The small island nation of Timor-Leste is experiencing its longest period of stability since achieving independence in 2002. But as in many fragile and conflict-affected areas, past volatility left behind poor infrastructure and limited economic development.
To jumpstart progress, IFC worked with Timor-Leste’s government to deliver the Tibar Bay Port, the country’s first public-private partnership (PPP) project. When the port becomes operational in 2021, it will reduce congestion at the existing port, easing a significant economic bottleneck. IFC support enabled legislation for this PPP, helped build capacity to develop and implement the necessary contracts, and facilitated a transparent tender process that attracted investors. The new port will create 500 direct jobs.
This multipronged approach illustrates IFC’s strategy in fragile and conflict-affected situations. We help create and strengthen institutions, mobilize investment, and promote private entrepreneurship — demonstrating throughout how this approach addresses critical development challenges. In FY19, our investments in fragile and conflict-affected areas totaled nearly $545 million, including funds mobilized from other investors. By 2030, we expect 40 percent of IFC’s annual investment commitments to be in IDA countries — those eligible to borrow from the World Bank’s International Development Association.
Today, about 1.3 billion people live in IDA countries. Afghanistan is one of them, and we are helping make a difference for citizens trying to recover from three decades of conflict. One of the legacies of this instability is electricity consumption that is among the lowest in the world. Fewer than 30 percent of Afghans are connected to the grid. The country imports up to 80 percent of its energy, and frequent blackouts affect some parts of the country for up to 15 hours a day. IFC is working with the government to design a 40-megawatt solar-power plant that will more than double the country’s current solar energy capacity and that will offer a new model for subsequent solar projects.
Small and medium enterprises (SMEs) are important drivers of growth in the world’s poorest countries, but their growth is often hindered by limited access to financial services. Our Small Loan Guarantee Program (SLGP) pools a portfolio of IFC risk-sharing facilities and synchronizes with broader World Bank Group efforts to improve the enabling environment for these SMEs to access finance. In FY19, we increased our existing investment in SLGP by $400 million. The program is supported by an IDA Private Sector Window first-loss guarantee of up to $120 million. This is expected to enable up to $800 million in SME lending in low-income countries around the world. In Haiti, for example, a $2.5 million risk-sharing facility we committed with Société Générale de Solidarité (Sogesol) is expected to help the microfinance institution provide more than 500 loans to SMEs and agribusinesses by 2023, fostering economic growth and job creation.
IFC also backs companies that can successfully scale up their business in one challenging market and then leverage that experience to expand across borders. For example, we provided a €24 million financing package to Gaselia Group, one of the largest beverage and packaging groups in West Africa. The investment will help the company expand operations in Côte d’Ivoire and Mali and set up a soft-drink project in Guinea.