Innovative Financing for Infrastructure in Low Income Countries

Among the outcomes of the Group of 20 (G20) Seoul Summit in November 2010 was an enhanced focus on development, especially infrastructure in low-income countries (LICs). The comprehensive work program that emerged included the establishment of a High-Level Panel for Infrastructure Investment to report to the forthcoming summit in France. Many of the actions for infrastructure development will take time to bear fruit. The aims of this think-piece are to propose some ways of responding to the G20’s initiative. One such response could comprise mobilizing innovative financing that uses the large and growing savings surpluses of some countries, often held in sovereign wealth funds (SWFs); providing those resources to LICs on appropriately concessional terms; using those resources to encourage private investments; and beginning to use the monies quickly while measures to scale up their use are taken. This document is more of a think-piece than a blueprint, and as such does not address all details of design and implementation. It does, however, pay particular attention to the region of Sub-Saharan Africa, where most LICs are and where LICs generally have worse infrastructure than LICs elsewhere. Overcoming infrastructure shortfalls is expected to have a large impact on the region’s economic growth, with significant implications for employment and poverty.