Private sector investment in developing countries infrastructure bounces back — World Bank
New data from the World Bank has shown that private investment in low- and middle-income countries’ infrastructure is rebounding from the historic lows recorded in 2020.
This is contained in a statement obtained from The World Bank website on Thursday.
It said private investment commitments in low- and middle-income countries totaled 76.2 billion dollars in 2021, representing a 49 per cent increase from 2020.
According to Imad Fakhoury, the Global Director for Infrastructure Finance, Public Private Partnerships (PPPs) and Guarantees, World Bank, the rebound of private sector investment commitments in infrastructure is a positive sign that the recovery from COVID-19 began in 2021.
“There is a significant opportunity to forge ahead with quality investments in green, resilient and inclusive infrastructure in 2022.
“But as economic stimulus slows, credit conditions tighten and uncertainty from overlapping crisis intensifies, there will be even greater need for private investment in infrastructure.
“This will require working collectively to enable private sector solutions and putting in place stronger foundations for a post-crisis recovery.”
It said although, the recovery of private investments was a positive sign, daunting challenges remain.
The statement said that overall commitments still lag 12 per cent lower than the previous five-year average, an indicator that recovery from the deep recession triggered by COVID-19 was still underway.
It said investments were unequal across regions. Europe and Central Asia saw the largest increase in private investment commitments.
In 2021, commitments in the region totaled 15 billion dollars, a 400 per cent increase compared to 2020 and double the five-year average.
“While Europe and Central Asia reported the largest per cent increase in private sector commitments, East Asia Pacific posted the largest total commitment of 28.1 billion dollars, a 69 per cent increase compared to 2020.
“Latin America and Caribbean also reported a 22 per cent increase in commitments, for a total of 18.6 billion dollars. Brazil led the recovery in the region.
“Private investment commitments decreased in Sub-Saharan Africa by 17 per cent in South Asia by 16 per cent and by 90 per cent in Middle East and North Africa.
It said that the transport sector received 43.8 billion dollars in investments across 82 projects, accounting for 58 per cent of global PPI investments, marking a return to the decade-long trend for PPI following 2020’s standstill in transport investments.
“Nearly one-third that is 29 per cent of all PPI investments went to the energy sector, a 26 per cent decrease from 2020 levels.
“Of the 22.4 billion dollars directed to energy projects, 72 per cent went to renewable electricity generation, primarily solar energy.’’
The statement said private sources contributed 63 per cent of the financing to PPI projects. Another 18 per cent came from public sources and 19 per cent from Development and export Finance Institutions (DFI).
In spite the impact of COVID-19, the share of financing across public, private, and DFI sources largely remained the same as that of pre-pandemic distribution.’’
It said infrastructure projects continued to be highly reliant on debt in 2021, with total debt raised of 13.6 billion dollars, or 64 per cent of projects with full financing information available.
