PRIVATE INFRAESTRUCTURE DEVELOPMENT GROUP
The Private Infrastructure Development Group (PIDG) is an innovative impact investor focused on developing and financing infrastructure projects in the poorest and most fragile countries in sub-Saharan Africa and South and South East Asia. PIDG develops and finances infrastructure in countries where the financing gap is the greatest, where Governments have less fiscal space, and where private investors are reluctant because of real and perceived risks. PIDG operates along the full cycle of an infrastructure asset and across the entire infrastructure capital structure through its companies PIDG TA (upstream and enhancing development impact), InfraCo Africa and InfraCo Asia (project developers and equity investors), Emerging Africa Infrastructure Fund (long term debt) and GuarantCo (local currency guarantees).
PIDG established a systematic approach to assessing the impact potential of prospective investments against its Theory of Change and investment thesis. This is part of PIDG’s end to end system to drive and demonstrate impact across the entire investment cycle. Each investment undergoes a quantitative assessment of expected and realised impacts in the following areas:
i. People: from improved access to sustainable and resilient infrastructure, particularly for low-income groups and women, and from the creation of jobs in the infrastructure projects and associated supply chains.
ii. Planet: through lower carbon intensity and improved climate resilience of new infrastructure, avoided GHG emissions, and exploring the viability of innovative nature proof solutions.
iii. Wider economy: through local contracts awarded in the infrastructure projects, forward linkages in the wider economy, developing technologically innovative economic sectors and increasing fiscal revenues.
iv. Market transformation: through expected replication of the innovative infrastructure solutions and unlocking new flows of finance from international and local private investors with a focus on local currency solutions.
Contribution to SDGs, Development Impact Risks and Climate Change risks are also systematically assessed through a Sustainable Development Impact scorecard which is built on the Impact Management Project’s norms.
PIDG put both climate and gender considerations at the core of its investment approach. At the Group level we introduced climate and gender KPIs for each PIDG company since 2019. In investment decision making, compliance with PIDG Climate Change Standards and Gender Equality Standard are two of three minimum compliance thresholds in the very first investment screening (the other being financial additionality).
Two of the main pathways and steps assumed in the PIDG theory of change are:
Improved infrastructure helps businesses to grow and create more and better jobs. In order to achieve impact in this way, these services must be affordable to businesses. There may also be employment opportunities generated in the supply chain of the PIDG-supported infrastructure.
The infrastructure company will pay taxes, as will the companies in the supply chain and those benefiting from the infrastructure.
The indirect economic impacts resulting from PIDG-supported infrastructure can often be higher than those which are captured by project level reporting. Thus, PIDG has had a long-standing interest in tools that help quantify these indirect impacts for which observed data is not available.
For example, PIDG partnered with Steward Redqueen to quantify the indirect impact associated with particular investments and published the results on PIDG website. Though using similar methodology to other DFIs, we were conscious that the results were not always comparable due to different assumptions used by different DFIs.
This explains our strategic interest in the JIM as an important component of wider efforts towards harmonised models, methodologies and indicators at a global level.
PIDG has been using the JIM since 2020 on select investments. In 2021 PIDG joined JIM Development Panel with the intention to:
Integrate the JIM, where appropriate, into the broader ex ante investment assessments and decision-making process described above, by using the estimates of the likely future effects of an investment or portfolio.
Contribute to further development of the module on the potential enabling effects of infrastructure projects beyond the energy sector, specifically for transport and telecom sectors.
Contribute to further alignment of impact modeling within the sector including on GHG emissions.
We look forward to working with others and contributing through our experience and expertise in these areas.