IFC outreach to donors for technical assistance funding began in the 1970s, in the early days of the Capital Markets Department. But no external funding was actually received until the 1980s, when the small and medium enterprise development work first got underway. In the sunny Caribbean, of all places…
Did a taxicab driver in Barbados forever change the way IFC does business?
In 1980, the director of what was then known as IFC’s Development Department, Dick Richardson, was on mission in Barbados. Taking a cab to meet a client, he found the driver to be an entrepreneurial sort, seemingly having the potential to do much more for his country’s economy. Curious by nature, Richardson asked the driver about his business and what it would take to built it up.
The answer came back like a shot: nothing...I don’t have enough money, and the banks don’t want to lend to someone like me. I’m too small for them. They only want to deal with the big guys.
From this humble exchange, an idea was planted. Richardson, an economist, knew that small businesses drove economic growth and job creation in the OECD countries, and that there was no reason it shouldn’t be the same in the developing world. Helping local small-scale entrepreneurs develop bankable business plans and obtain the financing, he thought, would be highly valuable role for IFC to play.
There was just one problem: IFC had never done this. It was an investment institution, and didn’t have any funding for technical assistance programs.
Thus was created the Caribbean Project Development Facility, created in 1982 as IFC’s first donor-funded operation and later renamed the Caribbean and Central American Business Advisory Service. Launched for an initial three years with $3.8 million from IFC, the Inter-American Development Bank, UNDP, the U.S., Canadian, and Dutch aid agencies, it was the first of IFC’s network of small and medium enterprise facilities.
In time the Barbados taxicab driver-inspired facility would be credited with helping local entrepreneurs raise $170 million for projects that created 17,500 jobs before it was closed down in the 1990s. Perhaps more important was the way it cross-fertilized other good ideas for IFC’s nascent technical assistance function in the 1980s. The first of these was the first technical assistance trust fund, a $1 million Canadian donor vehicle that was created in 1986, the acorn that grew into the large family of trust funds that IFC manages today. It was soon followed by two attempts to replicate and expand on the Caribbean venture, the African Project Development Facility (precursor of today’s PEP-Africa program) and the African Management Services Company (AMSCO). In time, many others in IFC grew smitten with the concept of donor-funded technical assistance as well, and a full-scale line of business to compliment our investment activities was born
If you have an idea for a “postcard from the past,” please email Celeste Diaz Ferraro at cdiazferraro@ifc.org.
