A new report finds that international finance institutions play a key role in catalyzing job creation and growth through the private sector in emerging markets, particularly as governments face increased pressure on public resources.
The report, International Finance Institutions and Development through the Private Sector, was launched during the World Bank-IMF Annual Meetings. The report was supported by the European Investment Bank and included contributions from 31 international finance institutions (IFIs). Senior officials of more than 20 IFIs are attending the launch event.
Key findings of the report are:
- IFIs provide the private sector in developing countries with critical capital and knowledge. Private sector direct foreign investment finance has reached over $40 billion in commitments a year–about five percent of capital flows to emerging markets.
- IFIs help companies set standards and manage risk in areas such as environmental and social standards; corporate governance; health and safety, sponsor and business integrity; labor and human rights; revenue transparency; and international financial reporting.
- IFIs catalyze additional financing from other private sector players. Each $1 of capital supplied to IFI’s can lead to $12 in private sector project investment
- IFIs support entrepreneurship and innovation, helping demonstrate the viability of private solutions in new or challenging areas.
“Expansion of the private sector is essential for future economic growth and creating new jobs in developing countries. International financial institutions can play a key role to help companies expand, encourage investment in sectors with the greatest potential and foster sustainable development that makes a real difference.” said Plutarchos Sakellaris, European Investment Bank Vice President responsible for Africa, Caribbean and the Pacific.
The report was initiated under the sponsorship of the Private Sector Development Institutions Roundtable, an annual meeting of the heads of IFIs that focus on the private sector. The meeting is coordinated by IFC.
See the report.
About the European Investment Bank
The European Investment Bank is the world’s largest multinational financial institution and last year lent EUR 72 billion for 460 projects around the world. The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The task of the Bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives. The EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.