# Global Events

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How Structural Constraints Limit Private Capital Mobilisation in BRICS Economies Policy, Regulatory and Institutional Uncertainty BRICS economies are widely seen as central to future global growth, yet officials from the bloc itself acknowledge that mobilising private capital at scale remains difficult. At a BRICS Finance Ministers' and Central Bank Governors' meeting in Jaipur in August 2026, India's finance minister said the core challenge is not the availability of capital but the absence of confidence, stability, predictability and credible long-term policy frameworks. This reflects a broader pattern: frequent shifts in tax rules, licensing regimes, procurement norms and sector-specific regulation raise the perceived risk of long-duration investments. Institutional capacity to design, appraise and enforce contracts also varies widely across the five original members and newer entrants such as Egypt, Ethiopia, Indonesia and the UAE, making it harder for investors to apply a single risk framework across the grouping. Currency, Macroeconomic and Capital-Control Risks Exchange-rate volatility and divergent monetary cycles complicate cross-border investment planning. Research from the IMF and national central banks shows portfolio flows to emerging markets, including BRICS members, are highly sensitive to shifts in advanced-economy interest rates and a strengthening US dollar, producing sudden inflow surges followed by abrupt reversals. In response, several BRICS members retain capital flow management tools and, at times, outright capital controls to limit volatility and protect reserves; these measures can shield financial stability but also raise transaction costs and uncertainty for foreign investors. Differences are notable: China and India maintain tighter management of cross-border flows than Brazil or South Africa, which have historically pursued more open capital accounts, so investors face a patchwork of rules rather than a common regime. Shallow Domestic Capital Markets and Bankability Gaps Long-term private capital, particularly for infrastructure and the energy transition, depends on deep local bond and equity markets able to absorb large, long-tenor instruments. Across much of the BRICS group, domestic institutional investor bases, corporate bond markets and securitisation markets remain underdeveloped relative to financing needs, forcing reliance on shorter-term bank lending or foreign-currency debt that carries additional risk. UNCTAD's World Investment Report 2025 notes that international project finance, critical for large infrastructure deals, fell 26% globally in 2024, with renewable-energy project finance down 16% — a decline that weighs heavily on capital-intensive BRICS sectors. Many projects also lack the technical preparation and predictable revenue structures needed to be "bankable," meaning public agencies and multilateral banks are frequently called upon to de-risk transactions before private investors will commit. Geopolitical Risk, ESG Standards and Investor Protections Sanctions exposure, trade tensions and fragmenting supply chains add another layer of risk. Russia's isolation from Western financial systems since 2022 is the starkest example, but broader geopolitical fragmentation has made cross-border investors more cautious about the bloc as a whole, even where individual members face no direct sanctions. Divergent legal systems, uneven contract enforcement and inconsistent judicial independence further complicate dispute resolution. On sustainability, the OECD finds that globally, sustainably labelled funds allocate roughly half the asset share to emerging markets that conventional funds do, partly because ESG disclosure standards and data quality across BRICS jurisdictions don't yet align consistently with frameworks like the ISSB or GRI — making it harder for issuers to attract dedicated sustainable capital even when underlying projects are sound. The Path Forward: De-risking and Multilateral Support BRICS governments and institutions such as the New Development Bank increasingly frame the solution around using scarce public resources to catalyse, rather than substitute for, private investment. Tools discussed at the Jaipur seminar included viability gap funding, credit enhancement mechanisms, hybrid financing models and infrastructure investment trusts designed to recycle capital and attract long-term institutional investors. The World Bank's own evaluations of private capital mobilisation echo this, emphasising first-loss guarantees, blended finance and sustained business-environment reforms over one-off deals. With global FDI falling for a second consecutive year in 2024, pressure on BRICS economies to build credible, harmonised and enforceable investment frameworks is likely to intensify rather than ease.   Sources World Bank Group – Private Sector Investment Lab https://www.worldbank.org/en/about/unit/brief/private-sector-investment-lab World Bank IEG – Evaluation of the World Bank Group's Approach to Private Capital Mobilization https://ieg.worldbankgroup.org/evaluations/world-bank-groups-approach-mobilization-private-capital-development IMF – Global Financial Stability Report, October 2025 https://www.imf.org/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025 Related YouTube Videos The Private Sector Investment Lab and Its Role in Capital Market Evolution – World Bank, 2024 Spring Meetings https://www.youtube.com/watch?v=s6FcG_g-KSk IMF Press Briefing: Global Financial Stability Report, October 2025 https://www.youtube.com/watch?v=4LpJX8KWHaA