The main objective of this study is to offer an overall picture of support by multilateral and bilateral development partners to development country infrastructure. By presenting an overview of the scale, distribution, and modality of development co-operation for infrastructure, the report is expected to contribute to discussions and further research in international fora on how to fill the financing gap, particularly by mobilising the private sector. However, the report does not generally make assessments against development objectives nor provide policy recommendations.

Infrastructure – and specifically, water and sanitation, transport, energy and communications – is fundamental in achieving economic growth, poverty reduction and human development. This is all the more relevant as production systems are increasingly taking place across continents, which requires scaling up infrastructure to connect developing countries with global value chains that could spur economic growth. However, with developing country populations expected to grow continuously in the decades ahead – and with high rates of urbanisation – there is wide recognition that current resources are insufficient to fill the infrastructure investment gaps of these countries.

Furthermore, the challenge will not only be supplying quantity, but also ensuring quality, as the threats posed by climate change necessitate the integration and promotion of low-carbon and climate-resilient technologies. This aspect is being highlighted in the United Nation’s Sustainable Developing Goals (SDGs) which point to the need of providing infrastructure that generates economic growth and human well-being, while mitigating and adapting to climate change. Ambitious goals have been set that will require significant efforts from all relevant stakeholders, notably governments, development partners and the private sector.

In particular, with investment needs in infrastructure at the scale of trillions in the decades ahead, mobilising private resources represents an important avenue to finance the investment gap. Although expenditures from the public sector will remain key, private participation has the potential to maximise available resources as well as provide expertise and innovation for development. At the same time, given the intrinsic risks of infrastructure investments, tighter global financial regulation, and poor enabling environment in developing countries, innovative strategies need to be devised in order to boost the contribution of the private sector.

The Group of Twenty (G20) is therefore increasingly paying attention to leveraging more resources to finance infrastructure, including for developing countries, through the Investment and Infrastructure Working Group (IIWG) and the Development Working Group (DWG). Both groups have been exploring modalities to foster investment by addressing bottlenecks at the upstream and downstream levels. The IIWG has particularly focused on identifying strategies to leverage the significant resources of institutional investors, such as pension funds and sovereign wealth funds. The Turkish Presidency in 2015 is notably working on the enabling environment for private sector participation in infrastructure through the DWG, with a special focus on Low Income Developing Countries. Moreover, to reduce investment bottlenecks, the G20 Australian Presidency in 2014 created the new Global Infrastructure Hub to act as a platform for mobilising public and private finance for infrastructure, including in developing countries.

To contribute to these global efforts, this report maps, measures and describes the activities of major development partners in financing infrastructure of developing countries, namely Official Development Assistance (ODA)-eligible recipient countries. While it gives a general overview of their infrastructure financing, it also focuses on development co-operation that concern mobilising private sector resources. The report includes data on the 50 major development partners that report to the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) at the activity level and in a harmonised manner. Furthermore, it provides estimates of official support by emerging economies that are playing key roles in development co-operation for infrastructure in other developing countries. The data mainly focus on Official Development Finance (ODF) of 2013 by bilateral and multilateral development partners, mostly in disbursements instead of commitments.

Key findings for 2013 include the following:

• Total infrastructure investments in developing countries amounted to roughly USD 1 trillion a year, of which more than half was financed by developing country governments and a third by the private sector.

• Official development partners generally financed 6-7% of infrastructure investments, which amounted to about USD 60 billion.

• Of the development partner financing, 46% was from bilaterals and 54% from multilaterals.

• Among development partners, China, India, Turkey and Arab partners provided about 13% of total official support for infrastructure through south-south development co-operation.

• Among those reporting to the DAC, the top 10 development partners, which included multilaterals, G7 countries and Korea, provided over 80% of ODF to infrastructure.

• Asia received half of ODF for infrastructure, Africa 28%, Americas 12% and Europe 10%.

• Lower Middle Income Countries received 43% of ODF to infrastructure, Upper Middle Income Countries 33%, and Low Income Countries 24%.

• Transport received 45% of ODF to infrastructure, followed by energy at 32%, water and sanitation at 19%, and communications at 4%.

• Support for green infrastructure was 37% of ODF to infrastructure.

• USD 34 billion was provided by development partners to support the enabling environment, both within infrastructure sectors and beyond for the general investment climate.

• Development Finance Institutions provided equity and loans of USD 5.9 billion to the private sector for infrastructure, mostly in UMICs.

• Development partners are also supporting Public-Private Initiatives such as Project Preparation Facilities, Project Facilitations Platforms and Blended Finance operations to leverage private investment for infrastructure.

This report presents comprehensive and generally harmonised data on financing for infrastructure by official development partners, mostly based on annual disbursements. By giving an overview of infrastructure financing comparable with annual expenditures or financing requirements for infrastructure, the expectation is to facilitate discussions on a more effective use of scarce public funds in filling the large infrastructure gap, which is crucial for developing countries to achieve sustainable development.

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This report was received by the G20 Finance Ministers and Central Bank Governors at their meeting of 4-5 September in Ankara, Turkey.