Friday, September 23, 2011

[IWS] ADB: International Finance Institutions and Development through the Private Sector [23 September 2011]

IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor----------------------
Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau


Asian Development Bank (ADB)


International Finance Institutions and Development through the Private Sector [23 September 2011]




Press Release 23 September 2011

New Report Finds International Finance Institutions Critical for Job Creation in Emerging Markets


The report, International Finance Institutions and Development through the Private Sector, was produced by 31 international finance institutions (IFIs) and was launched during the World Bank-International Monetary Fund Annual Meetings.


Key findings of the report are:


•IFIs provide the private sector in developing countries with critical capital and knowledge. Private sector direct foreign investment finance has reached over $40 billion in commitments a year–about 5% 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; labor and human rights; revenue transparency; and international financial reporting.

•IFIs catalyze additional financing from other private sector players. Each $1 of capital supplied to IFIs can lead to $12 in private sector project investment.

•IFIs support entrepreneurship and innovation, helping demonstrate the viability of private solutions in new or challenging areas.

“More jobs mean higher incomes for families and are key to reducing still-high poverty in Asia and elsewhere in the world. Since the private sector generates most of the jobs, development institutions should focus on helping create dynamic and sustainable private sector firms,” said Lakshmi Venkatachalam, Vice President (Private Sector and Cofinancing Operations) at the Asian Development Bank (ADB), which helped produce the report.


ADB aims to scale up private sector development and private sector operations to 50% of the Bank’s annual operations by 2020.


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.



Table of Contents

Preface iii

Executive Summary 1

Chapter 1: Role of the Private Sector in Development 3

Development Challenges 4

Broad Development Challenges 4

Millennium Development Goals 5

Role of the Private Sector in Addressing the Development Challenges 7

Growth 7

Jobs 8

Poverty Reduction and Inclusive Growth 8

Service Delivery 11

Addressing Food Security, Climate Change, and Environmental Sustainability 12

Taxes 12

Role of Government 12

Conclusion 14

Chapter 2: Role of the IFIs in Private Sector Development 15

Private Sector Challenges 16

IFIs’ Role in Addressing Private Sector Challenges 18

The Three Channels of Development Assistance 18

Overview: Role of Private Sector-Oriented IFIs in Addressing Private Sector Challenges 20

Finding High Development Impact Investment Areas and Approaches 22

Special Role/Additionality 26

Partnerships 30

Lessons from Experience 33

Conclusion 34

Chapter 3: Results and Case Studies 35

Overview 36

Commitment Volumes 36

Development Outcome or Transition Success Rates 36

Reach Indicators 38

Demonstration Effects 38

IFI Role in Speci?c Sectors 38

Private Infrastructure and Public-Private Partnerships 38

SMEs and Microenterprises 42

Financial Sector 45

Agribusiness 47

Inclusive Business Models 49

Investment Climate Reform 51

Climate Change 53

Innovation 54

Results and Case Studies Summary 56

Chapter 4: Conclusion 57

Annex: Pro?les of International Finance Institutions with Private Sector Operations 60

tutions and Development T


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