The Addis Ababa Action Agenda recognized the importance of an expanded role of the private sector in achieving the Sustainable Development Goals (SDGs). Given its six decades of experience, its core competencies and global footprint, the International Finance Corporation (IFC) is well-placed to catalyze much needed private investment. IFC’s new corporate strategy (IFC 3.0) focuses the institution on creating markets and mobilizing private capital, with increased support to countries where private capital flows are inadequate to address major development gaps.
As part of the World Bank Group, IFC has two overarching goals—ending extreme poverty by 2030 and boosting shared prosperity—that are aligned with the SDGs. Through direct investments and advisory services, IFC provides private sector solutions that lay the foundation for sustainable and inclusive economic growth. The objective is to support operations that address development challenges at scale, through project-level outcomes as well as market creation. IFC’s new Anticipated Impact Measurement and Monitoring (AIMM) framework contributes to intensifying the focus on development impact while better articulating IFC’s narrative, emphasizing the benefits of steering business towards more challenging areas, and strengthening measurement and monitoring of both project and market-level effects.
Below is an overview of IFC’s strategic alignment with the SDGs, and articulation of how its operations contribute to achieving the SDGs.
IFC’s Strategic Alignment with the SDGs
IFC operations contribute to several SDGs. Integral to IFC’s mandate and aligned with the WBG’s twin goals are SDGs 1 and 10: ‘No Poverty’ and ‘Reduced Inequality.’ At the strategic sector level, IFC promotes investment and advisory projects in infrastructure, agriculture, financial inclusion, health and education—aligned with SDGs 2, 3, 4, 6, 7, and 9.
Across sectors and regions, IFC seeks to promote employment creation and economic growth, gender equality, environmental and social sustainability, and climate-change adaptation and mitigation—aligned with SDGs 8, 5, 12, and 13, respectively. Furthermore, IFC has prioritized partnership with private investors to mobilize new sources of finance—aligned with SDG 17.
This mapping shows IFC strategic alignment with 13 SDGs, as illustrated in Figure 1.
Figure 1 IFC strategic alignment with SDGs
The above is not an exhaustive mapping but represents an overview of IFC’s approach to support the achievement of the SDGs. Given that cross-sectoral impact is delivered through investments and advisory operations in the strategic sectors, some overlaps exist in this mapping.
IFC’s Corporate Line of Sight to the SDGs
IFC’s mandate is to tackle difficult development challenges by creating markets and mobilizing private capital. In the context of the IFC 3.0 strategy, IFC has introduced the Anticipated Impact Measurement and Monitoring (AIMM) system, which provides a clear line of sight from IFC’s mandate, through intermediate corporate objectives, to the SDGs, as illustrated in Figure 2.
Figure 2 IFC’s corporate line of sight to the SDGs
IFC contributes to the SDGs through two pathways, as illustrated in Figure 2, namely: project outcomes and market creation. IFC measures and reports on project outcomes, including the direct impact on stakeholders (including customers, suppliers, government, and the community), the indirect and induced effects on the economy (value added, employment, etc.), and environment and social impacts.
In addition, IFC projects are assessed for the ability to create markets, defined as enabling the development of new markets or contributing to systemic improvements in how markets function and deliver sustainable development impact.
IFC seeks to create markets through several ways: by demonstrating successful innovative business models that can be replicated; by stimulating competitiveness through efficiency gains, cost and/or price reductions, and new market entrants; by improving business regulatory frameworks to enable the development and growth of a vibrant private sector in a sustainable manner; and by building capacity and skills that open new market opportunities. This will enable IFC to achieve impact beyond what is obtained with the financing from IFC’s own balance sheet.
Through IFC 3.0, IFC is playing a key role in the World Bank Group’s Maximizing Finance for Development approach. To meet the ambitious SDGs, there is a need to expand the role of the private sector and mobilize private capital while reserving scarce public resources. Together with the World Bank and the Multilateral Investment Guarantee Agency (MIGA), IFC is working on this initiative by focusing on mobilizing private sector solutions for development and by creating markets that enable private investment to contribute to the achievement of the SDGs.