Estimates indicate that global infrastructure needs will reach almost USD 70 trillion by 2035, and the world could face a USD 5.5 trillion gap, compromising economic growth and population’s wellbeing. Also, the lack of access to affordable housing will affect more than 1.6 billion people by 2025, mostly in major cities. This gap in infrastructure investment is uneven around the world, especially when considering the urgent needs that underserved regions face in terms of basic economic and social infrastructure. Moreover, financial markets are in constant evolution and require regulations to provide a stable environment for incentivizing growth and investment.
To close this investment gap, world leaders need to increase their efforts towards sustainable and resilient infrastructure investment, helping to also meet the Sustainable Development Goals (SDGs) while considering climate change adaptation and mitigation.
Closing the infrastructure gap will entail facilitating public and private investment in infrastructure through new and improved investment vehicles as well as strengthening the global financial sector. To this effect, the B20 encourages G20 leaders to pursue the following four actionable pillars:
1: Advancing the implementation of infrastructure as an asset class by improving project bankability, supporting the creation of financial vehicles for infrastructure, and enhancing the role of Multilateral Development Banks
We advise G20 leaders to adopt market-oriented pipelines in order to create bankable and investable infrastructure assets; and to keep improving the project pipeline to bridge the gap between national planning priorities and private investor’s needs. Also, we prompt the G20 to standardize the risk/return profiles of infrastructure investments, support the creation of marketplaces, and incentivize the creation of financial vehicles that can support the development of infrastructure as an asset class. The G20 should enhance the role of Multilateral Development Banks (MDBs) to support riskier infrastructure investments, project preparation
2: Increasing the impact of Public-Private Partnerships by clearly establishing their role, implementing competitive procurement mechanisms and promoting
We encourage G20 leaders to clearly establish the role of Public-Private Partnerships (PPPs), to develop a competitive governance framework for, PPPs and to promote PPPs
3: Narrowing the affordable housing gap by setting policy targets, increasing resource efficiency and expanding financial access for developers and buyers
We recommend G20 leaders to define affordability thresholds and promote a ladder approach for housing development. Moreover, G20 leaders should expand financing to reduce costs for home buyers and developers while supporting a healthy rental market. G20 leaders should also implement financing policies that expand the housing market by providing adequate instruments for developers and home buyers.
4: Ensuring consistency in financial regulation that fosters growth, stability
We encourage G20 leaders to enhance cross-border financial regulation consistency and to promote regulatory consistency to reduce compliance arbitrage costs by ensuring a proper dialogue with stakeholders in the implementation phase. Also, G20 leaders should encourage sustainable development financing, since the development of quality infrastructure investment financing runs parallel to the development of a suitable financial system for sustainable development.