Discussing Infrastructure Finance at the Asian Infrastructure Investment Bank annual meetings in Mumbai with Ms Anita George, Executive Vice President Caisse de Depot et Placement du Quebec, Mr Donald Kanak, Chairman Eastsprings Investments, Mr Alan Macdonald Vice Chairman of Citibank, Mr Thierry de Longuemar , Vice President and CFO AIIB, and HE Mr Shaukat Aziz Former Prime Minister of Pakistan.
According to estimates by the New Climate Economy group, about 90 trillion dollars is needed globally for infrastructure investment in the next 15 years. About two third of this, or $60 trillion, will be needed in emerging markets and developing countries.
The public sector cannot handle this alone so the key question is how can institutional investors, pension funds and insurance companies etc who hold over $100 trillion in assets be attracted to invest in emerging and frontier markets?
Multilateral development Banks MDBs like AIIB can play a key role by working with governments upstream to tackle uncertain policy and regulatory environments, lack of transparency, bureaucratic hurdles, lack of bankable projects and other hurdles that contribute to risk perception.
They can also work downstream to develop financial instruments that mitigate risk, such as blended finance instruments, guarantees, first loss provisions, construction finance, originate and distribute actions that will attract institutional finance. The AIIB's investment in India's National Infrastructure Investment Fund of funds NIIF is a good example of a blended finance approach.
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