Leveraging Blockchain to Bridge the $15T Infrastructure Financing Gap

• Infrastructure investments are essential for economic growth and reducing climate change.
• The Global Infrastructure Hub estimates that $94t in infrastructure investments will be needed during the next 20 years, but there is a $15t infrastructure financing gap.
• Public funds have historically been the major sources of infrastructure finance, but private-sector participation is needed to bridge the gap.

Infrastructure is essential for economic growth and reducing climate change. From power plants to transport facilities, healthcare centers, and telecommunication networks, infrastructure supports society to function and the economy to thrive. Quality infrastructure investments promote economic growth and reduce climate change, but there needs to be a greater balance between the demand for infrastructure investment and the supply of available financing in developed and developing countries.

The G20-backed Global Infrastructure Hub estimates that $94 trillion in infrastructure investments will be needed during the next 20 years in order to meet ambitious goals such as the Sustainable Development Goals (SDGs) by 2030 and net zero emissions by 2050. However, the World Economic Forum forecasts that the world will face a $15 trillion infrastructure financing gap by 2040.

Public funds have historically been the major sources of infrastructure finance, but the ongoing COVID-19 pandemic, high inflation, and tighter financial regulations (e.g., Basel III) have significantly restrained government spending. Scaling up private finance through public-private partnerships (PPPs) is crucial for bridging the gap. However, the high financing costs and inappropriate risk-return profiles caused by existing infrastructure financing mechanisms hinder broader private-sector participation.

The use of innovative financing solutions, such as blockchain, can help to facilitate infrastructure financing. Blockchain technology provides a secure, transparent, and cost-effective platform to facilitate infrastructure financing. It can help to reduce transaction costs, provide real-time insights, and enable efficient and secure financing processes. Blockchain can also help to improve risk analysis and investor confidence by providing access to reliable and comprehensive data. Additionally, blockchain can enable private-sector participation by creating new investment opportunities and allowing the efficient transfer of assets.

Overall, blockchain technology is a promising solution to bridge the infrastructure financing gap. It can help to reduce costs, facilitate financing processes, and enable private-sector participation. By leveraging blockchain technology, governments, businesses, and investors can collaborate to ensure that the world can continue to invest in quality infrastructure for a sustainable future.