IFC is adapting to a world in transformation. Developing countries, which once accounted for a small share of the world economy, are now major drivers of global growth.
These countries are home to an ascendant consumer class—and more than a billion people who survive on less than $1.25 a day. Financial crises have heightened the need for faster job creation. The rise of social media has amplified popular demands for greater transparency and accountability among governments and public institutions.
Against that backdrop, IFC has redefined development finance and the way we do business. We have established innovative ways to mobilize capital, and expanded our work in the poorest and most fragile areas of the world. We have more than doubled our investments in Africa over the last five years and have increased our activities in equity and short-term finance, providing essential liquidity for global trade and smaller enterprises. We have helped build crucial global partnerships for development and have been a leader in thinking through the challenges of private sector development.
Our success has helped governments and stakeholders recognize the vital role the private sector can play in development. For entrepreneurship and job creation to even exist in poor countries, for tax revenues to rise where governments are breaking free from years of conflict, there must be a functioning private sector.
Consider that hundreds of millions of new jobs are needed to lower unemployment over the next decade. Or that up to $300 billion in annual investment will be needed in the next two decades to mitigate and adapt to climate change. It cannot be done without the private sector. As the world’s largest private sector development institution, IFC’s role is clear.
New market players are changing the face of development. We must create more opportunity through partnerships—collaborating with the Group of 20, with foundations, with the full array of mobilization partners, and with our colleagues across the World Bank Group. That philosophy is behind our access-to-finance and inclusive-business work with the G-20, our efforts to increase local-currency finance, our Water Resources Group partnership with private sector businesses to boost the availability of water, and our push for more companies and development institutions to embrace our environmental and social standards.
Recent economic and financial crises have triggered new challenges. In times of uncertainty, banks often conserve capital and pull back lending in areas traditionally considered to be risky, including emerging markets. The consequences can be severe. We are responding by finding and catalyzing new sources of capital, ramping up our short-term finance activities, and putting a special emphasis on creating opportunities for women—who own more than a third of small enterprises in developing countries.
The World Bank Group has committed to make $27 billion in funding available for countries affected by the euro-zone crisis. IFC is a critical part of that effort—we have launched an array of innovative initiatives to increase the availability of capital and support vulnerable markets in eastern and southern Europe.
We created the IFC Asset Management Company in 2009 so developing countries could have a new source of long-term equity capital. AMC is already showing its promise, with $4.5 billion under management at the end of FY12. We have also taken strides to ensure that trade and commodity finance—without which international trade comes to a standstill—doesn’t disappear in developing countries. Our trade-finance investments, a low-risk way to expand our development impact, continue to grow.
We are also changing the way we work within IFC, part of a drive to bring staff and decision-making authority closer to clients. More than half of our staff now work in offices in developing countries. We opened new offices in a host of countries, and an operations center in Istanbul to speed the processing of our transactions. These changes have allowed us to make the most of our global knowledge and local expertise. We are also redoubling our focus on results—introducing the IFC Development Goals to help drive IFC strategy and decision-making.
I want to thank the entire team at IFC for making my time at the Corporation so personally and professionally fulfilling. Their dedication and unrelenting focus on creating opportunity and improving lives have given IFC a remarkable record of success.
It has been an honor to be a part of this effort over the past six years. The work we do here is having a critical impact—making a difference for the poor and building resilient private sectors where none had previously existed.
I am confident IFC is in position to address the developing world’s current challenges, and to respond with agility and ingenuity to new opportunities to achieve our vision in the years ahead.
June 30, 2012