I am presenting some important points collected from the World Bank Group Report 2023 on Private Participation in Infrastructure (PPI). Before that, I wish to mention the simple meaning of privatization: transferring public-sector enterprise ownership, management, and control to the private sector.
The term “investment” refers to private investment commitments at the time of financial close in energy, transport, water and sanitation, municipal solid waste, and ICT-backbone projects serving the public in low- and middle-income countries, including natural gas transmission and distribution, but excluding oil and gas extraction.
• Private sector investments in infrastructure, or private participation in infrastructure (PPI)1 in 2023 amounted to $86.0 billion. Although in terms of investment volume, this represents a decrease from the $91.3 billion levels in 2022, 2023 saw a significant increase in the number of projects, jumping from 260 projects in 2022 to 322 projects in 2023.
• Similar to the increase in the number of projects, the number of countries with PPI investment commitments in 2023 also increased to 68 from 54 countries in 2022 and the previous five-year average of 50 (2018-2022). It is noteworthy to mention Guinea Bissau, Libya, Papua New Guinea, São Tomé and Príncipe, and Suriname recorded their first PPI investment transactions in over a decade.
• The five countries with the highest levels of investment in 2023 as a percentage of national GDP were Cabo Verde, with 7.4 percent of its GDP committed to PPI investments; Lao People’s Democratic Republic (Lao PDR), with 6.2 percent; and Bosnia and Herzegovina with 2.0 percent. In absolute terms, China, Brazil, the Philippines, India, and Peru received the largest PPI investments in 2023. These five countries together attracted $66 billion, capturing almost 77 percent of global PPI investment.
• Twenty-six International Development Agency (IDA) countries, compared to eighteen in 2022, received investment commitments amounting to $4.3 billion in 2023. This represented an 18 percent increase in investment levels compared to last year but a 21 percent decrease from the past five-year average.
• Of all the projects recorded in 2023, 52 percent were primarily sponsored by foreign entities, increasing from the 44 percent recorded in 2022. ICT (78 percent) and energy (53 percent) are the sectors with the most PPI projects sponsored by foreign entities. On the other hand, the municipal solid waste sector (18 percent) and water sector (26 percent) predominantly have local sponsors.
• Energy saw a threefold increase in investment levels from 2022, with most of this increase occurring in the EAP (East Asia Pacific) region. Meanwhile, transport sector investment levels dropped substantially due to a sharp decline in road investments in China and India, although port subsector investments doubled. ICT investments increased almost fourfold, reaching $7.8 billion across 52 projects in 35 countries, while water and municipal solid waste sectors reported a decline.
• There was a significant increase in DEFI2 participation in infrastructure projects in 2023, with 127 projects receiving some form of DEFI support. This accounted for 40 percent of all PPI projects, a significant increase from 26 percent in 2021 to 18 percent in 2022.
• With respect to financing, approximately 67 percent came from private sources, 20 percent from DEFI sources, and 13 percent from public sources. Compared to 2022, private sources increased by 18 percent from 50 percent, while public sources decreased by 22 percent from 35 percent. DEFI’s contribution (in the form of loans) to PPI projects in 2023 remained relatively unchanged from the previous year.
According to the Report, the term “investment” refers to private investment commitments at the time of financial close in energy, transport, water and sanitation, municipal solid waste, and ICT-backbone projects serving the public in low- and middle-income countries, including natural gas transmission and distribution, but excluding oil and gas extraction. ICT here means information and communications technology. Also, DEFI, for the purposes of this report, refers to multilateral institutions and bilateral agencies with a development mandate, as well as export credit agencies with a mandate to support domestic businesses in pursuing investments abroad.
I have presented the key points so that researchers can take up further study.
Prof Shankar Chatterjee, Hyderabad
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