US President Biden and G7 Leaders Formally Launch the Partnership for Global Infrastructure and Investment
Posted on 06/26/2022
At the 2021 G7 Summit, U.S. President Joe Biden and G-7 leaders announced their intent to develop a an infrastructure partnership to meet the infrastructure needs of low- and middle-income countries and support the United States’ and its allies’ economic and national security interests. Over the past year, members of the Biden administration have traveled to hear directly from countries on how we can meet their infrastructure needs. The Group of Seven (G7) is an intergovernmental organization made up of the world’s largest developed economies: France, Germany, Italy, Japan, the United States, the United Kingdom, and Canada. This alliance is creating an infrastructure program has some similarities of the One-Belt, One-Road initiative of China.
At the G7 Leaders’ Summit in Schloss Elmau, the heads of state of the G7 will formally launch the Partnership for Global Infrastructure (PGII) to mobilize hundreds of billions of dollars. U.S. President Biden will announce that the U.S. aims to mobilize US$ 200 billion for PGII over the next 5 years through grants, U.S. federal government financing, and leveraging private sector investments. Together with G7 partners, the overall group aims to mobilize US$ 600 billion by 2027 in global infrastructure investments. The United States and its G7 partners will seek to mobilize additional capital from other like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and more. Biden’s predecessor former U.S. President Trump attempted a similar feat, but was bogged down with a plethora of internal issues.
U.S. President Biden will release a Presidential Memorandum to execute the PGII across four priority pillars. Some of these policies are a continuation of previous American president such as investing in 5G and 6G digital connectivity, cybersecurity enhancements, developing and upgrading the infrastructure of health systems and contributing to global health security, and improved water and sanitation infrastructure. Other measures include developing clean energy supply chains across the full integrated lifecycle, from the mining of metals and critical minerals; to low-emissions transportation and hard infrastructure; to investing in new global refining, processing, and battery manufacturing sites; to deploying proven, as well as innovative, scalable technologies in places that do not yet have access to clean energy.
EXCERPTS from the White House Press Release
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With support from the U.S. Department of Commerce and the Export-Import Bank of the United States (EXIM), U.S. firm AfricaGlobal Schaffer (Washington, DC), in collaboration with U.S. project developer Sun Africa (Miami, FL), signed a contract with the Government of Angola to develop a $2 billion solar project in four southern Angola provinces. The project will include solar mini-grids, solar cabins with telecommunications capabilities, and home power kits. In addition to supporting up to $1.3 million in U.S. exports, the project will help Angola meet their climate commitments, including generating 70% carbon-free power by 2025.
In collaboration with G7 members as well as the European Union and multilateral organizations, the U.S. International Development Finance Corporation (DFC) is disbursing a $3.3 million technical assistance grant to Institut Pasteur de Dakar (IPD) for early-stage project development for an industrial-scale flexible multi-vaccine manufacturing facility in Senegal with potential annual capacity of millions of doses of COVID-19 and other vaccines, potentially using both viral vector and mRNA technologies. DFC’s grant is part of a $14 million grant financing package that also includes $3.3 million from the International Finance Corporation, $2 million from the Agence Française de Développement, and $5.2 million from the European Investment Bank (EIB). DFC, along with other development finance institutions, is currently evaluating a loan to support IPD’s expansion to supplement EIB’s recent announcement of a nearly $80 million sovereign loan financing package.
U.S. telecommunications company SubCom (Eatontown, NJ), awarded a $600 million contract, to build the Southeast Asia–Middle East–Western Europe 6 submarine telecommunications cable that will connect Singapore to France through Egypt and the Horn of Africa. The submarine cable will stretch over 17,000 km and connect countries across the region with high-speed, reliable connectivity. The U.S. Government, including through the U.S. Department of State, Commerce’s Advocacy Center, EXIM, and the U.S. Trade and Development Agency’s (USTDA) commitment of nearly $4 million in additional capacity building to support five countries using SubCom’s technology, collectively helped secure the award of the construction and deployment of the undersea fiber optic cable for SubCom.
The U.S. Government with U.S. firm NuScale Power LLC (Tigard, OR) will provide $14 million in support for the Front-End Engineering and Design study for Romania’s deployment of a first-of-its-kind small modular reactor (SMR) plant. Building on U.S. Government efforts, including advocacy support from Commerce and technical assistance from State and USTDA, this investment is meant to mobilize a multi-billion-dollar effort and showcase U.S. ingenuity in the advanced nuclear sector, accelerate the clean energy transition, create thousands of jobs, and strengthen European energy security while upholding the highest standards for nuclear safety, security, and nonproliferation.
The U.S. Agency for International Development (USAID) will aim to commit up to $50 million over five years to the World Bank’s new global Childcare Incentive Fund – $200 million public-private partnership to address the gap in suitable childcare infrastructure; boost women’s employment opportunities, productivity and income, and broader economic growth; and promote human capital and early learning for children. Other partners include the Governments of Canada and Australia, the Bill & Melinda Gates Foundation, the Conrad N. Hilton Foundation, Echidna Giving, the Ford Foundation, the William and Flora Hewlett Foundation, and the LEGO Foundation.
DFC will invest up to $25 million in the Uhuru Growth Fund I-A, which will provide needed growth capital to small-and medium-sized enterprises in West Africa – including women-led businesses. Some of the largest economies in Africa, including Nigeria, Ghana, and Cote d’Ivoire, are facing a shortage of growth capital. Uhuru has committed to investing at least 30 percent of capital in eligible portfolio companies that support DFC’s 2X women’s economic empowerment initiative, and over 40 percent of the Uhuru team members are women. In addition to U.S. support, like-minded partners are investing including $35 million from the German Development Finance Institution, $30 million from the European Investment Bank, and $15 million from British International Investment, among others. Through this investment, DFC expects to mobilize $78 million in private capital.
The Digital Invest program will leverage $3.45 million in State and USAID funding to mobilize up to $335 million in investment capital for internet service providers and financial technology companies in Africa, Asia, and Latin America that use secure network equipment and advance competition and choice in emerging markets. This new blended finance program for fund managers and project developers through the Digital Connectivity and Cybersecurity Partnership will promote the growth of resilient, secure digital ecosystems in developing countries.
USAID will invest $40 million in the Southeast Asia’s Smart Power Program to decarbonize and strengthen the region’s power system by increasing regional energy trade, accelerating the deployment of clean energy technologies, and actively engaging private sector leaders and key development partners in shared priorities. The program is expected to mobilize $2 billion in financing as a result of U.S. Government assistance, increase regional energy trade by five percent, and result in 2 gigawatts of advanced energy systems deployed.
DFC will invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3, an impact venture capital fund that invests in entrepreneurs building the future of agriculture, food systems, climate, and the rural economy in India. The Fund seeks to invest in companies that increase food security and promote both climate resilience and climate adaptation in India, as well as improve the profitability and agricultural productivity of smallholder farms. The Fund is targeting a $65 million first close in September 2022 and a final close in 2023 to reach its target capitalization of $130 million. Through this investment, DFC expects to mobilize $30 million in private capital.
ABD group (Philadelphia, PA), a project development company, was awarded a $320 million healthcare infrastructure project to renovate or construct over 100 hospitals and clinics across Côte d’Ivoire and has already begun work on 10 locations. ABD Group credits the Memorandum of Understanding for commercial cooperation between the U.S. Government and the Government of Côte d’Ivoire with providing the necessary foundation of partnership for this deal to come to fruition. With the support of Commerce, the project has already received $160 million in closed financing with another $160 million nearing completion
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