Key facts
- The World Bank attracted $112 billion in private capital for facilitated projects in the year ended June.
- This figure represents more than triple the amount mobilized in fiscal 2022.
- The bank aims to more than double private capital flows to over $200 billion within two to three years.
- The World Bank's own resources contributed $123 billion in the same fiscal year, for a combined $235 billion.
- The bank is standardizing and packaging loans to appeal to institutional investors like pension funds and asset managers.
- Private firms have previously shied away from large investments in developing countries due to regulatory uncertainty, political risk, and currency challenges.
The World Bank announced it mobilized a record $112 billion in private capital for projects it facilitates in the fiscal year ended June, a significant increase from $69 billion a year earlier and more than triple the amount from fiscal 2022. This achievement comes as World Bank President Ajay Banga prioritizes attracting private investment to meet the vast financial needs of developing countries for energy transition, education, healthcare, and agriculture, especially as official development assistance declines.
Combined with the bank's own $123 billion in resources for the fiscal year, the total funding for development initiatives reached $235 billion. Banga aims to more than double private capital flows to over $200 billion within two to three years by standardizing and packaging loans to appeal to institutional investors such as pension funds, insurance companies, and asset managers like BlackRock. He noted that large pools of capital exist in the private sector, but they require an asset class that can tap into them effectively.
Private firms have historically been hesitant to invest heavily in developing countries due to regulatory uncertainty, political risks, and challenges with local currencies. To address these concerns, Banga convened a Private Sector Investment Lab and implemented initiatives to streamline the bank's operations, including assigning single country liaisons and reducing average project approval times to nine months or less. Borrowing countries are also increasingly seeking private investment over external aid and are working to improve infrastructure, raise revenue, and enact regulatory reforms.
Notable projects facilitated by the bank's efforts include a Rio Tinto greenfield lithium project in Argentina, which received a $400 million loan from the IFC and attracted $775 million from other lenders, with total committed funding reaching $2.5 billion. Another project involved Guatemala's Banco Industrial, which issued a bond that attracted over 190 global investors, including PIMCO, and was 3.6 times oversubscribed, with secondary market trading volume reaching approximately $1.1 billion.