IFC creates opportunities to deliver investments with high impact that solve countries’ development challenges.
This requires IFC to go in early and collaborate proactively with World Bank and MIGA colleagues to create opportunities for new investment. Since there are not enough bankable projects addressing development priorities, our approach is to create them — not only projects, but markets as well. We have taken this approach before, but never at such scale and ambition as now, in all regions and all industries.
We call this approach working Upstream.
COVID-19 has sparked major capital outflows, deeply impacting local economies. Our client countries, especially those with large populations in extreme poverty or those emerging from years of conflict and fragility, are asking us for more as they grapple with the crisis and move toward recovery, with the goal of building resilience.
Working Upstream, we target sectors with significant gaps. We are working across the World Bank Group to help craft policy and regulatory conditions, with a clear line of sight to future investments. Rather than just responding to requests for financing, we take the initiative to develop bankable projects as sector policy reforms emerge. This involves crafting innovative private sector solutions that will improve people’s lives, assessing their feasibility, and mobilizing investors to work with us to make them happen. This year we hired 233 new staff to focus on Upstream work and created a new Global Upstream Department with a director who serves as our focal point along with the experienced leads in our key industry groups.
Upstream is the approach that, for example, underpins the World Bank Group’s Scaling Solar program, in which we support energy sector policy reforms to develop and de-risk solar projects and then provide financing, insurance, risk mitigation, and more. Initially focused on Africa, Scaling Solar has enabled Uzbekistan to attract Masdar Clean Energy of the United Arab Emirates to develop a 100-megawatt utility scale solar plant that will sell solar power at some of the lowest prices yet seen in emerging markets.
Approaches for Promising Upstream Sustainable Solutions
- Offshore wind power started in the North Sea and is still primarily used in Europe. But to make a difference in mitigating climate change, it needs to be competitive. Due to available resources, improved technology, and cost efficiencies, wind power is now emerging as an option in Asia. IFC helped launch the World Bank Group Offshore Wind Development Program, a $5 million initiative funded by the United Kingdom that works with emerging market governments to accelerate the adoption of offshore wind. India, the Philippines, and Sri Lanka are among the high-potential markets being assessed.
- Electric buses are fast emerging as an effective way to improve air quality and reduce greenhouse gases from urban transportation. Their technology and declining costs are expected to eventually change today’s long-established, diesel-based paradigm, but much work remains to be done to attract private investment at scale. IFC’s advisory and investment teams are working to accelerate this transition in emerging market cities such as Cali, Colombia, Lviv, Ukraine, and Ho Chi Minh City, Vietnam.
- Mini-grids are electric power generation and distribution systems that provide electricity to a few customers in a remote area or bring power to far more users in a town or city in ways that conventional utilities cannot. Most are powered by an energy source — usually solar panels — combined with battery storage and a local distribution system. Nigeria is a key market, seeking private investors to help develop 10,000 mini-grids by 2023, which would serve 14 percent of its population. An IFC-led workshop focused on developing an approach for scaling up mini-grids in Nigeria through increased private sector investment.
An Innovative Transaction in Morocco
IFC’s Upstream approach has helped Morocco find innovative solutions for its vast infrastructure finance needs. After two years of policy dialogue with the government alongside the World Bank, IFC, in partnership with the Government of Japan, has helped set the groundwork for a vibrant new subnational financing program that does not require sovereign guarantees. Complementing World Bank support, our $100 million loan, which includes funding mobilized through IFC’s MCPP, is backing a new tramway in Casablanca that will cut travel times by 35 percent during working hours and will help the Casablanca-Settat region upgrade several hundred kilometers of rural roads in remote rural communities, connecting some 400,000 people to schools, hospitals, and other services. It marks the first time in Morocco that a local subnational government has raised commercial financing without a sovereign guarantee — opening doors for other regions and subnational governments to do the same and meet Morocco’s ambitious decentralization agenda.
In Morocco, Casablanca’s tramway system is expanding with support from a $100 million IFC financing package. Photo: Hassan Chabbi/LightProd