Private infrastructure investment rebounds from historic lows: New data
New data from the World Bank reveals that private investment in infrastructure in low- and middle-income countries is rebounding from historic lows recorded in 2020. Private investment commitments in low- and middle-income countries totaled 76 .2 billion in 2021, or 49% increase from 2020.
“The rebound in private sector infrastructure investment commitments is a positive sign that the recovery from COVID19 has begun in 2021,” said Imad Fakhoury, Global Director for Infrastructure Finance, PPPs and Guarantees at the Bank. world. “There is a significant opportunity to move forward with quality investments in green, resilient and inclusive infrastructure in 2022. But as the economic recovery slows, credit conditions tighten and uncertainty As overlapping crises intensify, the need for private investment in infrastructure will be even greater. This will require working collectively to enable private sector solutions and laying stronger foundations for post-crisis recovery. seizures.”
Although the recovery in private investment is a positive sign, significant challenges remain. Overall commitments are still 12% below the previous five-year average, an indicator that the recovery from the deep recession triggered by COVID-19 is still underway.
Investments were unequal from one region to another. Europe and Central Asia recorded the largest increase in private investment commitments. In 2021, commitments in the region totaled $15 billion, a 400% increase from 2020 and double the five-year average. An $8 billion airport concession in Antalya, Turkey, was a major contributor to this increase. A public-private partnership program in Uzbekistan also helped leverage $2.2 billion in commitments across five projects, representing 3.6 percent of the country’s national GDP. Prospects for infrastructure investment in the region are now clouded by the war in Ukraine.
While Europe and Central Asia reported the largest percentage increase in private sector commitments, East Asia-Pacific posted the largest total commitment – $28.1 billion, a 69% increase from 2020. Latin America and the Caribbean also reported a 22% increase in commitments, totaling $18.6 billion. Brazil led the recovery in the region.
Private investment commitments fell by 17% in Sub-Saharan Africa, 16% in South Asia and 90% in the Middle East and North Africa.
The transport sector received $43.8 billion in investments in 82 projects, representing 58% of global PPI investments. This marks a return to the decade-long trend for PPIs after transport investment halted in 2020.
Nearly a third – 29% – of all PPI investments went to the energy sector, down 26% from 2020 levels. Of the $22.4 billion spent on energy projects, 72 % went to renewable electricity generation, primarily solar power.
Private sources contributed 63% of the funding for PPI projects. 18% came from public sources and 19% from development and export finance institutions (DFIs). Despite the impact of COVID-19, the share of funding between public, private and DFI sources remained largely the same as pre-pandemic distribution. Infrastructure projects remained heavily dependent on debt in 2021, with total debt raised of $13.6 billion, or 64% of projects for which full financing information is available.