Making the most of markets: the role of IFIs

Since the World Bank and the International Monetary Fund were launched at Bretton Woods more than 50 years ago, and the regional development banks in subsequent decades, the world economy has changed in important respects. In considering the role of international financial institutions (IFIs), two changes are of particular significance. First, 'globalisation' implies that foreign trade and private capital now play a far greater role in economic development than before. Partly as a result, world real interest rates have increased markedly. Second, the poor performance of statist models of development has led to a re-examination of the role of the state and motivated a strong shift towards private, market-based approaches. As a result of these changes, the private sector and private, international finance have become prime agents of economic development. In this article, we discuss how IFIs can pursue their mandates by creating the conditions for the right kind of market-oriented growth and by forming partnerships with the private sector. We argue that partnership with the private sector calls for significant adjustments in the modus operandi of IFIs, as well as for clear principles of engagement. IFIs must complement and catalyse private finance, they must not displace it. A clearly defined approach to supporting private sector development will carry IFIs well into the 21st century

Mobiliser le secteur privé en faveur du développement et du climat dans les pays en développement: Un projet réaliste? Enseignements et recommandations tirés d'une expérimentation en cours au sein du Groupe de la Banque mondiale

The 2015 Addis Ababa "Billions to Trillions" initiative called for stepped-up private sector investments and financial flows in developing countries. But instead of closing, the "trillion" dollar gap between development and climate needs, and and the actual flows continues to widen. Was it a fairy tale? What is certain is that the current operating model of the aid agencies and the development finance institutions, is not helping to crowd-in private flows at the necessary scale. The paper reviews the evidence and highlights what needs to change and how to do it. Since the devil is in the details and the true test is implementation, the review is based on the preliminary lessons of the real-life experiment at IFC ("IFC3.0") launched in late 2016. The key finding is that despite some progress, more needs to be done for IFC 3.0 to deliver at scale, especially in the poorest countries. The private sector side of the WBG, i.e., IFC and MIGA, must continue to shift from a reactive to a proactive approach to creating markets and project development; and the public side, i.e., IBRD and IDA, must act in a complementary manner, embracing the private sector strategically and operationally as a key development agent. The paper concludes with detailed and concrete recommendations for what could be done rapidly. We call it WBG 3.0

Mustering the private sector for development and climate in the Global South: Is it realistic? Lessons and recommendations from an on-going experiment at the World Bank Group

The 2015 Addis Ababa "Billions to Trillions" initiative called for stepped-up private sector investments and financial flows in developing countries. But instead of closing, the "trillion" dollar gap between development and climate needs, and and the actual flows continues to widen. Was it a fairy tale? What is certain is that the current operating model of the aid agencies and the development finance institutions, is not helping to crowd-in private flows at the necessary scale. The paper reviews the evidence and highlights what needs to change and how to do it. Since the devil is in the details and the true test is implementation, the review is based on the preliminary lessons of the real-life experiment at IFC ("IFC3.0") launched in late 2016. The key finding is that despite some progress, more needs to be done for IFC 3.0 to deliver at scale, especially in the poorest countries. The private sector side of the WBG, i.e., IFC and MIGA, must continue to shift from a reactive to a proactive approach to creating markets and project development; and the public side, i.e., IBRD and IDA, must act in a complementary manner, embracing the private sector strategically and operationally as a key development agent. The paper concludes with detailed and concrete recommendations for what could be done rapidly. We call it WBG 3.0

Une expérience de la SFI et du Groupe de la Banque mondiale pour mobiliser le secteur privé en faveur du développement

Private financial flows to Emerging Markets and Developing Economies (EMDEs) today are lower than in 2015, when both the UN's Addis Ababa Agenda for Action and the Paris Agreement were adopted - committing the world to financing the SDGs and reducing carbon emissions. Were the expectations simply unrealistic? How can we hope to measure up to the challenge of our generation

An IFC/World Bank Group experiment in mustering the private sector for development

Private financial flows to Emerging Markets and Developing Economies (EMDEs) today are lower than in 2015, when both the UN's Addis Ababa Agenda for Action and the Paris Agreement were adopted - committing the world to financing the SDGs and reducing carbon emissions. Were the expectations simply unrealistic? How can we hope to measure up to the challenge of our generation