Rationale - addressing the financing gap: Infrastructure investment has been identified by a wide range of public sector bodies and private sector groups as an essential component of addressing short- and long-term growth challenges facing the global economy, both in mature and emerging markets. While infrastructure investment needs have been estimated to be in the $50-60 trillion range over the next 15 years, conservative estimates suggest that there is likely to be an infrastructure financing gap of $25 trillion or more—some $1.5 trillion per year. Given strained public sector finances worldwide, this funding gap will need to be closed in large part by mobilizing private sector investment—probably with some form of public sector facilitation.
Broad range of initiatives: With infrastructure high on the G20 agenda, many fora and projects have been launched to discuss and recommend measures to mobilize infrastructure investment. The vast majority of these are driven by the public sector, including the G20-B20 Global Infrastructure Hub, the World Bank-led Global Infrastructure Facility, the European Commission and many national and regional initiatives, including the Build America Investment Initiative, Infrastructure UK, and the Asian Infrastructure Investment Bank (AIIB). Many of these initiatives now have an explicit goal of leveraging private sector capital. To complement and help bring together these efforts, a group encompassing the broad range of public sector stakeholders—and including a strong private-sector voice—is greatly needed.
Role of the IIF—bringing together public and private sector investors: Since its inception over 30 years ago, the Institute of International Finance has worked to bring together the international private sector financial community and leading global policymakers, providing a unique forum for dialogue and collaboration. In recent years, we have been increasingly focused on our work in convening institutional investors—major pension funds, life insurers, asset managers and sovereign wealth funds—to address the dearth of funding for infrastructure investment. Towards that end, the IIF has organized a number of well-received public-private sector meetings around the world, many under the auspices of our Council for Asset and Investment Management.
The IIF Infrastructure Working Group: Establishing a joint public-private sector Infrastructure Working Group represents an important step towards bringing together key stakeholders, with the goal of finding and promoting practical solutions to financing the infrastructure gap. In addition to the major institutional investors from our Council for Asset and Investment Management, the IIF Infrastructure Working Group includes representatives from industrial companies involved in infrastructure, other financial institutions, including dedicated infrastructure investment funds, rating agencies active in infrastructure, relevant G20/B20 groups, multilateral/regional development banks, and interested government entities.