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CGD Policy Blogs

 

Makhtar Diop speaks into a microphone in front of an orange backdrop

An Agenda for Makhtar Diop at the IFC

Makhtar Diop, former minister of finance in Senegal and current vice president for infrastructure at the World Bank, has been tapped to be the next head of the International Finance Corporation, the World Bank Group’s private sector investment arm. This is welcome news: Diop’s experience and talents can help steer IFC towards greater development impact during the COVID-19 pandemic and beyond.

An image showing solar panels and a city skyline in the background.

What Are the Development Outcomes of Development Finance?

What impact do development finance institutions (DFIs) like the IFC have on actual development? Today, George Yang and I release a paper that tries to take a sectoral approach to impact: does an IFC electricity investment lead to more power production per capita in a country, or financing provided to local banks lead to a larger proportion of people with a bank account?

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If Development Finance Institutions Are Providing Aid, They Should Act Accordingly

How should member countries of the OECD's Development Assistance Committee classify their support to private sector investments in developing countries though development finance institutions? Either way, donors have decided that DFIs are in the aid business. And that means that DFIs should follow the principles of effective aid that DAC donors have signed up to.

An image of the financial sector buildings

Subsidy Use in Development Finance: Competitive, Capped, Transparent

When development finance institutions (DFIs) use subsidies to support private firms in developing countries, they fundamentally change the nature of their business. To ensure the maximum development impact of scarce aid resources, subsidies should be competitive wherever possible, capped if not competitive, and transparent in every case.

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Lending Practices of the Private Sector Window: How Effective are They?

The Private Sector Window (PSW) takes resources from the World Bank’s soft lending arm, the International Development Association (IDA), and uses it to support private sector investments in poorer developing countries.This is a comparatively straightforward way for the IFC to move money, but it is hard to know if it is a good way, in part because of the Corporation’s opaque lending practices –which need to change.

An image showing money with relation to subsidies

Introducing Five Principles for the Use of Aid in Subsidies to the Private Sector

Development finance institutions like the International Finance Corporation and the UK’s CDC Group use public finance to support private investments in developing countries. At their best they can help create new markets and invest in the delivery of vital goods and services, creating good jobs and entrepreneurial opportunity along the way. They have been rapidly expanding over the past few years.

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