Private infrastructure financing in developing countries: Five challenges, five solutions

This paper presents challenges in the financing of infrastructure in developing countries and suggests five solutions: a) Re-orientate international financial institutions (IFIs) to adopt ‘originate-to-distribute’ business models and focus on early-stage financing and project development; b) Deliver more ‘bankable’ projects by scaling up successful project-preparation facilities and by developing capacity for ‘state-of-the art’ national infrastructure planning and execution; c) Develop syndication and securitisation, using ‘mega-funds’ as a key financing model to crowd in institutional investors; d) Deliver affordable, more flexible and longer-tenure foreign exchange (FX) and political risk hedging by scaling up existing successful IFI seed-funded providers; and e) Deepen pension and life-insurance markets in domestic economies to deliver local- currency financing of infrastructure.