CAF promotes regional integration infrastructure to boost Latin America development

The maturity level of the investment environment for the private sector in Latin America has improved by 25% in terms of countries’ ability to implement projects under Public-Private Partnerships (PPPs) over the past decade (2009-2018). In 2009, the average maturity level was 33%, reaching 58% in 2018, i.e. somewhere between emerging and developed, according to world bank data and The Economist Intelligence Unit 2009-2018.

Latin America is making progress, but still has the great historical challenge of implementing infrastructure projects that reduce logistics costs and help energize productive complementarity between countries, developing value chains associated to regional trade, and between the region and the rest of the world. This was one of the issues addressed by Victor Rico, secretary general of CAF—development bank of Latin America—during his speech at the 2018 Latin American Cities Conference: “Santiago de Chile Perspectives: Reforms, Economy, and the New Administration.”

“Chile’s stability and regulatory framework are an asset that provides advantages for investment attraction. In the case of infrastructure, there is a regional lag in the area of financial facilities to finance PPPs. In this context, the path forward is towards a renewed approach with possible new financing schemes tailored to project needs, and further capital market development for private infrastructure financing,” explained the Secretary General of CAF.

The Pacific Alliance is instrumental in attracting private investment to Chile. In this regard, CAF is contributing to the infrastructure fund proposed by the Alliance’s members, which will streamline infrastructure investments across all four countries and allow them to tap into the full potential of the benefits created by this integration platform. In this context, CAF will offer its extensive expertise on the subject and, in particular, a new proposal to articulate the region’s structural integration by developing productivity logistics corridors.

“At CAF we are promoting a pre-investment facility for regional integration infrastructure projects, as well as the development and implementation of a methodology for strategic actions to be implemented on the Logistics Development Areas in order to optimize the logistics of Regional Integration Corridors, which would reduce logistics costs and improve infrastructure services for the productive sector,” added Victor Rico.

This is expected to deliver short- and medium-term results in the form of an evolutionary leap in the performance of logistics corridors in the region, favoring a process that will lead Latin America towards smart integration, with clear benefits in reducing logistics costs, time optimization, job creation, improved services and, thus, a subsequent spike in productivity.