The Public-Private Infrastructure Advisory Facility6 (PPIAF) has identified developing country investors as an emerging, but major, source of investment finance for infrastructure projects with private participation. For instance in 1998-2004, these investors accounted for more investment finance in transport across developing regions than did investors from developed countries. The local and regional players are also taking on greater managerial and operational roles.
| Table 1: Investment in Infrastructure Projects with Private Participation in Developing Countries, by Sector and Region 1995-2004 ($ billion) | ||||||||||
|
| 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 |
| Sector |
|
|
|
|
|
|
|
|
|
|
| Energy | 21.7 | 30.0 | 46.2 | 29.2 | 21.1 | 27.4 | 15.6 | 19.2 | 17.6 | 12.7 |
| Electricity | 18.2 | 27.4 | 43.3 | 23.3 | 18.3 | 24.9 | 14.1 | 10.2 | 14.7 | 12.1 |
| Natural Gas | 3.6 | 2.6 | 3.0 | 6.1 | 2.7 | 2.5 | 1.5 | 8.9 | 2.9 | 0.6 |
| Telecommunications | 17.2 | 24.6 | 39.9 | 51.8 | 36.1 | 48.9 | 45.2 | 33.0 | 33.2 | 45.0 |
| Transport | 8.2 | 15.7 | 19.4 | 17.5 | 8.2 | 9.1 | 8.1 | 3.6 | 5.0 | 4.5 |
| Water and Sewage | 1.5 | 1.7 | 8.4 | 2.2 | 6.5 | 4.8 | 2.4 | 2.0 | 1.4 | 1.9 |
| Region |
|
|
|
|
|
|
|
|
|
|
| East Asia and Pacific | 18.8 | 28.0 | 34.9 | 9.7 | 13.1 | 14.2 | 11.0 | 9.7 | 13.0 | 8.7 |
| Europe and Central Asia | 8.1 | 10.5 | 14.2 | 12.1 | 9.4 | 25.0 | 12.3 | 16.8 | 12.2 | 12.5 |
| Latin America and the Caribbean | 17.1 | 25.8 | 49.3 | 71.2 | 37.2 | 38.7 | 33.7 | 19.6 | 15.8 | 17.4 |
| Middle East and North Africa | 0.1 | 0.3 | 5.1 | 3.1 | 3.0 | 4.1 | 4.4 | 1.6 | 6.2 | 10.9 |
| South Asia | 3.8 | 5.8 | 6.3 | 2.3 | 4.6 | 4.4 | 4.6 | 6.0 | 3.4 | 9.6 |
| Sub-Saharan Africa | 0.8 | 1.7 | 4.3 | 2.5 | 4.6 | 3.7 | 5.3 | 4.2 | 6.5 | 4.9 |
| Total | 48.7 | 72.1 | 114.1 | 100.9 | 72.0 | 90.2 | 71.3 | 57.8 | 57.0 | 64.1 |
| Note: Date refers to projects reaching financial closure in 1990-2004. (World Bank and Public-Private Infrastructure Advisory Facility [PPIAF], Private Participation in Infrastructure Project Database.) Source: Izaguirre, Ada Karina. 2005. Private Infrastructure: Emerging Market Sponsors Dominate Private Flows. Public Policy for the Private Sector Note No. 299. Washington, DC: World Bank. | ||||||||||
Developing country investors can be anticipated to take on even greater shares of infrastructure investments as developing market capital markets deepen and expand, as the investors/operators develop more expertise, and as governments recognize the advantages (including a better understanding of social, political, and economic risks) of these firms and structure transactions (particularly prequalification and evaluation criteria) to be more inclusive of local participants.
According to PPIAF's analysis, developing country investors contributed more than half the private investment in concessions (54%) in 1998-2004, slightly less than half in greenfield projects (44%), and a smaller share in divestitures (30%). Developing country investors accounted for as much as 52% of the private investment in transport and 46% in telecommunications in 1998-2004, but only about 27% in energy and 19% in water.
South Asia had the largest share of domestic investment at 55% of the region's total investment in 1998-2004. Local investors were also active in East Asia and Pacific, accounting for 42% of private investment in 1998-2004 and acting as the main sponsors in 36% of projects. Telecommunications was again a predominant object of investment (local investors invested 65%) with transport at 48%.