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    Home » World Bank launches new global infrastructure facility for Nigeria, others

    World Bank launches new global infrastructure facility for Nigeria, others

    October 10, 2014
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    10 October 2014, Washington DC — In a bid to plug the infrastructure gap in developing nations, including Nigeria, the World Bank Group Thursday launched a new Global Infrastructure Facility (GIF), which has the potential to unlock billions of dollars for infrastructure in the developing world.

    The GIF launch, which took place at the ongoing 2014 IMF/World Bank annual meetings in Washington DC, drew the heads of some of the world’s largest asset management and private equity firms, pension and insurance funds, and commercial banks, who joined multilateral development institutions and donor nations to work as partners.

    Among the partners are the Nigeria Sovereign Investment Authority (NSIA), manager of the Sovereign Wealth Fund (SWF) and 26 others, including governments.

    World-Bank-Group-President-Jim-Yong-KimWorld Bank Group President, Jim Yong Kim, said the presence of a broad range of institutional investors at the GIF signing ceremony sent a powerful message, with the most recent data showing that private infrastructure investment in emerging markets and developing economies dropped from $186 billion in 2012 to $150 billion last year.

    “We have several trillions of dollars in assets represented today looking for long-term, sustainable and stable investments,” said Kim. He added: “In leveraging those resources, our partnership offers great promise for tackling the massive infrastructure deficit in developing economies and emerging markets, which is one of the fundamental bottlenecks to reducing poverty and boosting shared prosperity. “The real challenge is not a matter of money but a lack of bankable projects – a sufficient supply of commercially viable and sustainable infrastructure investments.”

    Developing countries now spend about $1 trillion a year on infrastructure, but maintaining current growth rates and meeting future demands would require investment of at least an estimated additional $1 trillion a year till 2020.

    Kim said the GIF was being packaged to tap into expertise from within and outside of the bank group to deliver complex public-private infrastructure projects that no single institution could address on its own.

    “The GIF is also being created to complement existing project preparation facilities in partner institutions across the globe. The multilateral development banks here represent that commitment to work together on behalf of our shared client countries, to bring together our resources, experience and our financing instruments,” he explained.

    Australian Treasurer and Chair of the G20 Finance Track, Joe Hockey, welcomed the launch of the GIF, saying it complemented the work the G20 is doing to boost infrastructure investment.

    “We all recognise that investment in emerging markets and developing economies will expand access to basic services and raise living standards. It also helps to underpin economic growth. The G20 looks forward to working closely with the World Bank Group and other multilateral development banks on such vital innovations,” he said.

    In his comments, President of the European Investment Bank (EIB), Werner Hoyer, said: “We welcome the proposed collaboration of the multilateral development banks and the private sector and capital market institutions on GIF, as it will increase the resources available to prepare major infrastructure projects.

    “It will also strengthen market investment in key infrastructure sectors and countries where such resources are lacking. What we need are viable, bankable and innovative projects which provide added value for investment and modernising the economy.”

    Also speaking, the World Bank Group’s Managing Director CFO, Bertrand Bader, said: “We know that simply increasing the amount invested in infrastructure may not deliver on the potential to foster strong, sustainable and balanced growth. A focus on the quality of infrastructure is vital.”

    He explained that the GIF would begin operations later this year in a pilot phase to “road test” new models to deliver complex public-private infrastructure in low and middle income countries. The key focus would be on climate-friendly investments as well as ventures to bolster trade.

    Work has already started on a pipeline selection process and the GIF is talking to partners and beneficiary countries about several projects with the potential to transform developing economies, boost job creation, and improve the lives of poor people. Kim, along with Hockey and Hoyer, signed up to the GIF.

    The new fund may help Nigeria and other developing nations bridge their huge infrastructure gap. The infrastructure deficit in Nigeria has held back economic growth by at least 2 per cent per annum, according to a recent World Bank study.

    The country needs about $14.2 billion per annum to bridge the infrastructure gap, with about $10.5 billion needed for federal infrastructure alone, even as the current spending is only $5.9 billion.
    *Ndubuisi Francis – Thisday

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