In addition to the specific impacts identified in this review, PIDG projects may have significant effects on the wider economy. These might be by enhancing local capacity among developers and suppliers, through the contributions made to local and national governments in the form of taxes and royalties, or by creating fundamental changes in capital markets. PIDG companies enhance local capacity in a range of ways. DevCo has a direct impact on the ability of governments to negotiate and implement public-private partnerships (PPPs). That in turn has an impact on projects in the immediacy, but also gives governments the expertise and confidence to enter into appropriate agreements in the future. The InfraCos have a close relationship with developers and work with them to implement high standards in environmental, social and governance issues. This can have an important wider economic impact as it can lead to an expectation of higher standards by all.
PIDG companies report on their expected and actual fiscal impact where possible. The fiscal impact for 2017 was $238m and for the period 2002-2017 it was $7.3bn.
Unlocking local funding: InfraCredit
For some projects these wider economic impacts, which can be difficult to quantify and are reported in narrative form, are the most significant. GuarantCo demonstrated the potential for such meaningful impact on capital markets and the growth of local businesses through its structuring of InfraCredit, an innovative credit enhancement vehicle enabling Nigerian pension funds to mobilise local currency savings into the financing of domestic infrastructure. By introducing infrastructure as a new class of high quality long-term assets to institutional investors such as pension and insurance funds, InfraCredit will free up banks to lend to new greenfield projects while encouraging the diversification of pension fund portfolios away from government securities. Subsequent to year-end, InfraCredit supported an investment bond issued by power developer Viathan which raised $22m from pension funds.
TAF will build on its partnership with GuarantCo and the success of InfraCredit to support credit enhancement facilities in selected countries, including Pakistan.
PIDG is undertaking an evaluation to explore how InfraCredit is changing the perceptions of Nigerian pension funds and other investors towards investment into private infrastructure and this will provide insight to support replication elsewhere.