The Institute of Sovereign Investors, the International Chamber of Commerce (ICC), and Africa Investor (Ai) today launched a new Global Fiduciary Efficiency and Cost of Capital Framework at the G20, revealing substantial investment losses arising from legacy emerging-market risk-measurement systems.
The analysis shows that the 20-year divergence between emerging-market fundamentals and market-implied risk premia — driven by outdated risk-measurement practices rather than changes in fundamentals — has generated USD 4–6 trillion in cumulative lost return opportunities for global pension funds, insurers and sovereign portfolios, equivalent to 30–90 bps of annualised performance drag for universal owners.
It further estimates that emerging and developing economies (EMDEs) face up to USD 15.6 billion in excess annual interest costs and foregone investment opportunities due to structural information asymmetries and limited access to public- and private-sector investor-grade risk data — a gap the GEMs3.0 initiative was expressly developed to help close.
“This is first and foremost a fiduciary excellence agenda. Cost-of-capital improvements are a by-product of correcting how risk is measured — not the motivation. If we want alignment between global investors and emerging markets, we must make development investable, not investment developmental,” said Dr Hubert Danso, CEO of Africa Investor (Ai).
A G20-aligned solution to reduce portfolio leakage
The proposal calls on G20 Leaders to endorse investor-led GEMs3.0 Sandboxes as a global reference platform for modern EM credit-risk transparency.
The sandboxes enable sovereigns, regulators, asset owners and MDBs to test updated risk-measurement tools alongside IMF, World Bank and rating-agency systems — without new mandates or public spending.
Global investor endorsement
“Appropriate allocation and careful consideration on how emerging-market risk is measured and managed is essential for long-horizon investors and for the G20’s financial-stability agenda. Initiatives like the GEMs3.0 Sandboxes can help address better how substantial capital can reach productive, real-economy opportunities.”
Kristian Flyvholm, Chair & CEO, The Institute of Sovereign Investors
“Efficient capital allocation is a foundation of global economic stability and shared prosperity. Improving the quality, transparency and comparability of risk information — particularly for emerging and developing economies — is essential to unlock long-term investment at scale. The G20’s engagement with initiatives like this framework represents an important step toward a more inclusive, rules-based and investable global economy.”
John W.H. Denton AO, Secretary General, International Chamber of Commerce (ICC); Co-Chair, Finance & Infrastructure, B20
Quantifying the allocation gap for Africa’s industrial opportunity
Despite delivering 16–22% risk-mitigated IRRs, below-average infrastructure default rates, and long-duration offtake demand linked to global transitions, Africa accounts for less than 3% of major benchmark weightings.
This benchmark underweight compounds:
- USD 4–6 trillion in cumulative fiduciary underperformance
- USD 15.6 billion in annual excess interest costs and foregone EMDE opportunities
- S&P’s recalibration, enabled by newly released GEMS risk data, unlocks USD 600–800 billion in MDB lending headroom over the next decade — converting previously lost opportunities in EMDEs into investable capacity.
By modernising risk-signal quality and aligning benchmarks with real-economy fundamentals, the framework enables institutional investors to integrate Africa’s energy, digital, and industrial platforms into long-term portfolios on a fiduciary-compliant basis.
A fiscally neutral G20 reform
The framework calls on G20 Leaders to commit to:
- Restoring fiduciary efficiency as a pillar of global financial stability.
- Scaling GEMs3.0 Sandboxes as a global reference platform.
- Deepening AU–G20 cooperation on Africa’s industrial transition.
- Mobilising institutional capital at scale — without reliance on donor funding or new taxes, using fiscally neutral, risk-aligned incentive mechanisms.
Investors described the framework as “the most practical, collaborative and economically significant private-capital mobilisation reform tabled to the COP30 and G20 South Africa Presidencies.”