PRIVATE Participation in Infrastructure (PPI) in developing countries, while taking an historic plunge in the first half (H1) of 2020 due to COVID-19, saw a very modest uptick in the second half of the year, according to new data released by the World Bank on Thursday.

The 56 per cent drop in PPI in H1 from the previous year moderated to 52 per cent for the full year. Infrastructure investment commitments in 2020 stood at USD 45.7 billion across 252 projects in developing countries.

"Hopefully, this data signals that the worst effects of COVID-19 on private sector infrastructure finance are now behind most developing countries," said Mr Imad Fakhoury, the World Bank’s Global Director for Infrastructure Finance, PPPs and Guarantees. "While this situation remains in flux as the pandemic’s trajectory changes, we’re keen on scaling up private investment in sustainable and quality infrastructure in these countries going forward—but need more resilient frameworks and enabling environments."

PPI is critical for building back better post-pandemic, restoring progress towards the 2030 Sustainable Development Goals (SDGs), and delivering on climate commitments.

Since the start of 2020, existing infrastructure projects were delayed or cancelled due to supply-chain disruptions, travel and shipping restrictions, and other obstacles. Decreased demand or required renegotiations also prevented or delayed many projects already in pipelines from achieving financial closure.

As public debt globally has risen to record levels and sovereign credit ratings have been downgraded across the developing world, the private sector reacted with caution.

Private investment commitments fell in all regions except Sub-Saharan Africa and the Middle East and North Africa, where development finance institutions played a strong role. The pandemic’s impact was most severe in East Asia and Pacific, followed by Latin America and the Caribbean, Europe and Central Asia, and South Asia.

Sectorally, transport investment commitments were the lowest in the past decade—due to lockdowns, mass transit services and toll roads were hugely affected. Ports and railways were affected as well, with decreased volumes of cargo.

A bright spot is that the disruption caused by the pandemic has not affected the longer-term shift towards renewable energy: of the 129 electricity-generation projects tracked in PPI’s data, 117 were in renewables.

Brazil, China, India, and Mexico retained their positions among countries with the top five investment commitments, with Brazil moving to first place, at USD 7.7 billion. Bangladesh is a new entrant to the top five, with financial closure of seven projects, including one mega project.

Burundi, the Democratic Republic of Congo, and Togo had the first PPI transactions recorded in the past five years.