Development finance institutions from the Group of Seven industrialised economies are launching a joint initiative with investors to boost private money to finance the trillions of dollars emerging markets need for infrastructure.
The world must spend some $4.2 trillion per year on infrastructure, according to Allianz Global Investors, a member of the group, two-thirds of it in emerging markets—a daunting task made tougher by rich countries’ cuts to aid and bilateral lending.
“This will mobilise capital at scale for infrastructure and advance economic prosperity and sustainable development in emerging and developing markets,” said Lori Kerr, chief executive officer of FinDev Canada. It is leading the initiative—dubbed the Infrastructure Investment Council—under Canada’s G7 presidency.
Development finance institutions from Britain, France, Germany, Japan and Italy are part of the effort, as well as the European Investment Bank, according to a statement shared by private-sector member Natixis Investment Managers.
Other private-sector members include BlackRock’s Global Infrastructure Partners, General Atlantic’s Actis as well as Brookfield, Macquarie and Ninety One, among others.
While nations worldwide must pour cash into infrastructure as transport, energy and the AI boom transform economies, many emerging market countries lack basic necessities, such as power connecting all citizens to the grid, clean water and well-developed ports, road and rail lines.
A myriad of barriers to investment has also hindered the flow of private cash to some of these markets.
In the press release, the council also said its main aims will be to co-create investment vehicles that allow more private capital to flow to emerging markets and facilitate knowledge and expertise sharing.
Reuters