Private Sector Solutions in Development: Frontier Markets

Frontier markets face difficult conditions, lacking the private investment needed to create jobs, improve services, and reduce poverty. But while incomes may be low, with the right support they can produce fast-growing, competitive companies that drive economies forward.

IFC defines frontier markets in two ways: the 82 poorest countries supported by the World Bank’s International Development Association (IDA), and the frontier regions of middle-income countries. These include many fragile and conflict-affected states. Improving lives in these countries is a priority for us.

In Nepal, entrepreneur Jackson Subeidi has found it easier to register a new business, thanks to an improved investment climate. In the past, he had to make repeated visits to a slow-moving government center. But recent improvements—supported by advisory services from IFC and the World Bank Group—allowed him to launch his latest start-up Hipster Technologies quickly. Adding a new electronic data base and filing system, the government’s Office of the Company Registrar has now registered 114,000 companies, most of them online.

In Kenya, Lucy Karuga started Eldoville Farm with just one cow, then built it into a thriving dairy company with a full product line. It now serves five-star hotels in Nairobi and exports across East Africa. Since receiving investment and advice from the IFC-backed Business Partners International Kenya SME Fund in 2009, its revenues are up by 25 percent, driving a 21 percent increase in employment.

For IFC, creating opportunity in frontier markets is crucial to helping meet the World Bank Group’s twin goals: ending extreme poverty and boosting shared prosperity. In FY13, more than half our investment projects and nearly two-thirds of our advisory expenditures were in IDA countries. Our investments in fragile and conflict-affected countries climbed to nearly $600 million.