World Bank’s IFC investments hit record $56 billion in FY 2024, managing director says – News

Makhtar Diop, Managing Director of the International Finance Corporation speaks during a panel session on the second day of the World Government Summit in Dubai earlier this year. — AFP file

Published: Tue 24 Sep 2024, 3:24 PM

Last updated: Tue 24 Sep 2024, 3:25 PM

Investments from the World Bank’s private investment arm hit a record $56 billion in its financial year to end-June, the lender’s managing director told Reuters.

International Finance Corporation (IFC) commitments, which cover both its own short- and long-term financing as well as mobilised funding, had risen by 28 per cent year-on-year, said managing director Makhtar Diop.

This was chiefly driven by internal reforms as part of World Bank President Ajay Banga’s push to speed up lending across the group, which includes the IFC whose investments are targeted at spurring growth and reducing poverty in developing countries.

“(We) have been in a process of kind of seeing what we can do differently,” Diop said, adding apart from streamlining processes the IFC had also decentralised decision making, allowing directors on the ground to take more responsibility over the deployment of funds in their patch.

Looking ahead to the financial year ending in June 2025, Diop expected another increase, aiming for a target of $62 billion, with the lender focusing efforts on infrastructure more widely, especially roads and transportation, and working with sub-sovereign entities, such as municipalities.

“They (municipalities) are not often the best equipped to structure deals and to do PPPs,” Diop said, referring to public private partnerships. “If you manage to work with them and develop a good pipeline of PPPs and to help them to deliver school, health services, things that are under their responsibility, to help them have much greener cities …you can have a huge amount of investment which is needed there.”

Diop also said he wanted to increase equity investments, shifting further away from traditional loans and bonds, possibly even as a cornerstone investor that would help take companies public on their domestic stock markets. However, the IFC would have to consider what this could mean for its coveted AAA rating, with equity investments bearing more risk than debt exposure.

“One objective that I can see in the equity business is to start investing in companies, having equity there, prepare them to be listed so that we can list them and exit maybe when they are listed,” Diop said.

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