OXIIC 1st Global Infrastructure Conference

Infrastructure Investment in Emerging Markets and Developing Economies

Systems-Thinking for New Institutions and Global Challenges

 

2 July 2015

St. Catherine’s College, University of Oxford

 

 

Conference Video

Conference Report

OXIIC Global Infrastructure Conference Report 2015

Conference Presentation Slides*

1) Session1_Hülya Paşaoğulları

2) Session1_Bernard Sheahan

3) Session1_Hisaka Kimura

4) Session1_Jean-Marc Aboussouan

5) Session1_Alex Wong

6) Session3_Fiona Stewart

7) Session3_Raj Kannan

8) Session4_Jim Hall

9) Session4_Christopher Kaminker

Background

 

Emerging Markets and Developing Economies (EMDEs) are facing a massive infrastructure deficit. Today 1.2 billion people live without electricity, 60 per cent of the world’s population lack internet access and at least 748 million people lack access to safe drinking water. According to the estimation of World Bank[1], an additional US$1 trillion to US$1.5 trillion of annual investment in low and middle income countries will be required through 2020 to meet the infrastructure demand from industry and households.

Faced with a large infrastructure deficit and tight public finances, governments in EMDEs have no way of closing the financing gap using public funds alone. Attracting private capital to complement public funds is vital to providing governments with the long-term liquidity they need for infrastructure. However, the real challenge is not simply a matter of money but a lack of bankable projects. Therefore, reinvigorating the supply of infrastructure in EMDEs requires work to establish a more supportive enabling environment for investment. In this context, new multilateral financial institutions such as the World Bank’s Global Infrastructure Facility (GIF), Global Infrastructure Hub (GIH), New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB) have been created successively to mobilise the private sector and institutional investors for infrastructure investment.

Further, whilst unlocking funds from different sources such as those in the private sector is an area of priority for financing the infrastructure deficit faced by EMDEs, it must be recognised that simply increasing the amount invested in infrastructure may not deliver the potential to foster strong, sustainable and balanced growth. Infrastructure investment strategies need to take into account that infrastructure assets are interdependent and constitute a wider system; therefore the conventional project-centric approach adopted by many development agencies may lack the “systems-thinking” that is needed for ensuring the long-term development of EMDEs.

In these aspects, academia has a lot to share with new multilateral financial institutions – either from engaging with institutional investors for the new era of infrastructure investing[2], or from developing an integrated ‘system-of-systems’ strategies for planning infrastructure investment in the long term[3].

The workshop aims to bring together leading experts from international organisations, academia and financial institutions to discuss challenges and solutions to mobilising infrastructure investment in EMDEs. In particular, it focuses on:

i) How multilateral financial institutions can function effectively as platforms to mobilise the private sector and institutional investors for infrastructure investment in EMDEs;

ii) How we can move from projects-thinking to systems-thinking for infrastructure, and fully appraise the macro-economic, societal and environmental benefits and impacts of these investment pathways.

Conference Agenda

 

09:00                         Registration

10:00                         Welcome and Opening Remarks

Professor Gordon L. Clark

Director, Smith School of Enterprise and the Environment, University of Oxford

10:15 – 11:45           Session 1: Infrastructure Investment in Emerging Markets and Developing Economies

Emerging markets and developing economies (EMDEs) are facing a massive infrastructure deficit. In these economies, the number of people living in cities is expected to double by 2030, expanding the urban population by two billion. With mass urban migration comes rising demand for basic services such as water, power and transport. EMDEs now spend about US$1 trillion a year on infrastructure, but maintaining current growth rates and meeting future demands would require investment of at least an estimated addition US$1 trillion a year through to 2020. This session aims to examine and take stock of pertinent infrastructure investment issues in EMDEs: What are the key challenges and barriers to investment? What successful approaches have been developed to overcome challenges and barriers? What lessons have been learned from unsuccessful initiatives? What prospects are there for cooperation and collaboration moving forwards?

Session Chair and Commentator:

Marjory-Anne Bromhead

Natural Resources and Climate Change Adviser; Former Sector Manager, World Bank

Speakers:

Hülya Paşaoğulları

Head, Public Private Partnership Department, G20 Investment and Infrastructure Working Group, Turkish Treasury

Bernard Sheahan

Director, Infrastructure & Natural Resources, International Finance Corporation

Hisaka Kimura

Unit Head, Private Sector Infrastructure Finance, East Asia, Asian Development Bank

Jean-Marc Aboussouan

Chief, Infrastructure & Energy Division, Inter-American Development Bank

Alex Wong

Head of Global Challenge Partnerships and Member of the Executive Committee, World Economic Forum

12:00 – 12:30                   Photo Session

 

12:45 – 13:45                   Lunch

 

14:00 – 15:00                   Session 2: Keynote Address: “Infrastructure Investment by Multilateral Financial Institutions”

Reinvigorating the supply of infrastructure in EMDEs requires work to establish a more supportive enabling environment for infrastructure investment. In this context, the Global Infrastructure Facility (GIF), Global Infrastructure Hub (GIH), New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB) have been created successively to facilitate the preparation and structuring of complex infrastructure Public-Private Partnerships in EMDEs. What are the different mandates of these new institutions and how will they prepare bankable projects for the private sector and institutional investors in practice? How will they guarantee the quality of the infrastructure delivered to foster strong, sustainable and balanced growth for EMDEs?

Session Chair and Commentator:

Professor Gordon L. Clark

Director, Smith School of Enterprise and the Environment, University of Oxford

Keynote Speaker:

Huan Chen

Deputy Head of Working Group for establishment of Asian Infrastructure Investment Bank

Chief Officer and Team Coordinator of THE MULTILATERAL INTERIM SECRETARIAT OF AIIB

 

15:00 – 15:30                   Coffee Break

 

15:40 – 17:10                   Session 3: Public-Private Partnership in Infrastructure – Engaging Institutional Investors

The demand for infrastructure investment has gone beyond the fiscal capacity of the public sector. Public-Private Partnerships (PPPs) have the potential to provide efficiencies and global best practices through market incentives that attract world-class participants. In particular, institutional investors such as pension funds, insurance companies and sovereign wealth funds with long-dated liabilities have the potential to play a larger role in markets for long-term, illiquid assets such as infrastructure. However, the real challenge is not simply a matter of money but a lack of bankable projects. What are the prospects for the global PPP infrastructure market? What has been learned from previous PPPs in global infrastructure market? What are the major concerns of institutional investors when they face opportunities for infrastructure investment? Which areas can the multilateral financial institutions bring into play for facilitating PPP infrastructure investment in the EMDEs?

Session Chair and Commentator:

John Bromley

Investment Manager, L&G Capital

Speakers:

Reyaz A. Ahmad

Head and Chief Investment Officer, IFC Catalyst Fund

Professor Gordon L. Clark

Director, Smith School of Enterprise and the Environment, University of Oxford

Fiona Stewart

Senior Financial Sector Specialist, World Bank

Raj Kannan

President & Managing Director, Tusk Advisory Pte Ltd

 

17:10 – 17:40          Coffee Break

 

17:45 – 19:15          Session 4: Long-term Planning and Systems Thinking in Infrastructure Investment

As much of the infrastructure is yet to be financed and built, this “deficit” presents an unprecedented opportunity for EMDEs to plan for an efficient and sustainable infrastructure system for the long-term. Since resources are limited and infrastructure assets are interdependent, efficiency and sustainability can only be guaranteed when we understand how infrastructure projects operate as “systems” and deliver value to the economy; when we shift from simply increasing the “quantity” of potentially wasteful infrastructure investment to ensuring “quality” infrastructure that is low-carbon and climate-resilient; when we can apply the philosophy of impact investing into responsible investment in infrastructure. In year when sustainable development goals and a global climate change deal will be negotiated, key questions to examine will be: How do infrastructure projects operate as systems and deliver value to the economy and society? How can we evolve from a “project-to-project” approach to a more systematic model of investment? How do we design and appraise investment pathways so that long-term risks such as climate change can be managed and so that private capital can find attractive investment propositions?

Session Chair and Commentator:

The Rt. Hon. Simon Upton

Director, Environment Directorate, OECD

Speakers:

Professor Jim Hall

Director, Environment Change Institute, University of Oxford

Jonathan Maxwell

Co-Founder & CEO, Sustainable Development Capital LLP

Atif Ansar

Programme Director of the MSc in Major Programme Management (MMPM), Saïd Business School, University of Oxford

Christopher Kaminker

Economist/Project Manager, Long Term Investment, Environment Directorate, OECD

 
19:30 – 20:00                  Drink Reception

 

20:00 – 22:00                  Dinner – Hosted by Professor Gordon L. Clark and Professor Jim Hall

 

[1] http://www.worldbank.org/en/topic/publicprivatepartnerships/brief/global-infrastructure-facility

[2] Clark, G.L., Monk, A., Orr, R. and Scott, W. (2012) The New Era of Infrastructure Investing. Pensions, 17: 103-111.

[3] Hickford, A.J., Nicholls, R.J., Otto, A., Hall, J.W., Blainey, S.P., Tran, M. and Baruah, P. (2015) Creating an ensemble of future strategies for national infrastructure provision. Futures, 66: 13-24.

* All materials in the OXIIC website have been uploaded with the consent of the presenters.