How Partnerships Can Fill the Infrastructure Gap
Growing populations and aging infrastructure are straining the capacity of most nations—not only to meet the basic needs of their people, but also to help grow their economies. Today, 1.3 billion people have no electricity and more than 2 billion lack modern sanitation facilities. Without proper infrastructure, these numbers will continue to grow.
Efficient infrastructure creates the foundation for economic growth. But the challenge is enormous: according to the McKinsey Global Institute, the world will need more than $50 trillion in infrastructure investment by 2030. To meet this level of investment, the public and private sectors—as well as local and international organizations—need to work together.
IFC is playing a critical role. By the end of FY13, IFC had an active portfolio of 103 PPP projects in 53 countries, valued at about $126 million. In FY13, advisory program expenditures in the area reached $39.5 million, improving access to infrastructure and health services for over 3 million people, mobilizing $750 million in private investment and demonstrating that well-designed PPPs can produce significant development gains even in challenging environments.
Consider a few examples of IFC’s work in this area:
Increasing access to services
A 14-year war left Liberia’s economy in ruin and devastated its infrastructure. Now, for the first time in nearly 20 years, the citizens of Monrovia have access to electricity, thanks to a management contract set up with the assistance of IFC and a group of international donors. When the project was completed in 2013, more than 32,000 people benefited from new or improved access to power, including more than 6,000 new electricity connections. In addition, based on the current growth rate, more than 390,000 people are expected to gain access to better services over the life of the project–more than double the original estimate of 150,000.
Facing rising oil costs, Jordan needed an alternative to support its energy sector. In November 2013, IFC signed a $221 million contract to finance a wind farm in Tafila, Jordan, as part of an effort to boost the country's supply of renewable energy and encourage economic development. The wind farm will be the country’s first privately owned renewable-energy facility. It is expected to lower wholesale energy prices by 25 percent, curb greenhouse emissions, reduce Jordan's reliance on imported oil, and set a precedent for future investments in renewable energy.
Delivering Better Healthcare
The state of Cross River in Nigeria faces an alarming shortage of doctors and hospitals, with a ratio of 1 physician for every 50,000 patients. To address the challenge, the government sought IFC’s assistance to attract private sector firms to help build a 105-bed hospital in the state capital of Calabar. The hospital is expected to be operational in 2015, and will provide high-quality clinical and diagnostic services. Health professionals in the state will also build expertise through exposure to international best practice.
Protecting the Environment
In Bhubaneswar, India, street lighting is outdated, inefficient, and in poor condition. Small streets and residential areas have little lighting, and inadequate resource management burdens the city’s budget. The municipal authority asked IFC to design, structure, and manage the bid process for an improved street-lighting project that is now the biggest in India. New lighting is expected to save the government $100,000 a year, mobilize $4.8 million in private sector investment, and reduce greenhouse emissions.
Improving facilities and systems
Over 11,000 children in Belo Horizonte, Brazil, were waiting to enroll in school. The government was eager to strengthen early education and improve workforce competitiveness. But it faced an acute shortage of school buildings, and lacked the resources to build more.
In 2012, IFC helped the government identify a private partner to build and operate 37 new schools (including 32 preschools), mobilizing $95 million in private sector investment. The project is expected to benefit 18,000 kindergarten and elementary children from low-income areas.