The World Bank released information from its Private Participation in Infrastructure (PPI) Database and – on the surface – it’s unexceptional. The developing world saw a slight decline (to $96.7 billion) from the previous five-year average of $103.5 billion.

So why am I writing?

Looking more deeply, 2019 stood out for two reasons: First, more developing countries hosted PPI than we’ve seen in a decade—62, from 46 countries in 2018. Countries such as Belarus, Belize, Cabo Verde, Comoros, Malawi, Sudan, and Uzbekistan, which had not posted private sector commitments in the last 10 years, saw a return in investment in 2019. St. Vincent and the Grenadines and Solomon Islands reported their first PPP transactions ever. These first PPP projects in countries deserve extra credit as they can act like seeds for future investments, often as precedents for the next PPP generation of transactions in the region.  

Second is the reason why we saw the broadening of PPI’s reach: Our data suggests that development finance institutions (DFIs) played a pivotal role in expanding the private sector’s activity to new countries by providing tailored support. 

Why does this matter?

Given COVID-19, clearly we should expect an even lower volume of total PPI investment in 2020. In this context, DFIs can play an important role and PPP projects in the past may provide valuable lessons for 2020. Infrastructure financing has evolved in order to cope with the risks specific to different environments, and DFIs has been playing a key role in providing more innovative financing options.

Imad Fakhoury, The World Bank’s Global Director for Infrastructure Finance, PPPs & Guarantees says, “I’m very pleased that this means that we’re playing exactly the catalytic role we should be playing – using our balance sheets and good offices to bring more resources for infrastructure development

“As the world reels from the effects of COVID-19, we’ll need even more resources, more collaboration to maintain access to the infrastructure services that people need now -- and those that will boost countries’ recoveries as they build back better.”

PPI data by region

• In 2019, EAP received the highest level of PPI investment among all regions at $38 billion, accounting for 39 percent of the global total. This was led mainly by China, which accounted for 69 percent of the regional investment. Excluding China, PPI in EAP is at $12 billion, accounting for only 17 percent of the global total.
• With $30.7 billion, LAC was the region with the second-highest investment level in 2019. Investment commitments in LAC almost doubled from 2018, driven largely by a surge in Brazil, which accounted for two-thirds of the regional investment at $18.6 billion.
• SAR attracted $12.7 billion in investments in 2019, marking an increase of 40 percent over the five-year average. India, at investment commitments totaling $7.6 billion, continued to be amongst the top-five investment destinations even though this represents a 33 percent drop compared to the 2018 value.
• ECA, with $8.4 billion, saw a sharp drop from 2018 levels of $15.9 billion as well as the five-year average of $19.8 billion. This was mainly due to a significant decrease in Turkey.
• SSA received $6.2 billion across 23 projects, marking a 19 percent decrease in investment levels from 2018. However, the 2019 value is 28 percent higher than the five-year average at $4.9 billion.
• At $826 million, 2019 investment levels in MENA increased PPI from its $666 million level in 2018. However, this is still significantly low compared to the five-year average at $3 billion.

Sector trends

• In 2019, the transport sector continued to outpace the energy sector, attracting $47.8 billion across 123 projects. This accounts for half of 2019 global PPI investments.
• The energy sector received $40.1 billion across 169 projects, accounting for 41 percent of investment commitments in 2019. Renewable energy continued to play a significant role in new energy generation projects. Of the 150 electricity generation projects, 136 were in renewables. Ninety-one percent of all new electricity generation projects used renewable-energy sources as compared to 89 percent in the preceding five years.
• Municipal solid waste received $4.7 billion across 64 projects and the water sector attracted $4.0 billion over 51 projects, while DD received $174 million for three projects.

For the full report click here.