Trusted Intermediaries Can Channel Concessional Finance For LMIC Green Development

Due to forex and country risks [1], low and middle-income (LMIC) sovereigns and infrastructure businesses often must pay prohibitively high interest rates on loans or bonds. As a result [2], the quantity of sustainable infrastructure built in LMICs is far less than is needed to meet the Sustainable Development Goals (SDGs). A UN report [3] estimates the investment gap at $4 trillion a year. To put this in perspective, the World Bank in 2022 made $70.8 billion available to developing countries in the form of credits, loans, and grants. Efforts are underway to expand the World Bank’s annual lending significantly [4], but its capacity will remain an order of magnitude below total LMIC requirements. What is needed are mechanisms to de-risk private institutional investments in LMICs so that investors’ reluctance to invest in developing countries can be overcome.