Why social infrastructure matters for resilient and cohesive societies

By Jasmina Glisovic, Head of Division, Loans and Social Development Directorate, and Eoin Raftery, Junior Advisor, Executive Office, Council of Europe Development Bank (CEB)

Multilateral Development Banks (MDBs) play a key enabling role in social infrastructure investment, with potential broad benefits for sustainable development and the global economy. There are challenges, which MDBs are addressing as they work together to achieve greater impact.

Hospitals, schools, housing, clean water and sanitation – these are just some examples of the social infrastructure on which people’s lives depend. There are several others too, such as care homes and training centres, which rely on human capital, such as teachers and health workers, for providing effective services.

Social infrastructure matters for people’s welfare, as well as for underpinning jobs and inclusive growth, and forging thriving, equitable, resilient societies. Investing in social infrastructure is therefore key for fulfilling the increasingly urgent 2030 Agenda for Sustainable Development.

MDBs are working as a system, leveraging their respective mandates across different regions, sharing expertise and best practices, and aligning their standards and approaches, all with the aim of achieving greater impact.

To begin with, several of the 17 Sustainable Development Goals (SDGs), particularly those on good health, quality education and sustainable cities and communities, as well as on reducing poverty and inequality, depend on investing in the physical and digital infrastructure that underpins social sectors. Achieving other goals, such as providing decent jobs, also relies on having in place an effective social infrastructure.

But delivering that infrastructure is challenging for all countries and regions, with demand for better, affordable and accessible social services rising everywhere. In some countries, a rapidly growing young population is exerting pressure on educational infrastructure, for example, while in others, ageing is fuelling the need for effective health and social care.

Beyond such welfare goals, it is important to underline the importance of social sectors for economic performance more broadly, through the employment they generate across different sectors, for instance, and the impetus that additional investment in the likes of education and skills may give to a country’s productivity.

Despite the clear multiplier effects, the financing gap for social infrastructure is wide. For education, health, and water and sanitation alone, the gap to achieve the SDGs is stands at some US$800 billion a year to 2030, according to UNCTAD.

While governments remain the primary stewards and funders of social infrastructure, private participation can play an important complementary role, whether through partnerships, ancillary services, or targeted investment.

Yet, unlike economic infrastructure, the attractiveness of social infrastructure for private investors is less clear-cut, as it depends on a broad set of factors beyond revenue streams alone. Social infrastructure accounted for just 5% of overall private capital mobilised by MDBs for infrastructure in low- and middle-income countries in 2023, with the rest being drawn towards so-called hard economic infrastructure instead, such as transport and energy. Mobilisation is highest in water and sanitation, with markedly less on average flowing to education or health.

Joint MDB report

A joint MDB report, Social Infrastructure in Focus: The Role of Multilateral Development Banks, published in 2025, casts a light on the issues and areas for action. As Chair of the Heads of MDBs Group during 2025, the Council of Europe Development Bank (CEB) – which has an exclusively social mandate – advanced this topic for attention on the MDB agenda. As the joint report demonstrates, all MDBs work on social infrastructure to differing degrees, and from 2019-2023, approximately 22% of MDB financing commitments were geared towards core social sectors.

By explaining each Bank’s contribution as well as their collective efforts, Social Infrastructure in Focus underscores the systemic importance of social infrastructure investment for jobs and growth, while making the case for strengthening it further. It highlights several areas in which MDBs are making a difference.

Take, for example, the vital enabling role MDBs play, working on the ground with their respective countries of operation and local development partners to create a conducive regulatory environment for social infrastructure investment and build capacity where it is lacking, with the aim of helping the market for social infrastructure investment reach potential.

Another area being explored is the catalytic role MDBs fill in unlocking more financing and more effective outcomes. Many MDBs are working with governments and public development banks in different jurisdictions, for instance, and as conduits for official development assistance (ODA). Forging public-private partnerships (PPPs) is another avenue MDBs have been taking, for instance, by setting the frameworks and incentives needed for more private sector risk-taking, not just to build hard infrastructure, but where appropriate, engage in service provision as well.

MDBs are also engaging in co-financing and partnerships, as in the case of the major Indonesia Health System Strengthening Project, which is described in the new joint report. MDBs are also harnessing existing financial instruments, such as debt-for-development swaps, and bonds designed specifically to raise funds for social infrastructure, thereby tapping a growing global appetite among investors for products that deliver both social and financial returns. The CEB knows this from experience, thanks to the strong growth of its pathfinding Social Inclusion Bonds (SIBs) since their launch in 2017, which accounted for some 40% of the Bank’s total funding requirement in 2025.

The report also highlights the important role that Public Development Banks (PDBs), which are often owned by national governments, play as source of funding for social infrastructure. Within the Finance in Common Summit (FiCS) global platform, MDBs and PDBs are translating these shared mandates into action by identifying concrete ways to strengthen cooperation on social investment – notably through the FiCS Coalition for Social Investment.

Thanks to its multiple broad benefits, investing in social infrastructure offers vital yet under-tapped potential for meeting the SDGs and fostering resilient, inclusive and cohesive societies for all.

©CEB February 2026