International Development Association Private Sector Window

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As part of the IDA18 replenishment, the World Bank Group created the $2.5 billion IDA-IFC-MIGA Private Sector Window (PSW) to catalyze private sector investment in IDA-only countries, with a focus on fragile and conflict-affected states (FCS). The facility is being continued under IDA19 at the same funding level of $2.5 billion (with $2.0 billion allocated to IFC-implemented facilities).

Resources allocated to the IDA PSW are a critical source of co-investment funding and guarantees to address market failures, to de-risk projects for all capital providers, and enable IFC and the Multilateral Investment Guarantee Agency (MIGA) to support projects outside of their normal risk acceptance criteria in IDA-only and IDA-FCS countries.

IDA PSW Blended Finance Facilities

The IDA PSW is deployed through four facilities – three managed by IFC and one by MIGA:

  • Blended-Finance Facility to mitigate various financial risks by providing loans, equity, and guarantees to pioneering IFC investments across sectors with high development impact
  • Local-Currency Financing Facility for markets with limited currency hedging capabilities
  • Risk-Mitigation Facility to provide project-based guarantees—focusing on infrastructure or public-private partnership (PPP) projects – without sovereign backing
  • A MIGA Guarantee Facility to expand coverage of MIGA guarantees from the Multilateral Investment Guarantee Agency (MIGA)

Competitive Tenders and Open Access programs:

Transparency and good governance are essential to the effective and efficient use of IDA resources. IFC ensures open and, where possible, competitive approaches to the allocation of IDA PSW funds to infrastructure projects that are similar to public-concession situations. IFC is also rolling out “open access” programs under the IDA PSW where market participants that meet IFC’s standards can benefit from pre-defined terms, including concessional pricing. An example of this approach is IFC’s Small Loan Guarantee Program. IFC is planning to launch other similar programs.

Definitions:

Competitive Tenders in Blended Finance Projects: This refers to a situation where all bidders in a competitive tender are informed in advance of the tender of the potential availability of blended concessional finance (BF). Subsequently, specific BF terms (e.g., BF amount, concessional price range etc.) are provided to all pre-qualified bidders eligible for IFC financing.

Open Access to Blended Finance: “Open Access” to concessional funds provides transparency for eligible companies to access concessional finance without distorting markets or preferential allocation to select companies. This applies in cases where a market or project situation may not be conducive for a competitive tender process, but all eligible companies may access similar levels of concessional funding and terms as other companies in the same market.

The IDA Private Sector Window became operational on July 1, 2017. Projects approved by the Boards of Executive Directors are listed here.

Read more about IDA PSW