Mobilising Private Finance for Sustainable Economic Infrastructure (MPF-Infra)

Principal Investigator

• Professor Ulrich Volz (SOAS)
• Professor Antonio Andreoni (SOAS)

Co-Investigators

• Dr Kate Bayliss
• Yamika Ketu
• Dr Yuen Lo
• Dr Adria Rius
• Dr Sophie van Huellen

Funder

• GIZ on behalf of the Foreign, Commonwealth & Development Office

Duration

• 2026-2027

Despite repeated international calls since 2015, private finance mobilisation for infrastructure in low and lower-middle income countries (LLMICs) has failed to meet ambitions. Between 2015 and 2018, 10% of infrastructure financing in sub-Saharan Africa came from the private sector – levels that have remained largely stable over the past decade. In Asia, private infrastructure financing stands at around 0.2% of GDP. Private capital mobilisation by multilateral development banks and development finance institutions was $71 billion in 2022, unchanged from 2016.

There is theoretically potential for a significant increase in private finance for commercially viable infrastructure projects. However, private investors are deterred by considerable risks in LLMICs, including political risk (asset expropriation), macroeconomic risk (exchange rate volatility), regulatory risk (ex-post policy changes), and project-specific challenges including revenue reliability, off-taker creditworthiness, and connecting infrastructure gaps.

This research project on Mobilising Private Finance for Sustainable Economic Infrastructure (MPF-Infra) investigates bottlenecks to mobilising private capital for sustainable economic infrastructure investments in LLMICs and seeks to identify and develop viable approaches to overcoming these. The project will put particular focus on demand-led approaches – attuned to institutional realities, development strategies, and distributional impacts – to ensure that private finance for transport supports inclusive, resilient and low-carbon structural transformation that benefits local populations.

The project is structured around four workstreams:

• Workstream 1: Sources of finance and challenges to investment
• Workstream 2: Drivers of cost of capital
• Workstream 3.1: Demand for finance – sustainable transport
• Workstream 3.2: Demand for finance – climate-resilient Infrastructure

This research project is conducted in collaboration with researchers from the University of Oxford, University College London, and ODI Global as part of the FCDO-funded Research on Infrastructure in Developing Economies (RIDE) platform.

Header image credit: Hendrik Cornelissen via Unsplash.