Emerging Market Works Need Seen at Annual $1.5 Trillion

Emerging-market nations need as much as $1.5 trillion a year for infrastructure projects, a “shocking” bill that requires governments to rely more on private investors, the World Bank says.

More than 5 million people a month are moving into urban areas in the developing world, doubling the population of those cities by 2030, World Bank Managing Director Bertrand Badre said today in Montreal. Countries such as China are dealing with an aging society and sub-Saharan Africa must invest more to account for population growth, he said.

“Cities offer prosperity, that’s where people hope to find jobs, schools and opportunities of all kinds,” Badre said at the Conference de Montreal. “Driven by this urbanization but more than urbanization, the demand for infrastructure remains shocking.”

As much as $1.5 trillion in annual investment is needed until 2020, Badre said. Private investment in this area has averaged about $180 billion over the last few years, a figure that may rise as banks seek investments with less risk and a longer time frame after the global financial crisis, he said.

“We will need to create an asset class with its well-identified risk and return features” to generate the private investment, Badre said. “Public funding alone isn’t sufficient.”

Greater investment may also curb poverty in developing and emerging-market nations, he said, noting that 2.8 billion people still cook food with “solid fuels, like wood,” 1.2 billion people have no electricity, and 1 billion people live more than 2 kilometers away from an all-weather road.

Investor Interest

Canadian investors are showing interest in these kinds of infrastructure projects, Badre said, citing visits yesterday with investors in Toronto and Montreal. He didn’t identify specific investors or projects.

Badre spoke on a panel with Burkina Faso Prime Minister Luc Adolphe Tiao. “The growth and prosperity we have seen can’t continue in this manner unless the supply and demand for infrastructure is satisfied,” Tiao said.

Sub-Saharan African nations are growing at a rate of about 5 percent a year, the second-best regional performance after Asia, International Monetary Fund Director Christine Lagarde said in a speech to the conference yesterday.

“With large untapped potential -— both natural and human - — the forecast is for this growth to continue,” Lagarde said, adding that some governments must guard against building up large debts.

Australia, which holds the leadership of the Group of 20 nations this year, is promoting private-sector investment in public infrastructure. Australia hosts a meeting of G-20 leaders in Brisbane in November.

To contact the reporter on this story: Greg Quinn in Montreal at gquinn1@bloomberg.net

To contact the editors responsible for this story: Paul Badertscher at pbadertscher@bloomberg.net Mark Rohner

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