETTER BUSINESS BETTER WORLD

amounts of private capital. Specifically, blended finance entails public funders using
market-driven risk mitigation tools to mobilise multiples of additional private capital,
as outlined in the work of the Redesigning Development Finance Initiative, led by
the World Economic Forum and the OECD. 180 It is a striking example of the concept
of “billions to trillions” coined during the 2015 Spring Meetings of the World Bank
Group and IMF. 181 The concept envisages converting billions of official development
assistance into trillions of private capital supporting investment in developing
countries.
Other obstacles currently restricting infrastructure financing include a shortfall in
DFIs’ lending capacity, lack of private investment generally, lack of focus on project
preparation, poor legal frameworks and protection for private investors, and the
limited availability of a liquid asset class for private investors.
Closing the global infrastructure investment gap needs long-term thinking and
greater collaboration between public and private entities, from the project-level up to
institutions. The Commission believes that business and financial sector leaders can
contribute to closing the gap in the following ways.
First, they can advocate for different kind of public sector engagement in
infrastructure in many regions of the world. Historically, most infrastructure
spending has come from public sources. However, as noted above, many developed
countries, like the United States, have significantly decreased public expenditure on
infrastructure. Governments may be constrained in putting a lot more money into
infrastructure at present but they can do three other things to make sure projects in
line with Global Goals get the funding they need. They can attract more finance from
other sources by being more consistent in how they structure the finance for major
projects. For example, they can take on unusual planning or unproven technology
risks, reducing the risk for other investors. They can improve legal frameworks and
protections for private investors. And they can increase the credibility of public
institutions involved in executing projects on the ground. Business leaders should
advocate strongly for these practical actions that would enable greater private sector
participation in infrastructure investment and operations.
Second, business leaders can support the revitalisation and re-orientation of DFIs.
Their power to raise blended finance makes them a critical bridge between private
investment and public projects. (See Box 9: Hydroelectricity from blended finance).
The World Bank, for instance, can raise US$28 from international markets for
every dollar put in to the bank as paid capital 182 , as can the International Finance
Corporation (IFC), which has financed over US$200 billion of private sector projects
in a variety of sectors on the basis of only US$2.6 billion of paid-in capital. 183 The
IFC has now established its own fund business to manage third-party capital as
well. 184 In addition, a recent Standard & Poor analysis estimated that, under certain
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