This paper highlights some of the critical operational, financial, and governance obstacles facing multilateral development banks (MDBs) to provoke new thinking on ways to maximize the potential of the MDB model for development in general and infrastructure in particular. The rationale for MDB involvement in infrastructure remains as compelling today as it did when the MDB model was conceived following World War II. A financial cooperative among like-minded nations can overcome market failures and accelerate development, particularly if coupled with high-quality knowledge to improve project design and implementation. Existing MDBs have tremendous potential for catalyzing infrastructure investment if they are able to address some of the key obstacles inhibiting them, and ample room exists for new institutions utilizing the MDB model, such as the recently announced BRICS NDB and AIIB, among others.
The remainder of the paper is structured as follows. Section 2 reviews the activities of MDBs in relation to infrastructure provision over time as well as between different MDBs and sectors. Sections 3 and 4 analyze, respectively, financial and business procedure and policy obstacles that limit the ability of many MDBs to engage more actively in infrastructure provision. Section 5 concludes the paper.
This paper is part of the working paper series "Infrastructure Finance in the Developing World" and is a joint research effort by GGGI and the G-24, exploring the challenges and opportunities for scaling up infrastructure finance in emerging markets and developing countries.