Results - 19 of 19 items found
Jan 30, 2020
Domestic capital markets that are deep, efficient, and well-regulated can create access to long-term, local-currency finance. Interviews with market participants reveal four important findings. First, there are two distinct phases of capital market development, an embryonic phase in which the government is predominant and a mature phase in which the capital market starts to serve the private sector. Second, capital market development requires continuous monitoring and policy interventions due to changing market stages. Third, while capital markets are a crucial source of large volume, long-term local currency finance, they often fail smaller countries and companies. Finally, as the capital market develops, intangible or “soft” factors become more important.
English | 8 Pages - January - Note 77 | IFC 2020
Oct 7, 2019
How big is the financing gap to achieve the 2030 Sustainable Development Goals (SDGs)? Can private capital fill the gap? This note provides an updated overview of estimates of SDG financing in low- and middle-income countries and gives an analytical and data-based foundation for discussion. Based on a review of recent studies, as well as IFC’s own calculations of cross-border flow trends, the note documents the ongoing and significant SDG financing gap. Raising taxes to expand public spending is an option for many middle-income countries to fill the gap, but it will be insufficient for low-income countries. Private financing, especially of infrastructure, can also contribute to bridging the gap, but it will depend on the availability of investable projects. Capital market development and improved domestic financial systems can help intermediate more private capital into available investment opportunities.
English | 8 Pages - October - Note 73 | IFC 2019
Sep 30, 2019
In new and challenging markets, blended concessional finance—the combining of concessional funds with other types of finance, on commercial terms—is increasingly used to mobilize capital and accelerate high impact private sector investments. However, a relatively new approach for the provision of concessional capital for use by development finance institutions is emerging—the “returnable capital” model. With this new model, principal, interest, and other amounts are repaid to the original provider of funds (usually a government) on a regular basis. Because this can reduce the impact on donor government budgets, more government funds could become available for collaboration with the private sector. This note explores the effects of this new model on incentives, accounting, resource management, and reporting.
English | 8 Pages - September - Note 72 | IFC 2019
Jun 26, 2019
The rapid growth of credit over the last two decades has led to increased levels of non-performing loans across the globe. This can reduce lending and hamper economic recovery, creating a vicious circle that can be difficult to break. However, robust distressed assets markets can interrupt this loop, allowing for a return to financial stability and economic growth. IFC, through its Distressed Asset Recovery Program (DARP), is taking the lead in developing strong distressed assets markets in emerging economies.
English | 80 pages | IFC 2019
Jan 8, 2019
Emerging market countries require substantial foreign investment for development, economic growth, and poverty alleviation. There are multiple challenges to attracting this investment, however, ranging from political and economic instability to corruption, poor security, and small market size. An additional challenge is inadequate delivery of key services like electricity and other utilities that private firms and investors rely on. Service performance guarantees are a promising approach to addressing this issue. These guarantees enable firms to purchase protection against poor or insufficient service delivery, and they may work particularly well in industrial or export processing zones by ensuring that shortfalls in service delivery are measured, reported, and addressed in a timely manner.
English | 8 pages - January - Note 62 | IFC 2019
Jul 20, 2018
Private businesses and investors can create markets and accelerate growth for low-income communities in emerging markets. In doing so, they benefit from estimates of poverty in the targeted market segments they seek to serve. While national household surveys provide poverty data, they are often too costly and overly broad for the purposes of private enterprises. Use of the Poverty Probability Index can help businesses improve their estimates of poverty and thereby better tailor their operations and strategies to specific populations.
English | 6pages - July - Note 56 | IFC 2018
Apr 17, 2018
At the heart of IFC’s approach to blended finance are efforts to create and help sustain private markets with strong development impact. This note explores the role of blended finance in creating markets and looks at lessons from three blended finance projects and structures—and how each contributed to the creation of markets that are scalable, sustainable, and resilient.
English | 6pages - April - Note 51 - IFC 2018
Jan 30, 2018
Agriculture is central to emerging market economies. In Africa it accounts for as much as 65 percent of employment and 32 percent of output. Globally, two-thirds of the world’s poor—some 750 million people—work in rural areas. But as economies expand and production shifts to manufacturing and services, agriculture’s share of employment and GDP decreases. At the same time, the broader agribusiness industry—business activities performed “from farm to fork”—is playing a more important role in growth and development. Improved land rights, better regulation of input and output markets, and better access to seeds and fertilizer are all critical to this transition. In Part II, the emphasis is on a shift of R&D spending from the public sector to private enterprises in middle-income countries focused on market opportunities related to advanced technologies and knowledge transfers.
English | 5 Pages - January - Note 50 | IFC, 2018
Jan 30, 2018
Agriculture is central to emerging market economies. In Africa it accounts for as much as 65 percent of employment and 32 percent of output. Globally, two-thirds of the world’s poor—some 750 million people—work in rural areas. But as economies expand and production shifts to manufacturing and services, agriculture’s share of employment and GDP decreases. At the same time, the broader agribusiness industry—business activities performed “from farm to fork”—is playing a more important role in growth and development. In Part I, the emphasis is on improved land rights, better regulation of input and output markets, and better access to seeds and fertilizer that are all critical to this transition.
English | 7 Pages - January - Note 49 | IFC, 2018
Apr 27, 2017
Commodity exchanges can provide emerging market economies with orderly, transparent, and efficient markets by acting as mechanisms that mitigate price risk, discover equilibrium prices, and connect buyers and sellers. Exchanges can also reduce transaction costs and information asymmetries by using technology to disseminate market information while creating better supply chains. The Ethiopia Commodity Exchange is striving to transform Ethiopia’s agriculture sector from a fragmented one marked by high transaction costs and low quality standards to a thriving and reliable part of the country’s economy. Ethiopia’s exchange continues to expand its activity across the farming regions of the country.
English | 4 Pages - April - Note 37 | IFC, 2017
Feb 8, 2017
The private sector plays an important role in emerging market countries with limited education capacity by providing quality schooling at all levels. By strengthening connections between education providers and private enterprises, it helps equip students with skills needed for successful employment, thereby creating additional potential for development. Private firms also play multiple roles in supporting public education by publishing learning materials and developing assessment tools and educational software, building and maintaining schools, and enabling financial support for students in need of it.
English | 6 Pages - February - Note 32 | IFC, 2017
Feb 1, 2017
The role of private enterprise in healthcare is to complement and support improvements to public healthcare, not to supplant it. Private providers are the primary source of care for the world’s poorest people and their record is often as good as or better than that of public providers. As low and middle-income economies grow and resources become more widely available, competition and consumer choice offer substantial potential to improve the reach, quality, and efficiency of both private and public provision.
English | 6 Pages - February - Note 31 | IFC, 2017
Jan 25, 2017
The financing needs of emerging markets are enormous. Sectors such as infrastructure, small business, and housing are vital to a nation’s sustainable development and require substantial financing support. Since these sectors primarily generate revenues in local currency, foreign currency financing may incur a mismatch that can expose emerging market borrowers to exchange rate risk in times of high volatility. Local currency bond issuance is a significant potential option that avoids such risks and can support private sector investment in productive sectors of emerging markets.
English | 3 Pages - January - Note 30 | IFC, 2017
Jan 18, 2017
Significant additional resources from the private sector will be needed for infrastructure in emerging market countries if the Sustainable Development Goals are to be achieved. Scaling up the role that private firms and investors play in infrastructure provision will require a better understanding of the advantages and disadvantages of public versus private provision, including the issues and incentives that need to be considered in order to find the right balance between the two.
English | 6 Pages - January - Note 29 | IFC, 2017
Jan 11, 2017
Rudimentary markets for capital—for raising money and investing—exist in even the world’s remotest places. Yet they are often speculative ventures prone to fraud. Prudent macroeconomic management, regulation, investor protection, and innovation are necessary to transition them into modern, efficient, well-functioning markets capable of serving the needs of investors, entrepreneurs, borrowers, and lenders alike.
English | 6 Pages - January - Note 28 | IFC, 2017
Sep 29, 2016
In fragile settings the challenges of building a business are increased by a legacy of conflict, instability, and loss. Institutions struggle to provide basic services, let alone the complex reforms and public goods necessary for an enabling business environment. Despite these substantial obstacles, it is possible to create a sophisticated business in even the most challenging settings. The Congo Call Center is one such example—a formal services firm reliant on costly, imported technology that has grown and prospered in the Democratic Republic of Congo.
English | 2 Pages - September - Note 16 | © IFC, 2016
Apr 11, 2016
Governments lack the fiscal space to fund the enormous investments required to reach the Sustainable Development Goals adopted by numerous countries in 2015. To meet those goals they are exploring how to ‘blend’ public aid money with private finance in order to make aid spending go further and crowd in more private investment.
English | 4 Pages - April - Note 3 | © IFC, 2016
Apr 11, 2016
How can businesses in emerging markets tap local capital markets to expand? A microfinance lender in Zambia did just that with assistance from multilateral development banks.
English | 2 Pages - April - Note 2 | © IFC, 2016
Apr 11, 2016
Domestic capital markets are a vital source of stable, sustainable finance, yet they are underdeveloped across the emerging market world, leading to illiquidity, elevated transaction costs, and other inefficiencies. Development banks can help foster stronger capital markets in various ways, from local bond issuances and partial credit guarantees to anchor investments and securitization assistance.
English | 2 Pages - April - Note 1 | © IFC, 2016