Emerging markets need infrastructure investments
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Emerging markets need infrastructure investments

Infrastructure has been somewhat relegated to the back of investors' minds compared to 2016, but the need for infrastructure upgrades and investments remains as pressing as ever.

Taking a close look at the latest global developments in the area of infrastructure , we see interesting new points of focus. Namely, two continents often absent from thematic investments: Africa, one of the most underinvested continents, along with Latin America, which has, however, been seeing strong investments from China.

The great potential of road transport

The Global Infrastructure Outlook of the G20 countries forecasts that infrastructure investments in the global transport sector offer the greatest potential by 2040. This is particularly true for road transport. Investments in road infrastructure are expected to absorb 36% of the globally projected needs of USD 94 trillion. Adding rail, airports and ports to the pool means that over half of the sum will go to transport infrastructure.

Unsurprisingly, the G20 Infrastructure Outlook also projects the largest investment gap in the transport sector through 2040. Of the total USD 15 trillion funding gap, a little more than two-thirds (69%) is expected to occur in the transport infrastructure sector, with road transport accounting for over half of the total funding gap by 2040.

More focus on Africa and Latin America

While much focus has been on the One Belt One Road initiative (the idea of interconnecting infrastructure of overland corridors and shipping lanes between China and Eurasian countries) and thus Asia, we believe Africa and Latin America are interesting regional highlights. The African Development Bank expects annual investment costs for road, ports, railways, and air transport of USD 35-47 billion by 2025. Of these investments, 80% is required to preserve existing infrastructure and 20% to develop new projects.

Percentage of unpaved roads around the world


Latin America


emerging Asian economies



In Latin America, more than 60% of roads are unpaved, compared to 46% in emerging Asian economies and 17% in Europe. It often takes longer to move agricultural or other products by rail within one Latin American country than to ship them to Europe.

China – a newly important player

In both regions, China has become a very important partner and catalyst. In Latin America, China's banks invest more than the World Bank and the Inter-American Development Bank combined.

In Africa, China, on average, has provided 15% of all infrastructure investments over the past five years, while 40% of project financing has come from African governments. This high share of Chinese infrastructure project financing comes with large contracts for Chinese construction companies, mostly, but not exclusively, state-owned and with implicit state guarantees should African governments default on loans.

New opportunities, new risks

Tight public finances continue to speak for public private partnerships (PPPs), which offer private investment opportunities.

Investors in infrastructure are well advised to keep an eye on certain risks, however. To be successful, PPPs require strong institutions, competent agencies, government guarantees, and a political willingness to engage the private sector along with multilateral agencies and the public sector.