Just a few years ago, the International Finance Corp "flew below the radar" in the World Bank Group. Now, it is a big player in President Robert Zoellick's plans to mobilise the private sector to help pull poor countries and people out of poverty.
Through loans and investments to the private sector in developing countries, the IFC has sought to reduce poverty and promote economic development, sometimes by teaming up with 'blue chip' companies.
"People have recognised that the private sector is commanding growth to create opportunities for people so they can have opportunities is what we're trying to do," said Lars Thunell, who was previously head of Swedish bank SEB, in an interview.
The IFC has become an important part of Zoellick's strategy to carve out a bigger role for the private sector in the development of poor countries and regions, including working with large charitable groups such as the Gates Foundation.
The success of emerging economic powers China and India have shown that high economic growth and private investment can help to reduce poverty.
Earlier this month, Zoellick announced he would boost the World Bank's contribution to the International Development Association, the world's biggest lending facility to poor countries, using some of IFC's $2.6 billion in profit from last year. The move gave IFC, and its private-sector focus, a bigger stake in a fund that has traditionally been a vehicle for disbursing aid and grant handouts to poor countries.
Thunell said it was fitting for IFC to expand its focus on nascent markets in the developing world, where economic growth has averaged more than 5 percent over the past decade, prompting demand for investments in energy, roads and general infrastructure.
"The world changes," he added. "It's in our articles that we should only do business where financing is not available at reasonable prices."
Thunell said IFC had already dramatically expanded its business in IDA-member countries where its contributions had risen to 37 percent in fiscal 2006/07 up from 25 percent in 2005/06.
He said IFC was experimenting in sectors that had the biggest impact on the poor, such as micro-finance, a mushrooming market that won Bangladeshi economist Muhammad Yunus a Nobel Peace Prize last year.
"We're trying new methods, also working with special programs for women entrepreneurs in Africa," he added. Thunell said as private capital has poured into large emerging economies, IFC's focus has also shifted to undeveloped, rural areas in countries such as China. It was also increasing its investments in home-grown medium-size companies in countries such as Brazil or Turkey, which want to expand internationally. "Everyone wants more of us," Thunell added. "Our bottleneck in terms of growing are constraints in terms of how quickly we can take in new people," he said.
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