For six decades, we have held true to our founding vision—that the private sector is essential to development.
In this series of stories, you’ll learn more about how IFC grew from a small organization to become the largest global development institution focused on the private sector.
The year was 1959—still early days in development thinking, long before the term “emerging markets” was in use. The world’s focus was far more on Cold War politics than cross-border capital flows or the role of private sector development
Beneath the surface, however, lay great opportunity in the world’s lower-income countries. To seize it, new investment initiatives needed to be launched—opening the doors to increased private capital so countries could build on their potential, benefiting both themselves and their investors.
Just three years after our founding, IFC took a key early step in this direction, going into the financial markets in 1959 to raise $2 million from commercial banks for Brazilian pulp and paper producer Champion Celulose. Supplementing our own $2 million loan, this first IFC loan syndication financed a new $20 million pulp mill in São Paulo state that still operates today. At the time, the package financed equipment imports and permanent working capital for the mill that today is owned by one of the world’s largest pulp companies, International Paper.
This early transaction gave rise to today’s IFC loan syndications program, the oldest and largest of its kind among multilateral development banks. It has mobilized approximately $50 billion from commercial lenders for more than 1,000 emerging market projects over the years.
From the early days, IFC also knew that private sector development could not only be financed transaction-by-transaction from abroad. It would also require the growth of strong local financial institutions that could mobilize and re-invest capital on their own.
We began this work in 1962, working jointly with the World Bank on specialized institutions called development finance corporations that targeted local businesses with limited access to capital. Among them was the Korean Development Finance Corporation (KDFC). IFC helped launch it in 1967 as a founding shareholder, providing a $702,000 equity investment that came alongside $5 million in loans from the World Bank and $17 million from foreign and domestic investors.
Today KDFC is known as KB Kookmin Bank, one of the four largest in its country. The capital IFC helped attract proved critical, crowding in private investment at just the right stage of the Republic of Korea’s industrial growth, supporting what would soon become one of the world’s greatest development success stories.