Financing Private Infrastructure

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.


In the late 1980s and early 1990s, a new challenge arose on the global agenda: raising private capital for infrastructure in emerging markets.

The needs had become vast, beyond the reach of government resources alone. New solutions were needed—particularly innovative business models that could tap the power of the private sector to meet development goals.

IFC was at the forefront of the response. Throughout the decade we financed a new wave of privately funded infrastructure projects, helping clients in power, water, transport, and telecoms find profitable models of providing essential services.

An early focus country was the Philippines, whose high external debt burden at the time limited the government’s ability to invest in infrastructure projects. In fiscal year 1989, IFC provided a $11 million debt and equity financing package for Hong Kong–based Hopewell Holdings, developer of a $40 million plant supplying 200 megawatts of power to the national utility.

IFC’s financing in this and other landmark projects enabled the Philippines to mobilize private investment to meet priority infrastructure needs, without relying on constrained national budgets. This model would be repeated many times over in the coming years in numerous countries.

“The need is enormous,” Hopewell founder Sir Gordon Wu later said. “What IFC, the World Bank, and MIGA can do is to play the catalytic role, rather than finance everything themselves, which they just cannot. The need is just too big. But if they play the role of the catalyst, then that will facilitate greater cross-border flows of money.”

In the power sector alone, IFC helped financed 57 projects in 37 countries in the 1990s—supporting projects that cost $14.4 billion in all. That marked a dramatic increase over the previous three decades, when IFC financed seven projects—costing a total of $703 million—in four countries.

We played a critical role in other sectors as well. In 1994, for example, IFC invested $5.6 million in a small start-up mobile operator in Uganda that four years later became a new regional telecommunications company, Celtel International. No one else was willing to finance it at the time, but IFC took the risk.

At the time, Uganda had only 23,000 telephone lines for a population of 17 million—with fewer than 50 percent of its calls going through. Headed by Mohammed Ibrahim, Celtel soon became the pioneer mobile-phone company in Africa, contributing considerably to lower prices and the region’s dramatic growth in mobile-phone use. This is now considered one of the most transformational events in the continent’s development history.

Celtel worked closely with IFC for several years to create widespread access to mobile-phone service in Africa. By 2014, twenty years after IFC’s initial investment in Celtel, Africa had 608 million mobile connections. People at every income level benefited—not just through the convenience of modern communications but also through improved access to health care, education, and financial services.

Overall, private participation in infrastructure during these years represented a game-changer in development—altering the scope of private investment in emerging markets while also yielding major improvements in the delivery of basic public services.


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