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From Transaction to Transformation

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by

Adam Diehl

on 26 October 2013

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Transcript of From Transaction to Transformation

Why invest in Infrastructure?


What do World Bank Group clients want?


How has the World Bank Group responded so far?


What will the World Bank Group do over FY12-15?

MDG 7: Halve the porportion of the population without access to safe drinking water
Infrastructure supports social progress
Country-Level Achievements on MDG-7 :
Halve the proportion of the population without access to safe drinking water
Over the period 1990-2008, nearly 2 billion people in urban and rural areas have gained access to improved drinking water.

By the end of 2010, 90 % of the world’s inhabitants were covered by a mobile cellular signal, with mobile penetration reaching 68%.

In 2009, an additional 20 million people were provided with access to electricity.
Achievements in Millenium Development Goals for Infrastructure
Infrastructure supports growth and creates jobs
A 10% increase in infrastructure development contributes to one percent growth in the long-term.

Infrastructure development contributed to half of the acceleration in growth in Sub-Saharan Africa in 2001-05 over 1990-95.

Every US$1 billion invested in infrastructure generates an average of 110,000 jobs in oil importing countries.
Infrastructure serves as a counter-cyclical instrument
A US$1 increase in public spending in infrastructure in developing countries generates a US$0.35 increase in exports from developed countries.

In Latin American and the Caribbean, US$1 billion additional fiscal infrastructure spending has contributed to 40,000 new jobs.
Infrastructure can transform development paths
Integrated Flood Risk Management
Facilitating trade through regional transport corridors
Producing energy through hydro or solar over more polluting forms
Bus Rapid Transit with Incentives for Behavior Change
Integrated Urban Development with Low Carbon Growth
Smart Metering
Combining Sanitation Infrastructure with Education
Regional Broadband Backbone
...And the Private Sector is already developing new infrastructure solutions
67 financial institutions have adopted the Equator Principle
Expanded into large scale biomass, wind farms, and micro-reactors
Developed electric smart metering as a first step toward smart grid integration
Developed green material for building roads and infrastructure
Offers services from water, transportation and communications to enviromental activities
Expanded its activities beyond water, to transport and waste management
Therefore, infrastructure is a priority for countries
China has $1 trillion planned for urban infrastructure over 2011-15
India plans $500 billion for infrastructure over the next five years
In Sub-Saharan Africa, $45 billion in infrastructure is financed annually by governments, users, and others
Access to basic infrastructure services for all
Two thirds of the world's population have yet to gain access to the internet
About 1 billion in rural areas have no ready access to all-weather roads
2.5 billion have no access to basic sanitation
Increases in living standards
Infrastructure investments support growth, but as countries develop, their demand for infrastructure grows as well
Tackling the more systemic development challenges of today's world
Urbanization
Social Stablity
Globalization
Technology
Climate Change
Yet, who can finance infrastructure?
Private participation in infrastructure in developing countries reached a peak of $160 billion/year in 2010
The disparity between middle income countries (MICs) and low income counties (LICs) has grown: MICs can mobilize huge flows of private money from global infrastructure funds and domestic markets while LICs, with the greatest needs, also have the greatest difficulty attracting capital
Investments over the past 10 years were primarily in energy and telecommunications
High volatility in private investment flows experienced during the 1990s, shows that the private sector cannot substitute for the public sector
Throughout the 2000's, private participation in infrastructure (PPI) has proved to be a game changer in infrastructure financing
Private Sector
The public sector remains central to the delivery of infrastructure services, either as a provider or enabler:
Public Sector
However, the public sector is facing several constraints:
Tighter domestic budgets
Bilateral ODA flows unlikely to rise
$22.6 billion to infrastructure in 2009
MDB Capital constraints
$72 billion in 2012
$63 billion in 2011
An evolving strategic approach
WBG Infrastructure
Action Plan
FY03-07
WBG Sustainable Infrastructure
Action Plan
FY08-11
Transformation through Infrastructure
Objective: to do more
Re-engage and scale up infrastructure support in support of the access and growth agenda
Scaling from a baseline of WBG infrastructure commitiments of US$ 5.2 billion in 2002
Objective: to do more, and better
Scale up infrastructure in support of the access agenda
Initiate actions in emerging areas (e.g., climate change, PPP and rapid urbanization)
Better integrate environment and social concerns and government risk in projects
Recent achievements
Exceeded SIAP commitment targets by more than US$34 billion over FY08-11
High performance of environmental and social safeguards (design and supervision)
Accelerated efforts to integrate governance risks and accountability frameworks
Increased direct mobilization of private financing through IFC
Bank’s leverage effect on the private sector through knowledge work
In FY10, the Bank Group emerged as the largest multilateral financier of infrastructure
Transformational Engagement
Core Engagement
Mobilization of
Private Capital

3 Pillars
World Bank Group Strategic Vision for Infrastructure FY12-15
1
2
3
The Group will continue to do what it does well: mono-sector engagement in energy, ICT, transport and water to support the access to basic infrastructure and growth agenda. This will continue to constitute the bulk of the Group's engagement in infrastructure, accounting for 70-80%.


Additionally, the Group will work to increase its effectiveness in 4 areas:
Pillar 1: Core Engagement
Poverty
Reduction
Governance
Gender
Knowledge
Enhance the poverty focus of projects at the sector level (e.g., Sanitation, Hygiene and Wastewater Support Service project teams to identify opportunities to address poverty in all water supply and sanitation projects at the design stage)
Enhance project-level engagement in governance with wider engagement at the sector level
Embed governance in upstream Country Assistance Strategy preparation
Support country systems and institutions
Scale up efforts to increase the efficiency of public spending
Follow-up on implementation of the 2012 World Development Report on Gender Equality and Development
Ensure 100% gender-informed design of Country Assistance Strategies
Increase level of gender-informed infrastructure projects to 100%
Connect the Group to outside expertise
Staff up with Global Expert Teams, Chief Technical Specialists and World Bank Fellows
Develop and enhance Knowledge Platforms (e.g., ICT, Green Growth, Urban)
Pillar 2: Transformational Engagement
The Group will transform the way it engages with clients and partners
Why?
With whom?
Leveraging and Brokering Knowledge
South-South Knowledge Exchanges
Knowledge Platforms
Ensuring Strategic Staffing
Deep technical skills with an ability to connect among diciplines
Enhancing Partnerships
Effective use of international fora
Collaboration with other Multilateral Development Banks
Delivering Different Projects
Identification of points of leverage, and design of projects so as to mazimize certain benefits
How?
Reaching beyond the traditional government line ministries to include:

Private Sector Firms

Non-Traditional Donors

Private Foundations

Municipal Governments
A necessity for tackling the more complex and interconnected development challenges of today's world: Urbanization, Globalization
Climate Change, Natural Disasters, Social Stability, and Technology

These issues are not only evolving, but vary by region and even country

Yet, if adequatly tackled, there is an opportunity for accelerating growth and the shift towards a more sustainable development trajectory
Pillar 3: Mobilization of Private Capital
Transformational
Projects
The Group will work to achieve a critical mass of Transformational Projects, those designed to optimize spacial, green, inclusive, and co-benefits
Removing institutional bottlenecks that impede competitiveness, integration and growth
Strengthening regional integration, social accountability and job creation
Connecting countries with power grids, broadband networks, transportation corridors and large-scale renewable energy
Improving environmental and social sustainability
Using a programmatic approach and supporting institutional reforms
Developing renewable energy, low- carbon infrastructure, sustainable urban systems and power trading
Opportunities for Transformational Projects across the world
Actions
Commitments and Targets
World Bank Group wide
PPP Action Plan for Tier 1 countries
Ghana, Kenya, Nigeria, Indonesia, Pakistan, the Caribbean
Enabling environment and portfolio assessment tool
Integrated program of activities, with a joint Bank/IFC/MIGA strategy
Dialogue with clients on private participation in infrastructure
Capacity building
Technical support from the Infrastructure Finance Center of Excellence
Staff training for PPP skills building
Enhanced Support for Private Sector

Engagement in Tier 2 Countries

Incentives for Resource Mobilization
includes all other countries, with Tunisia as a priority
Double the number of PPP projects and advisory services delivered by FY15
PPP Projects (Bank)
PPP Advisory (Bank)
PPP Advisory (IFC)
Baseline
Target
19
18
20
36
40
38
Actions
Commitments and Targets
MIGA
Business Scale-up
Infrastructure scaled up to 50% of portfolio
Funding mobilized from other sources
Funding mobilized from the private sector
Baseline
Target
4000
700
1400
8000
Individual Institutions
5% Business scale-up
Business Scale-up
IFC
Mobilization ratio between 0.75 and 1
Bank
Measure Capital Enabled
Double funding mobilized from other sources, including the private sector, by FY15
Progress on MDG-7, by country
Changes in growth per capita due to changes in growth fundamentals across regions, 2001-5 versus 1991-5
Fiscal Stimulus Packages in Developing and Emerging Economies to counter the global financial crises
Produced by
The World Bank Group

December, 2011
Content and Design by
Nancy Vandycke and Adam Diehl
With Assistance by
Eva Kolker
From Transaction to Transformation
Recent World Bank Research Findings
Source: Cesar Calderon 2009
Source: World Economic Forum, Global Competitiveness Report 2010-2011, www.datapult.info
Overall Quality of Infrastructure
Natural Disasters
Percent of population without access to electricity
Percent of population without access to improved water
Recent World Bank Research Findings
Transportation
Water Supply and
Sanitation
Energy
Information and
Communication Technologies
How does the World Bank see infrastructure?
In China and Brazil, a great deal of infrastructure is financed by national development banks.
In other countries, private investment funds operate with extensive public guarantees.
Multilateral Development Banks - Infrastructure Commitments FY04-15
Upon implementation of SIAP,
highlights included:
Source: Center for Global Development MDG Progress Index, 2011
For more information visit:
HTTP://worldbank.org/infrastructure
1 The Millennium Development Goals Report 2011 (UN Statistics division)
2 Energy for All, World Energy Outlook 2011, International Energy Agency
3 Cesar Calderon and Luis Serven, 2010. Infrastructure in Latin America; Cesar Calderon et al, 2011. Is Infrastructure Capital Productive? A Dynamic Heterogeneous Approach
4 Calderon, 2009. Infrastructure and Growth in Africa
5 Caroline Freund and Elena Ianchovichina, 2012. Infrastructure and Employment Creation in the Middle East and North Africa, World Bank
6 Justin Yifu Lin and Doerte Doemeland , 2011. Beyond Keynesianism: Global Infrastructure Investments in Times of Crisis
7 Laura Tuck et al, 2009. Crisis in LAC: Infrastructure Investment and the Potential for Employment Generation
8 The Millennium Development Goals Report 2011 (UN Statistics division)
9 World Bank, 2011. Global Economic Prospects: Navigating Strong Currents
10 International Road Federation 2010
1
2
1
3
4
5
6
7
Source: Khatiwada, 2009. Stimulus Packages to Counter the Global Economic Crisis: a review, Discussion Paper, ILO.
8
9
10
Source: WHO and UNICEF 2010
Source: IEA World Energy Outlook 2010
Source: Tito Yepes 2010
Source: Private Participation in Infrastructure Advisory Facility
Source: MDB Working Group, G20 High Level Panel on Infrastructure
References
US$ Millions
Infrastructure at the World Bank Group
This learning instrument is intended for World Bank Group Staff and external audiences to explore infrastructure, how it supports prosperity and a world free of poverty, and what the Group commits to do in infrastructure over the next three years. This presentation is a condensed form of the Transformation through Infrastructure - The World Bank Group Infrastructure Strategy, FY12-15.
Full transcript