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IFC and IDA Countries: Past Time for a New Approach

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  • Charles Kenny

    (Center for Global Development)

Abstract

The IFC has the potential to be a macroeconomically significant player in the world’s poorest countries that most need a more vibrant private sector. Sadly, however, it provides very little finance to firms in those countries. The IDA Private Sector Window was designed to help that problem by subsidizing both IFC and MIGA operations in IDA and fragile states. But it is not delivering in terms of IFC own-account investing or development impact. MIGA is claiming significant leverage by using PSW funds to guarantee activities with considerable private investment, but these investments would occur without MIGA engagement. The IFC is frequently using PSW funds to support deals that might well not exist without public support, but take such a considerable amount of that finance that leverage and demonstration effects are both low. Neither organization is finding the sweet spot in the middle, likely because so few investable deals are available that hit such a sweet spot. It is time for a new approach: supporting country industrial development strategies with governments rather than firms as the primary client.

Suggested Citation

  • Charles Kenny, 2026. "IFC and IDA Countries: Past Time for a New Approach," Policy Papers 392, Center for Global Development.
    • Handle: RePEc:cgd:ppaper:392
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