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Innovative Approach Aims to Unleash Private Finance for Sustainable Infrastructure in Developing Countries

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New York, 22 September – An innovative initiative that aims to dramatically increase finance for sustainable development infrastructure announced that it was entering into a new, and pivotal phase this week, it was announced at a press conference at the United Nations today in the run-up to the Climate Action Summit.

The Initiative on Closing the Investment Gap for Sustainable Infrastructure (the CIG Initiative) announced the launch of the third phase of its mission to match private financing with specific infrastructure initiatives in developing countries.

Building on its 2018 pilot phase to pique the interest of private investors in such projects, Phase 2 in 2019 helped nine developing countries partner with private investors and other stakeholders to develop thirteen project portfolios worth USD 4.27 billion, all of which advance the Nationally Determined Contributions (NDCs) and Sustainable Development priorities of these countries. Over fifty private sector partners are engaged in the development of the projects, which are currently moving through the process to reach financial close.

Luis Alfonso De Alba, the UN Secretary-General’s Special Envoy for the 2019 Climate Action Summit, recalled: “The Secretary-General has called on leaders to come to the Climate Action Summit with plans to accelerate action to secure our path towards a 1.5degree world by the end of this century. Unleashing finance is critical to accelerating this transition. The CIG Initiative works at the heart of this challenge, at the nexus of financing, development, and sustainability, and is helping create the new reality of large-scale private finance for nationally led sustainable infrastructure.”

The projects include a water system and a pair of grid-tied solar power plants in Bangladesh; a remote solar farm serving a copper mine and an indigenous community in Chile; an electric bus conversion program and district cooling in Colombia; a program to green dry ports in Egypt; wind farms and solar projects in Ethiopia; green shipping in Fiji; a special economic zone and a wind farm in Jamaica; geothermal energy in Kenya; and a hydropower plant in Vietnam.

Dr. Irving Mintzer, Director of the CIG Initiative, said developing countries were the driving force for the initiative. “This is an exciting and necessary next step for the CIG initiative. As we hurtle towards the first review of the NDCs under the Paris Agreement, the need for large-scale funding on the ground is becoming ever more urgent. This developing country-led initiative helps them build the capacity to develop project portfolios that are attractive to private capital. Through this process, we are helping deliver the transformative flows of finance needed.”

Phase 3 of the CIG Initiative will take this approach to scale, increasing the number of countries, investors and projects, and helping create a “new normal” ecosystem of large-scale private investment for sustainable infrastructure in wide-ranging areas such as energy, transport and resilience across the Global South. Importantly, Phase 3 will also prioritize gender equality concerns. The governments of Denmark and Canada will continue to support the initiative in its next phase.

H.E. Ms. Kamina Johnson-Smith, Foreign Minister of Jamaica, showcased Jamaica’s projects during the UN General Assembly high-level week in New York. She observed: “As co-chair of the Group of Friends on Sustainable Development Financing as well as co-lead on Climate Finance and Carbon Pricing for the Secretary-General’s 2019 Climate Action Summit, we believe that the CIG approach, when scaled up, will be essential for unleashing flows of private investment to support the implementation of NDCs and SDGs in developing countries.”

H.E. Dr. Sahar Nasr, Minister of Investment and International Cooperation of Egypt, concurred on the value of the CIG Initiative: “Achieving inclusive and sustainable growth would require partnership with the private sector and international financial institutions. The CIG Initiative has facilitated discussions between the Government of Egypt and several IFIs in securing a grant for the continued development of the dry ports projects in Egypt and integrating low-carbon considerations and green elements into these projects. Dry ports are located close to the investment zones, hosting industries, which is creating jobs and enhancing productivity, promoting trade and contributing to economic growth. We also look forward to additional opportunities to use the CIG approach in order to attract further private investment and mainstream sustainable infrastructure development in Egypt.”

Ms. Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital, said that through these projects, the private sector has also seen the value of the CIG Initiative. "The CIG Initiative fills a void in the market, stimulating private finance for climate action. As a result of our engagement with this initiative, we have seen a significant improvement in the viability of project proposals from the partner countries. We look forward to reaching financial close on a number of important projects during Phase 3.”

H.E. Mr. Ole Thonke, Ambassador, Sustainable Growth and Employment, Ministry of Foreign Affairs of Denmark, reiterated Denmark’s support: “The CIG Initiative is a new and hands-on model to deal with the major bottlenecks the world faces in making low-carbon infrastructure investments. We have been happy with the collaboration and look forward to seeing the investments unfold at country level.”

H.E. Mr. Marc-André Blanchard, Permanent Representative of Canada to the United Nations and Co-Chair of the Group of Friends of SDG Financing, said: “Linking global capital to local projects is key. Mobilizing investment for sustainable infrastructure at scale requires careful, coordinated capacity-building among all stakeholders. This is why H.E. Courtenay Rattray, the Permanent Representative of Jamaica, and myself, the co-chairs of the Group of Friends of SDG Financing, believe in the power of the CIG initiative as it tackles this challenge head-on in its next phase.”

During phase 3, the CIG Initiative will continue to be hosted at the Center for Global Sustainability at the University of Maryland School of Public Policy. Dr. Nathan Hultman, Director of the Center for Global Sustainability (CGS), welcomed the new phase of the initiative: “CGS is excited to partner with this network of diverse actors and supporters in their efforts to channel new capital at scale to worthy climate and energy projects where they are most needed - and with its particular emphasis on gender equality in sustainable development and climate finance, this work advances our mission of integrating robust analysis with diverse and collaborative climate action.”

The CIG initiative is a multi-stakeholder initiative that aims to correct a market failure that challenges the achievement of the Sustainable Development Goals and the Paris Agreement on Climate Change: developing countries with sound infrastructure project proposals and global investors cannot find each other. The mission of CIG is to apply a developing country-led, facilitated approach to close this investment gap. This approach involves the governments of developing countries working with investors and financial sector representatives to prepare key projects so that they are well-aligned with the criteria of private capital and structured to fit into the portfolios of institutional investors. This approach minimizes demand for increasingly scarce public capital, using it sparingly to de-risk projects and to mobilize private sector investment to the greatest degree possible. The CIG initiative is facilitated by the Center for Global Sustainability at the University of Maryland School of Public Policy, and is supported by the Governments of Denmark, Canada and Jamaica as well as by the United Nations Development Programme (UNDP).


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