Financing infrastructure in financial markets: Why civil society should be alert

Rethinking Bretton Woods | Tue, Feb 2, 2016

For the last five years, the Group of 20 (G20) has been weighing proposals to finance the “infrastructure gap” in developing countries: the more than USD1 trillion of additional investment needed to bridge the gap between existing infrastructure and the infrastructure needed in such areas as transport, energy, water, sanitation and internet connectivity to support socio-economic development.

The G20 has leaned towards proposals to attract the savings of institutional investors (mutual funds, pension funds, insurers, etc.), based on the premise that the long-term financing needs for infrastructure development are a fitting match to institutional investors’ need for long-term investment vehicles. However, such proposals have been criticised because this could induce “financialisation”, with all its consequences.

In an article written for the Heinrich Boell Foundation South African Office, RBW Project Director Aldo Caliari explains what is financialization and why it matters, what is the relevance of the new proposals to finance infrastructure to the civil society agendas on human rights, sustainable development and good governance, and what civil society can do about them.