The World Bank Group and the Private Sector

The World Bank Group works to accelerate sustainable and inclusive economic growth across regions and sectors. We play a critical role in building partnerships and creating new opportunities for the private sector.

Ending poverty and reducing inequality are ambitious goals. But the gap in funding between what is needed and what is available amounts to trillions of dollars each year. The only way to spur this level of investment is by creating new markets and bringing innovative solutions to developing countries. This is why the private sector must be involved.

Opportunities have never been greater for owners of capital to get a reasonable return while expanding their investments in developing countries.

But to enter these markets, private investors need better information on opportunities, and assurance that these present acceptable risks. For their part, many developing countries need help to attract and manage private capital. With our global outreach and local presence, the World Bank Group is a strategic advisor that can help link capital looking for greater returns with countries seeking to improve the lives of their people. 


 

 


The World Bank Group has 70 years of experience working with governments and the private sector around the world. We have long-standing relationships in 189 countries, an international staff, offices in 140 countries, and deep expertise across regions and sectors.  We facilitate private investment through high-impact projects — for example, the Global Infrastructure Facility, which prepares and structures complex infrastructure public-private partnerships, and the Climate Change Action Plan to deliver investable projects in clean energy.  We coordinate closely with other organizations, agencies, and multilateral institutions that are working with the private sector.

The World Bank Group offers multiple channels and instruments to encourage the private sector to seek opportunities and engage in developing countries. These include:

Creating markets and matching opportunities: We help create markets by identifying new opportunities and unmet demand, sharing this information with the global business community, and helping governments build an environment that will open doors to private sector investment. We use a range of tools to understand country-level needs and risks, including our systematic country diagnostics

Building new markets for companies: Through operations in emerging markets and in high-risk, fragile, and conflict-affected environments, we have built considerable risk management expertise to help governments reform and enable business opportunities. We use technical expertise and financing to design solutions that link business interests and development impact. We help businesses successfully navigate new environments and increase their impact by connecting with local supply chains and strengthening relationships with local communities. We also offer credit enhancement instruments, political risk insurance, and payment and loan guarantees, which can be part of a package enabling new projects and transactions and unlocking better opportunities for private sector investment.  

Promoting investment opportunities for investors and financial institutions: We mobilize resources from capital markets, reflecting our financial strength. We are also working to mobilize additional capital for the 2030 Agenda, using a range of tools, platforms, and approaches to mitigate risks in emerging and high-risk markets.

In addition to issuing traditional Triple-A credit-quality products in several currencies, we offer innovative solutions that support responsible, sustainable investments while reducing associated risks. We have themed bonds, including green, social, peace, SDG Index-Linked, and catastrophe bonds. And in 2016, for the first time, IDA received Triple-A credit ratings, enabling it to raise money in capital markets to help finance life-changing investments in the world’s 75 poorest countries – from providing clean water and energy to creating opportunities for refugees and responding to natural disasters and health crises.

Building relationships to advance common goals: The World Bank Group forms alliances with CEOs and global business groups on initiatives that are of mutual interest and can advance development priorities such as the Carbon Pricing Leadership Coalition and Invest4Climate. We also partner with organizations like the World Economic Forum and join other public and private platforms to promote transformational change.

The World Bank Group helps the private sector invest in emerging markets, in line with each investor’s strategic priorities and risk appetite. We offer a wide range of products and programs to mobilize resources from capital markets and risk mitigation instruments. 

Supporting our work through capital market instruments

The private sector can invest directly in our work with developing countries:

The World Bank (IBRD), which lends to middle-income countries, and the International Finance Corporation (IFC), which lends to private enterprises in developing countries, issue bonds in the global capital markets. Both institutions have triple-A credit ratings and offer innovative debt capital market instruments to meet the needs of investors in markets around the world. These include green bonds, pandemic bonds, SDG-linked bonds, social bonds, and more.

Beginning in 2018, the International Development Association (IDA), which provides concessional loans and grants to the poorest countries, will begin issuing bonds in the global capital markets. IDA joins IBRD and IFC as a triple-A rated issuer. IDA bonds will offer investors an opportunity to support development activities where they are needed most.

Creating investment opportunities in emerging markets

Opportunities to invest alongside the Bank Group continue to expand:

  • IFC’s syndicated-loan program allows financial institutions to enjoy the advantages of IFC’s preferred creditor status as a multilateral institution. It has mobilized more than $62 billion from more than 500 financing partners for projects in emerging markets since its inception in 1959. 
  • IFC’s Managed Co-Lending Portfolio Program allows institutional investors to participate in IFC’s future loan portfolio. Investors provide capital on a portfolio basis, which IFC can deploy in investments across regions and sectors in accordance with its strategy and processes.
  • The IFC Asset Management Company manages funds on behalf of institutional investors – sovereign funds, pension funds, development finance institutions – enabling them to invest in high-potential companies and infrastructure projects in developing countries.
  • The World Bank Group houses the Global Infrastructure Facility (GIF)—a matchmaking effort to marry well-structured and bankable public-private partnerships in infrastructure with interested private capital. The GIF works in partnership with multilateral development banks, investors, financiers, and governments and has built a pipeline of sustainable infrastructure projects, potentially unlocking billions of dollars of investment in developing countries.

The World Bank Group makes it easier and more attractive for private companies to do business in developing countries. 

  • We help create markets by identifying opportunities for growth, sharing this information with the global business community and working to spur private sector investment.
  • We use a range of tools to understand countries’ needs and mitigate risks for companies
  • We help countries improve their business climate in key ways, such as supporting labor market reforms, advising on public-private partnerships, implementing pro-competition market policies, and introducing sector-specific regulatory changes.

Providing finance for private companies

We help businesses by providing local-currency loans and a variety of other financing solutions—and by connecting them with institutional investors. We help them navigate new environments and connect with local supply chains and communities.

We also offer credit enhancement instruments, political risk insurance, and payment and loan guarantees.  These can be part of a package helping projects and transactions unlock better opportunities for private investment.

Promoting innovation and entrepreneurship

We help build the capacity of promising companies in high-growth sectors like agribusiness, information and communication technology, and clean technology. We help them access seed capital and business know-how.

IFC’s Venture Capital group invests in growth-stage companies that offer innovative technologies or business models geared at emerging markets; areas include health care, edu-tech, and e-commerce.

Aligning with business and philanthropy

We engage the global business community and philanthropies on solutions and funding for key development priorities. These include investments in human capital, jobs and economic opportunities for refugees and host communities, tackling climate change, and broadening access to finance—particularly for women entrepreneurs.

We offer knowledge, data, and advice to help companies and governments enhance their sustainability practices.

We form alliances with CEOs and business groups on initiatives of mutual interest that address global challenges, such as carbon pricing and investments in climate-smart technologies. We convene partners through many platforms, including the Advisory Council, Carbon Pricing Leadership Coalition, Invest4Climate, and the Sustainable Banking Network.

We offer tools that small- and medium – sized enterprises (SMEs) can use to improve their access to finance and markets, as well as unlock new sources of capital:

SME Lines of Credit provide dedicated bank financing – frequently for longer tenors than are generally available in the market – to support SMEs in areas such as investment, growth, and exports.

Partial Credit Guarantee Schemes, under which the guarantor pledges to partially or fully repay a loan to a lender in the banking sector, facilitate SMEs’ access to finance. The World Bank Group provides advisory support to design and capitalize on such facilities.

Early-Stage Innovation Finance, which provides equity and debt/quasi-debt to start-up or high-growth firms that may otherwise not be able to access bank financing.

IDA Private Sector Window was created to catalyze private sector investments in IDA countries, with a focus on countries affected by fragility and conflict, and includes a facility to help mitigate financial risks associated with investments in infrastructure, SMEs, agribusiness and other pioneering projects across sectors.

Advisory services on trade and investment policies, supply chains, and improved financial infrastructure, which help create an enabling environment and build SME capacity to access finance and markets.

A global network of business-incubation centers, which include Climate Innovation Centers, Agribusiness Entrepreneurship Centers, and Mobile Application Laboratories (mLabs). These support emerging entrepreneurs at each stage through early-stage financing, technical training, and market intelligence.

The World Bank Group finances over 1,700 investment projects in some 130 countries, in a wide range of industries and sectors. About 80 percent of total financing each year is in the transport, water & sanitation, and energy & extractives sectors. Our institutions’ active project portfolio is worth about $80 billion, with annual procurement in project operations in the range of $20 billion. 

The World Bank's Procurement Framework maximizes the strategic role of procurement in achieving key development effectiveness goals - emphasizing choice, quality, and value for public spending, while enabling adaptation to country contexts.

A new Procurement Framework was approved by the World Bank Board on July 21, 2015 and its use is mandatory for all lending operations after July 1, 2016.

Please visit the links below to access either the old Policy, Procedures and Guidelines or the current Policy and Regulations.

Learn more about procurement

Projects & Operations

As part of our unique value proposition, the World Bank Group offers numerous insurance and guarantee mechanisms to help mitigate the risks for private investors and make projects bankable.

IBRD and IDA offers guarantees to help attract all forms of commercial financing to development projects by protecting financiers against defaults by a government, its political and administrative subdivisions and all other public-sector entities.  They are backed by sovereign counter-guarantees and ensure continued commitment of the countries to the project.  IBRD and IDA guarantees can be structured to mitigate any breach of contract that arises from government inability to meet its performance and/or payment obligations.

MIGA guarantees cover equity, debt, and other forms of financing, mainly to promote cross-border investments. These products, which do not require a counter-guarantee by the host government, cover risks posed by:

  • Currency inconvertibility and transfer restriction;
  • Expropriation;
  • War, terrorism, and civil disturbance;
  • Breach of contract; and
  • Non-honoring of financial obligations by governments or state-owned enterprises.

IFC guarantee tools mostly cover debt products issued by its private sector clients.  They include partial and full credit guarantees, as well as risk-sharing facilities. 

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