The World Bank's private sector arm, criticised by civil society for investing largely in middle income countries, will ratchet up its projects in Africa and poor regions, the agency's head said on Wednesday.
We are getting more and more represented in Africa and I expect that to continue, International Finance Corp. chief Lars Thunell said. I'm going to make sure it happens.
A third of last year's $8.3 billion in investments went to Latin America and the Caribbean compared with 16 percent to Africa and the Middle East two of three priority frontier markets Thunell has singled out. Rural western China is his other priority region.
Sub-Saharan Africa, where a large number of low-income countries are concentrated, got 42 percent of the IFC's technical assistance advice on laws, regulations and good governance out of last year's $200 million in those services.
It will definitely happen in the number of projects, but the average size of projects are small in Africa and in some middle-income countries, he said on the sidelines of the World Bank and International Monetary Fund annual meetings.
To the extent that different countries are at varying stages of development, and have comparative advantages, the IFC should follow a step-by-step approach to project financing, he said.
We look at the needs of a country and try to have a dialogue, he said between meetings with government officials. You need to have a functioning financial system, you need to have electricity and water and ports that function.
Once those are in place or being established, then the IFC should focus on a country's competitive advantages, be it shoes in Vietnam or textiles in Bangladesh, he added.
In middle-income countries where the IFC has gone through those stages, Thunell wants to see the lender drilling down to seek out small and medium-sized firms with which to work or fund projects in rural areas, as it is doing in Turkey at present.
We want to go where the private sector doesn't dare to go, he said, adding that IFC backed a Turkish bank that started funding business in Romania.
China's request for IFC projects in its western hinterland, where an estimated 500 million people live on $2 a day, runs from infrastructure to power generation and banking, he said.We're trying to redirect our resources to do that, Thunell said, adding the IFC had converted four municipal credit unions into banks and was doing the same with a rural banking cooperative.