Although poverty rates have declined, progress has been uneven, and the number of people living in extreme poverty remains unacceptably high. Around the globe, the majority of poor people reside in fragile and rural areas, where it is more difficult to reach them. That’s why this is a crucial time in development — and IFC understands that we cannot wait for opportunities to come to us.
As we carry out IFC’s Creating Markets strategy, we collaborate with the World Bank to seek development opportunities and work with governments to create conditions that will attract private finance.
IFC is partnering to introduce solutions that remove barriers to market development and establish a sound framework for projects to bear fruit. Scaling Solar, a World Bank Group program designed to make it faster, easier, and cheaper for developing countries to procure utility-scale solar power, is an example of this work. By providing standardized documents designed for a simple, transparent, and rapid tendering process, Scaling Solar facilitates the engagement of developers in new markets. This allows small countries to benefit from the economies of scale typical to larger countries and ensures competition from committed industry players.
The results speak for themselves: After Scaling Solar was signed in four African countries, the program was expanded beyond the region in FY19 — to Uzbekistan. The country’s government signed a mandate with IFC for a 100-megawatt project, making it the nation’s first competitive tender to select an independent power producer. This step forward is critical for a country where an ambitious program of market reforms has recently opened the door to private investment.
Scaling Solar mandates signed by June 2019 — in Ethiopia, Madagascar, Senegal, Uzbekistan, and Zambia — total 1.2 gigawatts of new solar power generation. In several of these markets, including in Zambia, where the first Scaling Solar plant came online this year, the program achieved a substantial reduction in local solar energy prices.
A joint IFC-World Bank approach is also being used to create new markets in Haiti, which is still recovering from the devastating 2010 earthquake. World Bank Group support helped the government remove legal barriers to facilitate the country’s first leasing entity and pave the way for private investment. Now, Ayiti Leasing, a subsidiary of the Alternative Insurance Company, helps owners of small and medium enterprises (SMEs) lease critical equipment on favorable terms. IFC provided an $11 million loan to the firm that included funding from the IDA Private Sector Window and a private investor as well as advisory support to help the company ramp up its operations. In Ayiti Leasing’s first two years, it financed more than $6.6 million in leased assets — more than 80 percent of that going to SMEs. The firm is expected to finance at least $15 million by May 2020.
Implementing IFC’s strategy to develop new and stronger markets for private sector solutions has required reshaping the way we work. Country strategies — based on country and private sector diagnostics — now help us establish sector priorities and potential engagements. The ability to assess development impact and market creation potential before the start of a project — achieved by our Anticipated Impact Measurement and Monitoring (AIMM) system (see page 86) — has influenced IFC’s project selection and design, and it will lead to more projects that can create markets.