WASHINGTON, May 3, 2022 — New data from the World Bank finds that private investment in low- and middle-income country infrastructure is rebounding from the historic lows recorded in 2020. Private investment commitments in low- and middle-income countries totaled $76.2 billion in 2021, representing a 49% increase from 2020.
“The rebound of private sector investment commitments in infrastructure is a positive sign that the recovery from COVID19 had begun in 2021,” said Imad Fakhoury, the World Bank’s Global Director for Infrastructure Finance, PPPs & Guarantees. “There is a significant opportunity to forge ahead with quality investments in green, resilient and inclusive infrastructure in 2022. But as economic stimulus slows, credit conditions tighten and uncertainty from overlapping crises intensifies, there will be even greater need for private investment in infrastructure. This will require working collectively to enable private sector solutions and putting in place stronger foundations for a post-crises recovery.”
Although the recovery of private investments is a positive sign, daunting challenges remain. Overall commitments still lag 12% lower than the previous five-year average, an indicator that recovery from the deep recession triggered by COVID-19 is still underway.
Investments were unequal across regions. Europe and Central Asia saw the largest increase in private investment commitments. In 2021, commitments in the region totaled $15 billion, a 400% increase compared to 2020 and double the five-year average. An $8 billion airport concession in Antalya, Turkey was a significant contributor to this increase. A public-private partnership program in Uzbekistan also helped drive $2.2 billion of commitments across five projects, amounting to 3.6% of the country’s national GDP. The outlook for infrastructure investments in the region is now dampened by the war in Ukraine.
While Europe and Central Asia reported the largest percent increase in private sector commitments, East Asia Pacific posted the largest total commitment — $28.1 billion, a 69% increase compared to 2020. Latin America and Caribbean also reported a 22% increase in commitments, for a total of $18.6 billion. Brazil led the recovery in the region.
Private investment commitments decreased in Sub-Saharan Africa by 17%, in South Asia by 16% and by 90% in Middle East and North Africa.
The transport sector received $43.8 billion in investments across 82 projects, accounting for 58% of global PPI investments. This marks a return to the decade-long trend for PPI following 2020’s standstill in transport investments.
Nearly one-third — 29% — of all PPI investments went to the energy sector, a 26% decrease from 2020 levels. Of the $22.4 billion directed to energy projects, 72% went to renewable electricity generation, primarily solar energy.
Private sources contributed 63% of the financing to PPI projects. Another 18% came from public sources and 19% from development and export finance institutions (DFI). Despite the impact of COVID-19, the share of financing across public, private, and DFI sources largely remained the same as that of pre-pandemic distribution. Infrastructure projects continued to be highly reliant on debt in 2021, with total debt raised of US$13.6 billion, or 64% of projects with full financing information available.