Infrastructure development is sine qua for the development of a country, which has a "Multiplier Effect " on the economy. This will facilitate the enhancement of the Gross Domestic Product (GDP) and, subsequently, an increase in the per capita income. According to Wikipedia, infrastructure is the set of facilities and systems that serve a country, city, or area and encompass the services and facilities necessary for the economy, households, and firms to function. Infrastructure comprises public or private Public-private partnerships (PPP). Generally, PPPs allow large-scale government projects, such as roads, bridges, or hospitals, to be completed with private funding. Infrastructure is "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions" and maintain the surrounding environment (Wikipedia).
I am presenting a few facts based on the World Bank Group Annual Report “Private Participation in Infrastructure (PPI) 2023”. So, this information is based on secondary as well as authenticated source.
a) PPI investment in 2023 amounted to $86.0 billion, representing 0.2 percent of the GDP of all low- and middle-income countries ($38.8 trillion). Although this represents a slight decrease from $91.3 billion in 2022, total commitments in 2023 still marginally exceeded the previous five-year average (2018-2022) of $85.5 billion. In terms of number of projects, 2023 saw a notable jump from 260 projects in 2022 to 322 projects in 2023, which was also an increase from the previous five-year average of 305 projects.
b) In 2023, the number of countries with PPI investment commitments increased to 68, surpassing the 54 countries reported in 2022 and the previous five-year average of 50 (2018-2022). Since the pandemic, there has been a continuous increase in the number of countries reporting PPI transactions. Notably, Guinea Bissau, Libya, Papua New Guinea, São Tomé and Príncipe, and Suriname recorded their first PPI investment transactions in more than a decade. Guinea Bissau, Libya, and Papua New Guinea, which are Fragile, Conflict-affected, and Vulnerable (FCV) countries, reported one PPI project each in 2023.
c) Regarding the number of projects, 52 percent of PPI projects were primarily sponsored by foreign entities, marking an increase from the 44 percent recorded in 2022 (Please see Figure 2). This is the first time since the pandemic that foreign-sponsored PPI Projects have outnumbered the local ones. In terms of investment volume, 26 percent of the investments came from foreign sponsors, which is consistent with that of previous years. Foreign share of PPI investments is smaller (compared to foreign share by number of projects) owing to a significant portion of locally sponsored PPI projects, particularly in China, exceeding the billion-dollar mark in terms of investment volume. Excluding China, 50 percent of PPI investments are from foreign sponsors.
d) The regions with the highest contribution from foreign investors in 2023 were the Middle East and North Africa (MENA) and Sub-Saharan Africa (SSA). In 2023, all 14 PPI projects in the MENA region were sponsored by foreign companies, while in SSA, 83 percent of all PPI projects were sponsored by foreign companies. Conversely, East Asia and Pacific (EAP) and Latin America and the Caribbean (LAC) were the PRIVATE PARTICIPATION IN INFRASTRUCTURE (PPI) 2023 ANNUAL REPORT Figure 2: Proportion of International to Local Sponsors in Low- and Mid- 2 income Countries with Private Investment Commitments, 2023 Local France United States United Arab Emirates China Spain Thailand Hong Kong Colombia India Bahrain Rest Foreign 6 regions with most projects being sponsored by local companies. In EAP, only one-fourth of its PPI projects were funded by foreign companies, while in LAC, the figure stood at 41 percent.
e) Amongst foreign sponsors of PPI projects, France was the leading country, sponsoring the most significant volume of projects with a total investment of $2.1 billion across 14 projects. It was followed by the United States, with investments amounting to $2.0 billion across 14 projects, and the United Arab Emirates (UAE), with $1.9 billion invested across 10 projects. SUEZ/Engie from France undertook several water and energy projects in the MENA region, while EDF Energies Nouvelles was prominent in power generation projects in SSA.
Since we are entering the New Year 2025, I hope all the world's people will enjoy economic prosperity and, in turn, will lead a blissful life.
Prof Shankar Chatterjee, Hyderabad
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