A new report finds that international financial institutions (IFIs) play a key role in catalysing job creation and growth through the private sector in emerging markets, particularly as governments face increased pressure on public resources.
The report, “International Finance Institutions and Development through the Private Sector”, (3MB - PDF) was launched during the World Bank-IMF Annual Meetings. It was produced by 31 IFIs. Senior officials of more than 20 such institutions, including the EBRD's First Vice President Varel Freeman, are attending the launch event.
Key findings of the report are:
- IFIs provide the private sector in developing countries with critical capital and knowledge. Private sector direct foreign investment has reached over US$ 40 billion in commitments a year – about five per cent of capital flows to emerging markets
- IFIs help companies set standards and manage risk in areas such as environmental and social standards; corporate governance; health and safety, sponsor and business integrity; labour and human rights; revenue transparency; and international financial reporting
- IFIs catalyse additional financing from other private sector players. Each US$ 1 of capital supplied to IFIs can lead to US$ 12 in private sector project investment
- IFIs support entrepreneurship and innovation, helping demonstrate the viability of private solutions in new or challenging areas.
"Fostering entrepreneurship in the countries which strive towards the market economy is the cornerstone of the EBRD's strategy. The overwhelming majority of the EBRD's activities support the private sector and public entities which are managed on a corporate basis. As the EBRD prepares to expand its region of operations to the southern and eastern Mediterranean, where the problem of youth unemployment is particularly acute, the new report underlines the importance of the private sector for job creation and growth – and the importance of IFIs, like the EBRD, for the development of the private sector", said EBRD's First Vice President, Varel Freeman.
The report was initiated under the sponsorship of the Private Sector Development Institutions Roundtable, an annual meeting of the heads of IFIs that focus on the private sector. The meeting is coordinated by the International Finance Corporation.