A new report finds that international finance institutions (IFI) 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 today during the World Bank-IMF Annual Meetings. It was produced by 31 international finance institutions (IFIs). Senior officials from more than 20 IFIs will be 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 more than $40 billion in commitments a year–about 5 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.
“Traditionally, international development institutions' work on public sector projects has been widely recognized. Over the past decades, there has been an increasing recognition of the role development institutions can play in fostering development through the private sector,” said Steven Puig, Vice President for Private Sector Operations at the Inter-American Development Bank (IDB), one of the institutions that participated in the production of the report.
“This report recaps 31 international finance institutions’ private sector initiatives and helps explain how we promote development by closing gaps in finance, infrastructure, social inclusion and standards. It shows that international financial institutions support entrepreneurial initiatives that help developing countries achieve sustainable economic growth.”
The Inter-American Investment Corporation (IIC)and the Multilateral Investment Fund (MIF), members of the IDB Group, participated in the production of the report.
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 the International Financial Corporation (IFC).