Saturday, February 24, 2024

World Bank intensifies focus on private sector, launches effort to scale investment in emerging markets

BY BAMIDELE FAMOOFO

The World Bank Group has launched the Private Sector Investment Lab, a concrete step in a broader effort to develop, and rapidly scale solutions that address the barriers preventing private sector investment in emerging markets.

The Bank noted that trillions of dollars of investment are required annually in emerging markets and developing countries to make adequate progress towards climate goals, to manage the risks of climate change, and to tackle poverty.

The scale of this challenge requires the private sector to play a significant role alongside the World Bank Group and other development institutions.

The World Bank Group is approaching this work with urgency and purpose bringing to bear its leadership capacity, knowledge, and resources to pursue tangible results.

The Lab’s work will include an emphasis on scaling transition finance, with an initial sectoral focus on renewable energy and energy infrastructure.

It will build on the World Bank’s current work to address existing barriers and ensure a bias towards ideas that can be implemented quickly.

The core group will be charged with utilizing new approaches and recommendations that support the World Bank’s capital mobilization at the scale needed.

This includes ideas for improved financing structures, ways to better align the World Bank Group with the needs and speed of private finance mobilization, approaches to balancing and allocating risks across investors, and new partnerships, as well as other areas where there is an opportunity to better catalyze private investment.

Ajay Banga, World Bank Group President announced the new initiative at the Summit for a New Global Financing Pact, alongside the Lab’s two co-chairs – Mark Carney and Shriti Vadera.

Banga noted that “For years, the World Bank Group, governments, and other multilateral institutions have tried – and fallen short – to mobilize meaningful private investment in emerging markets. Given the urgency and scale of our intertwined challenges, we must try a new approach – and the World Bank Group has a central role to play in this effort by using its resources, convening power, and knowledge to catalyze private capital more effectively.”

The Lab will comprise senior leaders from private finance and business who have experience financing, investing, and doing business in emerging markets and developing economies. That team will be announced in the coming weeks. They will work closely with experts from government, regulatory policy, and civil society – across regions and sectors.

The Lab will meet regularly and will report directly to the World Bank Group President Ajay Banga and World Bank Group leadership including Axel van Trotsenburg, Hiroshi Matano, Anna Bjerde, and Anshula Kant.

Makhtar Diop, Managing Director of the International Finance Corporation will oversee coordination and serve as a day-to-day point of contact into the World Bank Group.

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