Sustainable infrastructure in Africa and Southeast Asia
To enable people to live in dignity and create positive economic prospects, people and businesses must be able to depend on reliable and sustainable infrastructure. These include roads, public buildings, educational facilities, water and energy supply systems and data lines.
Constructing and maintaining such infrastructure is expensive and requires capital. As operators often have limited access to capital, they often have to procure it abroad and usually in US dollars. This makes them dependent on foreign lenders and they bear the risk of fluctuating exchange rates. It also further pushes up the already immense levels of foreign debt incurred by developing countries.
Domestic loans in local currency are in demand, for example from local pension funds and insurance companies. However, they are often reluctant to invest because they fear a high level of risk and so demand collateral in case of default.
This is where development players can provide support. One example of this is the Infracredit platform in Nigeria. It has been providing guarantees to mobilise local investors since 2016 and works closely with the Private Infrastructure Development Group (PIDG).
Thanks to this safeguard, a total of 19 pension funds had come onboard as investors by 2023 taking part in 14 infrastructure projects. Projects included the refurbishment of a power station and the expansion of a hydropower plant. With the support of PIDG, Infracredit is planning to roll out this successful model in Vietnam and Kenya as well.
PIDG mobilises private sector capital for building climate-friendly infrastructure in sub-Saharan Africa and in South and Southeast Asia. By utilising public funds, the Group reduces the risk associated with infrastructure projects so that the private sector is also willing to invest in such ventures. PIDG also helps to develop the projects, offers technical assistance and ensures that health, safety, environmental and social standards are met.
Since 2002, PIDG has enabled 149 infrastructure facilities to operate, thereby improving the supply of infrastructure to 228 million people and creating 254,500 long-term jobs.
Since PIDG was founded in 2002, SECO has contributed a total of USD 225 million to the Group, making it the third largest donor. This involvement is one of SECO's most important development initiatives.
Since PIDG was founded in 2002, SECO has contributed a total of USD 225 million to the Group, making it the third largest donor. This involvement is one of SECO's most important development initiatives.
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Sustainable infrastructure in Africa and Southeast Asia
