Interview with the Global Infrastructure Hub's Marie Lam-Frendo

How does the Global Infrastructure Hub work and what are your priorities for the coming years?

The GI Hub is a not-for-profit organisation that was formed by the G20 with a mandate to advance the delivery of sustainable, resilient, and inclusive infrastructure. We have a particular focus on helping mobilise private investment in infrastructure and forming collaborations across the public and private sectors.

Our team of infrastructure specialists and economists produces data and tools, conducts capacity-building and knowledge-sharing programs, and advances reforms in line with our mandate.

Some of our current priorities are to contribute to:

• Mobilising private capital, by filling data gaps on ESG, for example, and advancing reforms to banking regulations.
• Maximising infrastructure investment, for example by tracking public investment and the outcomes it is targeting, and by producing knowledge tools and programs that create capacity in the infrastructure sector to optimise the quality and outcomes of infrastructure planned and delivered.
• Increasing innovation and the adoption of technology through thought leadership initiatives and our work on InfraTech (infrastructure technology).
• Supporting the climate transition with targeted knowledge tools, consultations, and programs for governments and the private sector.  

India has made ‘One Earth, One Family, One Future’ the mission statement for its G20 presidency – what role does infrastructure play in that? 

Infrastructure will remain the backbone of our economies, and a key component for addressing the climate and inequality crises for decades to come. Yet, it is still developed using many of the planning, design, and financing approaches adopted in the middle of the last century. This is a problem. The G20, as the premier international economic cooperation forum, has a central role in resetting this approach and ensuring infrastructure is developed to support the transition towards net zero (one earth) and a more inclusive economy with less inequality (one family), while fostering the use of technologies to lesser infrastructure costs and optimise its use and maintenance (one future).

In the past GI Hub has published analysis of current infrastructure investment levels against the levels needed to attain net zero networks worldwide – where are we on that journey? 

We have recently released two pieces of work that provide new information on this journey.

The first is our InfraTracker of public investment in infrastructure developed for the G20 initially and now freely available, which tracks how G20 central governments are investing in infrastructure, by sector, and how these investments are aligned with transformative outcomes like low-carbon transition and others. In terms of the climate journey, InfraTracker revealed a few interesting findings. One headline is that 39% of G20 central government investment in infrastructure is targeting either environmental sustainability or resilience. The transport and social sectors made up around half of this investment (24% and 21% respectively). It’s important to note the significant and ongoing investment gap to tackle the climate transition.

The second is our work on Transition Pathways for Sustainable Infrastructure to achieve climate targets and SDGs, which consists of research into how governments are developing infrastructure to meet these goals as well as broad consultations with the public and private sectors to support the achievement of these objectives. A headline finding of this work is that G20 economies will invest $11.5trn in infrastructure aligned to the climate transition and SDGs between 2020 and 2030, and it will focus on 15 broad transition pathways.

The team also continues to include analyses of green investment in our Infrastructure Monitor report on private investment in infrastructure. The most recent report found ‘green’ private investment reached a record high, but more private investment is needed – particularly outside renewables, as noted above – for the green transition.

What’s the one trend that infrastructure leaders need to be alert to in the coming years?

It’s difficult to choose just one, as so many are inter-related. But really, everyone should realise that private investment in infrastructure has been mostly flat for eight years, and there are a few things coming up that could boost it, and a few things that could drive it down further.

The MDB reforms being considered as part of the Capital Adequacy Frameworks review are key, given the role of MDBs in helping attract private capital and acting as financiers of infrastructure in middle- and low-income countries. But these reforms are not enough on their own. Globally, we need reforms that focus on strengthening the enabling environment, and this is true in advanced economies as well as in EMDEs.

Better and more project preparation has great potential to increase private participation, but there has been very little progress in improving project preparation, despite it being a focus for many years. More than 300 project preparation facilities exist in emerging markets, but still very few projects are getting prepared. It’s time for a rethink and a reset.

The other item that is important to mention is the impact of the Basel Framework not distinctly recognising infrastructure as an asset class. Basel III creates an unfavourable regulatory environment for infrastructure that puts us at risk of missing critical debt providers, especially in middle- and low-income countries where capital markets are typically weak. Basel IV will reinforce and accelerate this trend. The GI Hub is working with a coalition of globally leading banks to advise on this issue and develop proposals to submit to the G20 and regulators.