Washington, D.C.: IFC, Partners Deepen Collaboration to Support Private Sector Role in Development
- Oct 12, 2013
Over 20 International Financial Institutions (IFIs) attending a meeting hosted by IFC, a member of the World Bank Group, today pledged closer collaboration to support private sector development.
“Finding solutions to the deepest development challenges, particularly in fragile areas, is too great for one institution to tackle alone,” said Jin-Yong Cai, IFC’s EVP and CEO. “It will require innovation and partnership between the public and private sectors.”
The senior executives from multi-lateral and bi-lateral development institutions held their yearly roundtable meeting on the sidelines of the 2013 Annual Meetings of the World Bank Group and IMF. Highlights of the meeting include:
Agreement to make it easier for private sector companies that receive investment from development institutions to provide development results data. Harmonization of key indicators reduces the reporting burden on shared clients and facilitates knowledge transfer among development institutions.
Support for a new global partnership to facilitate more and better private sector jobs. ‘Let’s Work’, coordinated by IFC, is a new coalition to develop practical approaches to overcome obstacles that prevent the private sector from creating jobs.
Endorsement of common guidelines for the use of concessional finance where there are market failures and the potential development impact is high. For the most part, development institutions offer financing on commercial terms when investing in private sector projects. However, in some carefully structured investments, concessional funds – for example from donor partners – can catalyze investments in such areas as climate change and food security that otherwise would not be possible.
Endorsement of strategic focus on domestic capital market development. Recognizing that deep, liquid capital markets are essential for long-term private sector development, IFIs are collaborating on specific initiatives to develop domestic capital markets and increase local-currency finance availability for the private sector. This includes possible coordination on local-currency bond programs and on dialogue with regulators in developing countries; as well as knowledge management and capacity building initiatives.
Over the past six years the Roundtable—which is the only high-level forum for senior executives from both multilateral and bilateral development institutions—has helped foster collaboration among IFIs in a number of areas to better serve clients and enhance development impact.
“Sustaining and creating jobs, particularly for the youth, is our top priority, both in Europe and outside,” said EIB Vice President Philippe de Fontaine Vive. “Our experience in working with the private sector enables us to develop new and innovative financing solutions tailored to the specific needs of clients and that help addressing financing gaps caused by the crisis. Working together, we need to improve our understanding of what works best, in order to help the private sector make a real difference.”
“ADB is pleased to be part of initiatives by the international finance institutions to support the private sector. It is established that the private sector is a critical partner in driving growth and change for development through improved technologies, better management and innovative solutions for the underserved,” said Lakshmi Venkatachalam, Vice President, Private Sector and Cofinancing Operations, Asian Development Bank.
"Private sector development is critical for growth and jobs and requires an engagement that supports rather than crowds out market efforts,” said Philip Bennett, First Vice President, EBRD. “For this reason the use of subsidies and concessional finance needs to be limited to market failures, carried out transparently and phased out over time.”
“Job creation and addressing social imbalances rank high on the social agenda throughout Europe and we welcome today’s joint commitment by IFIs to support our member countries in achieving these goals,” said Dr Rolf Wenzel, Governor of the Council of Europe Development Bank (CEB). “As a European Multi-lateral Development Bank with a social mandate, CEB will continue to support employment by financing investments in particular of MSMEs and in municipal infrastructure in its Member States.”