Private Sector Development in IDA Countries
An Integrated World Bank Group Approach
The world’s poorest countries face enormous demands for development finance that simply cannot be met
through public resources.
The World Bank Group believes that broad, inclusive growth, underpinned by a thriving private sector, is central
to ending poverty. Achieving the results that are important to the poorest countries – from filling large
infrastructure gaps, to expanding access to basic services and meeting the jobs agenda – demands
private sector and effective, complementary action across the public and
At the same time, emerging patterns of global economic growth—sparked by new sources of finance,
knowledge, partnerships, and innovation—are opening new opportunities for the poorest countries.
them seize these opportunities and confront complex challenges also demands comprehensive and
coordinated development support.
“4 for 1”—Enhancing World Bank Group Synergies
The International Development Association (IDA), the
World Bank’s fund for the poorest, is working to
and maximize the benefits of public and private sector
synergies in a more systematic way
to address this need.
IDA is working to optimize the World Bank Group’s “4 for 1”
value proposition—that is, tap the combined strengths and
comparative advantages of IDA, the International Bank for
Reconstruction and Development (IBRD), the International
Finance Corporation (IFC) and the Multilateral Investment
Guarantee Agency (MIGA)—to enable IDA countries to have
better access to a comprehensive package of support.
World Bank Group synergies are being enhanced by:
- Creating joint business plans and focusing on private
sector development, especially in fragile and conflict-
- Expanding the range of IDA guarantee instruments to
attract and leverage private resources.
- Catalyzing transformational investments to address
bottlenecks to sustainable growth.
More Bang for the Buck with IDA
IDA has a unique capacity to leverage public and private resources
It’s estimated that IDA has the potential to leverage up to $9 for
each dollar invested, depending on the type of IDA instrument, sector
Over the past decade, IDA’s partial risk guarantees have leveraged
almost $6 of private capital and $9 of total project financing for every
$1 committed by IDA. In transport, each $1 committed by IDA from
FY00 through FY12 leveraged $6 in private transport investment. By
working closely with its World Bank Group partners, IDA can further
catalyze private sector-led growth to deliver deeper and more lasting
results than ever.
The World Bank Group’s new change agenda will reinforce
these synergies by stepping up teamwork, information-
sharing and joint activities for more integrated client
support. This will further enable IDA to provide increasingly
customized, integrated development solutions.
This emphasis builds on many years of World Bank Group
collaboration that has yielded extensive results in many
countries across a range of sectors.
Examples of the World Bank Group
at Work in IDA Countries
Collaboration across IDA, IBRD, IFC and MIGA has grown
over time and spans a range of activities at the regional,
country, sector and thematic levels. This includes the preparation of joint Country Assistance Strategies, joint investment
projects, notably for infrastructure and the financial sector, and
on advisory services and investment climate.
IDA, IFC and MIGA have helped turn
around a barely functioning
decades of conflict. By 2012, 18 million people had
access to a phone compared with only 57,000
functioning phone lines in 2002. The Bank Group came
together to create an environment where change could
flourish and then encouraged the private sector to
jumpstart investment. IDA financed the digital
transmission network, the World Bank/IFC helped the
government reform the policies and regulations needed
to attract private investment, and MIGA came in with a
guarantee to support the mobile operator against
- In Africa:
Approximately 80 percent of
’s people still
lack access to
, and the average cost of
electricity is prohibitively high ($0.20/kWh, twice that in
OECD countries). IFC, IDA, and MIGA are using a range of
innovative tools to boost private sector participation in
electricity generation projects.
- In Burundi:
IDA and IFC provided technical assistance to
reduce the compliance time and costs of paying
by 10 percent; simplify the SME tax regime; expand the tax base; and align the tax-incentives
regime with East African Community standards. The
reforms included the establishment of a One-Stop-Shop
for facilitating business in 2012, and reduction in the time
required for business registration from 14 to 8 days.
Costs dropped from 117 to 18 percent of GDP per capita
and the annual number of registered companies more
than doubled from 700 in 2010 to 1,500 in 2012.
- In Côte d’Ivoire:
The World Bank Group is working
support the government’s efforts to
boost electricity output
by around 80 percent over the
next six years. With financing from IFC, an IDA partial risk
guarantee, and a MIGA political risk guarantee, the Azito
thermal power plant provides the state power utility with
more than a third of its electricity.
- In the Democratic Republic of Congo:
intervention in the
of the Democratic
Republic of Congo more than 40 years ago helped
kickstart domestic private sector growth with the creation
of a development finance corporation. The Bank Group’s
work in the country’s financial sector continues today.
- In Kenya:
The Bank Group supported the private sector
and the Kenyan government to work together on ways to
increase much needed access to electricity
country through support from a unique package of IDA-
supported partial risk guarantees, paired with long-term
debt and political risk guarantees from the IFC and MIGA.
- In Uganda:
The privately sponsored Bujagali hydropower
project has transformed
Uganda’s power sector. Inaugurated in 2012, the project is already meeting almost
50 percent of the country’s electricity needs, selling power
for about a third the previous cost. Sponsored by a
consortium of Sithe Global Power of the US and the Aga
Khan Development Network, the 250 MW plant on the
White Nile received $130 million in IFC loans, a $115 million
IDA guarantee, and $115 million in MIGA insurance. The
Bank Group supported the work that laid the foundation for
the project through challenging conditions for nearly 10
years before bringing the financing agreements to a close,
beginning its efforts at a time when less than 10 percent of
Uganda’s population had access to power.
Strengthening Joint Approaches
across IDA, IBRD, IFC and MIGA
The Bank Group is taking a number of important steps to
optimize its value proposition and to further mobilize private
sector involvement in IDA countries.
- Joint business plans
: The Bank Group plans to develop
joint (IDA-IFC-MIGA) plans in about
20 IDA countries
during the IDA17 period (July 1, 2014–June 30, 2017),
covering a range of interventions—from support for
women’s economic empowerment, sustainable cities/
green buildings, climate change adaptation (including the
planned expansion of the World Bank-IFC “Lighting Africa
Program” across the African continent and into India),
agribusiness, and the food supply chain, to private sector
engagement in the delivery of education and health care.
- Joint approaches to private sector development in
fragile and conflict-affected states:
business plans will be prepared during IDA17
, several of
which are already underway. For example, in Nepal, IDA-
IFC-MIGA are working together in support of the energy
sector along with critical banking sector reforms to increase
business activity. Efforts will emphasize reducing barriers to
business growth related to access to power, finance, and
markets, promoting an enabling environment for business
along with transparency and the rule of law, and using risk
tools to facilitate increased private investment.
- IDA is also expanding its range of guarantee
—with the introduction of Partial Credit
Guarantees and Policy Based Guarantees—to attract and
leverage private resources, particularly long-term private
financing for infrastructure.
alignment of environmental and social
safeguards for private sector projects among WBG
was approved by the Bank’s Board in June
The World Bank Group will also work together to
transformational investments for inclusive and
sustainable growth, with a sharpened focus on
The World Bank Group and IDA at-a-Glance
IDA, IFC, and MIGA each offer distinct competencies that together create a holistic framework for catalyzing
financing and collaboration in countries that often fail to attract private investment.
IDA’s support for private sector development:
Roughly one-quarter of IDA commitments in recent years
has focused on strengthening the enabling environment for private investment, including the regulatory
framework and institutions, thus helping catalyze private sector investment and growth.
IDA countries are also a critical priority for the IFC:
IFC’s investments in IDA countries have grown
six-fold since fiscal year 2005, now reaching more than $6 billion a year. IFC helps create an “enabling”
business environment through firm-level interventions, promotion of global collective action, governance
and standard-setting. Over the next three years, the aim is for about half of all IFC investment projects and
about 60 percent of all advisory services projects to target IDA countries, with an increasing focus on fragile
and conflict-affected states and other challenging locations.
One of MIGA’s top strategic priorities is to support investment in IDA countries:
private sector participation through political risk guarantees for investments in a broad range of sectors,
helping to boost investment and keep revenues flowing. In FY12, MIGA supported 25 projects in IDA
countries with $1.1 billion in investment guarantees—41 percent of the gross portfolio. By mid-May,
MIGA had more than doubled the guarantees over FY11, from 20 percent of the portfolio supporting
private investment in IDA countries to 47 percent of the gross portfolio.
works in middle-income countries and creditworthy poorer countries by promoting sustainable
development through loans, guarantees, risk management products, and analytical and advisory services.
IDA and IBRD countries partner though knowledge exchange, innovation, South-South learning, and finance.
As an integral part of the new integrated World Bank Group strategy, IDA will strengthen its ability to
catalyze private resources, promote foreign and domestic private investment, and maximize the positive
spillovers of private investment for IDA countries.
The International Development Association
The International Development Association (IDA) is a game-changer in the field of development, paving the way for others in the
most difficult and complex situations to help hundreds of millions of people escape the cycle of abject poverty.
- IDA provides leadership on global challenges. From its support for climate resilience to the creation of jobs to get
combatants back into society, IDA rallies others on tough issues for the common good and helps make the world more secure.
- IDA is transformational. IDA helps countries develop solutions that have literally reshaped the development landscape—
from its history-changing agriculture solutions for millions of South Asians who faced starvation in the 1970s to its pioneering
work in the areas of debt relief and the phase-out of leaded gasoline.
- IDA is there for the long haul. IDA stays in a country after the cameras leave, emphasizing long-term growth and capability
to make sure results are sustained.
- When the poorest are ignored because they’re not profitable, IDA delivers. IDA provides dignity and quality of life,
bringing clean water, electricity, and toilets to hundreds of millions of poor people.
- IDA makes the world a better place for girls and women. IDA works to reverse millennia of gender discrimination
by getting girls to school, helping women access financing to start small businesses, and ultimately helping to improve the
economic prospects of families and communities.
- Working with the World Bank Group, IDA brings an integrated approach to development. IDA helps create environments
where change can flourish and where the private sector can jump-start investment.