The foundations of economic activity

Initiated by the G20 in 2014, the Global Infrastructure (GI) Hub is an independent entity that works with governments and the private sector to improve the delivery of high-quality infrastructure services in both G20 and non-G20 countries.

The GI Hub develops and disseminates pragmatic knowledge products and tools for infrastructure markets. We focus on collaborating with governments, the private sector and our partners to identify, successfully procure and future-proof infrastructure projects that are necessary, resilient and sustainable in a rapidly evolving world.

High-quality economic infrastructure underpins economic activity both within and across national borders. It is one of the most powerful levers available to support businesses – from small and medium-sized enterprises to large multinationals – to make the investments that drive inclusive, sustainable growth across the globe. It promotes development in emerging economies, growth and employment in developed economies and trade among all.

However, economies around the world face significant challenges in meeting current and future demand for infrastructure, driven by growing populations, rapid technological innovation, the increasing integration of the global economy and value chains, the legacy of ageing or poorly managed assets, and public balance sheet and fiscal pressures.

One of our flagship tools, the Global Infrastructure Outlook, forecasts that $97 trillion will need to be invested in infrastructure by 2040. Based on current trends, we forecast that only $79 trillion will be invested, leaving a $18 trillion gap.

Although governments have a crucial role to play in closing the gap, a big part of the solution is greater involvement by the private sector. These investors have the resources and the experience to invest directly in productive infrastructure, and partner with governments to build and manage
public investments more effectively.

A priority area

Reassuringly, the G20 finance ministers announced in Buenos Aires on 23 March 2018 that infrastructure would remain a priority for at least the next three years – a very welcome announcement for those in the private sector who have long called for greater global coordination of efforts in this area.

In addition, the recent announcement by Canadian prime minister Justin Trudeau regarding funding for the GI Hub to establish an ancillary office in Toronto is also very encouraging.

Most significant for the GI Hub is the re-establishment of the G20’s Infrastructure Working Group and the creation and endorsement of the Roadmap to Infrastructure as an Asset Class by the G20 leaders.

This roadmap is the first real, multi-year work plan that the G20 has produced on this issue, and we believe that with continuing support from future G20 presidencies it will lead to the creation of infrastructure as a standalone global investment asset class.

The roadmap presents the G20’s version of a vision that has been talked about for close to a decade in the private sector: the creation of an infrastructure asset class that makes private-sector investment easier and more transparent around the world and facilitates the flow of private capital into much-needed public infrastructure projects.

Core elements of the roadmap, such as greater standardisation of documents and contracts for both procurement and financing, and an emphasis on better project preparation, are critical to delivering more bankable projects in which the private sector can feel comfortable investing.

Another key aspect of the roadmap is the ambitious Infrastructure Data Initiative, which will provide potential investors with infrastructure investment performance information that will allow them to make assessments on the relative risks of infrastructure investments. Currently, infrastructure investors have limited data about the long-term financial performance of infrastructure projects, and this knowledge gap has been called out by various private- and public-sector stakeholders for some time.

Private capital unlocked

Importantly, this means not just financial performance, but also measures of environment and social sustainability, governance and economic performance. Creating and making this type of data available to investors is key to helping unlock private capital flows, not only into G20 member infrastructure projects, but also into those in emerging markets.

The G20 has an opportunity to create an environment that unleashes private investment, and helps governments around the world procure and deliver projects that improve the lives of their citizens – and contribute to sustained and equitable economic growth.

Closing the infrastructure investment gap will require the ongoing commitment of governments and a greater role for the private sector – as both an investor and a delivery partner.

As a G20 initiative, the GI Hub is grateful for the ongoing support expressed by the G20. It is our primary purpose to help the G20 deliver on its infrastructure ambitions, and we have never before seen such an alignment between public- and private-sector objectives, and never been as confident that they can be achieved.