Connecting for good | KPMG | SG
close
Share with your friends
A thin refugee child's hand lies in the palm of an adults hand - Somalia refugee camp

Connecting for good

Connecting for good: Civic investment

To help bridge the developing world infrastructure gap, the development sector wants to build better connections between the private sector and developing world projects. To find out how they are doing this - and what more needs to be done - we sat down with three experts representing three different viewpoints: Mahmoud Mohieldin is the World Bank Group Senior Vice President for the 2030 Development Agenda, UN Relations and Partnerships; Jan Kellet is the Special Advisor for External Engagement on climate, disaster and energy with UNDP; Elizabeth Hausler is the Founder and CEO of Build Change, an NGO focused on improving resilience in disaster-prone regions.

Why are development agencies, multilateral institutions and NGOs so focused on catalyzing infrastructure investment?

Mahmoud (MM): I think infrastructure has always been at the very heart of development. But I think there is an increasing recognition that, in more ways than one, infrastructure gives people hope and stability; it serves more than just its function. If you consider water, basic sewer network facilities, access to electricity and, increasingly, access to communication - these are all key to driving the development agenda today.

Elizabeth (EH): For us, it comes down to the realities on the ground in these markets. We often say it's not the earthquake that kills a person, it's the collapse of a poorly built building. And in many cases, the challenges these markets face are a result of the quality and design of the infrastructure they either have or don't have. Infrastructure is the key to building a more resilient society.

Jan (JK): I absolutely agree. And, obviously, as the UN's Development Agency, we're guided by the UN's Sustainable Development Goals, and infrastructure plays a major role in the vast majority of those. The problem is that, for many of these countries, the targets are ambitious and require quite a lot of inward investment. And we tend to work in very vulnerable places where finding investment for infrastructure is very challenging. The conditions, or as we call it, the enabling environment for inward investment, are not always in place.

Why are partnerships with the private sector so important today?

JK: A large part of it is financial. The reality is that, between now and 2030, developing countries are going to need somewhere around US$2 trillion per year of annual investment to meet demand for infrastructure. At their best, global development assistance budgets amount to less than US$150 billion combined. And only a fraction of that is earmarked for catalyzing infrastructure investment. Tax revenues in many developing countries still remain weak. You look at those numbers and quickly realize that there is a massive need for private investment if we want to achieve our goals.

MM: I agree that the amount of funding that countries can put in from public sources is very limited. So governments and development agencies really need to be pragmatic. They need to find ways to involve the private sector in those projects that are commercially feasible while keeping their public money for the areas that are unable to secure funding from the private sector. It's what we refer to as `maximizing finance for development'.

EH: If we're talking about the wider private sector, it's also important to note the value of using development funding to catalyze local private sector growth. We predominantly work with small, local builders and construction materials companies with the intention of encouraging skills transfer and inspiring local builders to practice more resilient construction techniques. It's not just about spreading out the money. It's also about spreading around the knowledge.

How do you help connect developing world projects with private sector players?

MM: Besides the funding support the World Bank Group provides through our various funding arms -- including the International Finance Corporation, the International Development Association or the Multilateral Investment Guarantee Agency -- our focus is on helping governments make sure they have the right technical support to properly engage with the private sector. Even some of the most advanced economies we deal with currently lack the kind of in-house technical capabilities required to capture the attention of the private sector and then reach a good deal.

JK: A lack of capabilities is absolutely a challenge to attracting private investors. It also comes down to creating the right enabling environment - basic security, good governance, rule of law, representative legislation, transparency, good tax management and so on. I think one of the key roles for the UN organization is to help countries move to a more stable development and investment environment which, in turn, will help them attract more private in-flows to infrastructure projects.

EH: As a non-profit social enterprise, we spend a lot of time trying to mobilize private sector investment, both directly into our projects and into wider initiatives. For example, we have been working with some of the large reinsurers and financial institutions to think about how we can develop a financial instrument for governments that can be used encourage or directly fund investments into housing stock retrofits in disaster-prone zones. I think part of the challenge is just helping private sector organizations and governments to think differently about the solution.

What types of projects are you hoping to help drive forward?

MM: The World Bank Group participates in a wide range of projects - from very large ones in the energy and renewables sectors to small road and sewage networks in rural and remote areas of low-income communities. We're involved in projects in more than 120 countries, so there is no end of opportunities at the project level. At the strategic level, however, our work is focused on helping client governments maximize their finance for development.

JK: One initiative that I'm particularly keen on is a resilient infrastructure investment mechanism targeted toward insurance investors. Working with KPMG, BlackRock and others, we are really at an advanced stage of development; if it all comes together, we will have something significant to offer developing countries but still plenty of work to do. As Elizabeth said, we need to be thinking about different ways to use our capital to tackle the big problems. And these types of partnerships with the private sector are one way to do that.

EH: I absolutely agree, Jan. Our focus is very much on the development of resilient housing and schools in disaster-prone areas, so we're focused at both the tactical level - working on projects in places like Mexico, the the Philippines, Indonesia, China,Haiti, Nepal, Guatemala and Colombia - and at the strategic level advocating for greater emphasis on social housing from development banks, policy makers and private sector participants.

Why is collaboration so important to achieving your goals?

EH: I think we need to start looking at development from a much more holistic standpoint. It's about more than just bricks and funding. It's also about technology and people. We need to overcome barriers to development that are financial, technical, social and cultural. And if you just look at infrastructure in terms of developing a building without looking at it in the wider context, you're probably not creating much value.

MM: I agree we need to move forward with an integrated approach that prioritizes inclusiveness, sustainability, culture, and social requirements. We can no longer continue to fix one part of the problem and neglect the rest of it, assuming it will be resolved automatically. We need integrated approaches that put people first in the sustainable development agenda.

JK: That is certainly an increasingly important theme in development circles. We can't continue to just look at issues in silos - infrastructure in one silo, healthcare in another, conflicts in another. We need to help countries look at this holistically and help them find ways to wisely utilize investments so they can create the right conditions for investment. And that takes great collaboration.

Connect with us

Related content