International Finance Corporation Research Articles

Continuing to Put People First: Embedding community investment in the sustainability standards of international financial institutions

AbstractWe discuss environmental, social and governance (ESG) considerations in international development projects, especially those funded by the World Bank and International Finance Corporation (IFC). Their social safeguard policies were adopted because of neglect of social impacts by projects. Although development assistance goals have shifted from economic growth towards poverty reduction and shared prosperity, mitigating adverse impacts of projects does not necessarily address the multiple dimensions of poverty or the Sustainable Development Goals. ‘Do no harm’ has limited ability to achieve social development objectives. Instead, a significant contribution to international development could come by embedding community investment in the environmental and social frameworks of international financial institutions, and social impact assessment and international development practise. This would ensure that projects contribute to improving the lives of project affected peoples. We propose changes to the IFC Performance Standards that could be implemented by other multilateral development banks and in the Equator Principles.

Taking development for a ride: the World Bank’s research with ride-hailing companies

The World Bank’s International Finance Corporation has produced three research reports on gender equality and ride-hailing, in collaboration with ride-hailing companies. This article examines these reports in light of wider conversations about the growing corporate co-production of development knowledge. Focusing on research claims about the gender and development potential of ‘sharing economy’ firms like Uber, it argues that the shortage of women drivers has been successfully framed as a gender and development problem, rather than a labour supply problem to be resolved by ride-hailing companies themselves. Multi-stakeholder solutions are proposed, involving licensing actors, charities, government development agencies, banks, and insurance providers. Gender equality research contributes to a new development common sense involving expanding the numbers of indebted ‘independent contractors’ in the gig economy; reducing ‘regulatory burdens’ on platforms; and binding nongovernmental organizations (NGOs) ever tighter to corporate interests. This article shows the centrality of gender research to the Bank’s broader reorientation towards business-led development, and highlights some distinctive lessons of work on ride-hailing.

Amr Allam: outgrowing a family business

Learning outcomes The expected learning outcomes are to understand key frameworks and tools for global leaders through the application of widely used theoretical frameworks on a written business case, understand the role of the leader in a team, apply theories of change to situations to anticipate courses of events and evaluate and apply relevant theory to assess a leader’s character and personality. Case overview/synopsis Hassan Allam Holding (HAH) was a family-owned Egyptian engineering, construction and infrastructure company managed by co-Chief Executive Officers and brothers Amr and Hassan Allam. HAH experienced significant growth and success, but eventually, it reached a point where its family governance structure could no longer sustain further growth. Amr and Hassan realized this and started planning to transition toward a corporate governance structure. In 2016, they managed to get the International Finance Corporation on board as an equity partner, and this helped propel the governance transition, but they still needed to find a way to convince the family to step back. This case study can help students understand the issues that may occur during a change within an established organization of any size. The case study considers the implications the change may have on the leader, his personality and his character and how it shapes the leader in question as an outcome. This case study has been designed to be used in one or two sessions and can be offered in management or leadership courses at an undergraduate or graduate level. Complexity academic level This case study is intended for graduate and undergraduate students studying a leadership or management course. It can help students comprehend the challenges of a family-owned business and how change is associated with such businesses. The case also considers how leaders are shaped by effectively managing conflict. This case can be considered as Level 1 on a 1–3 scale, as the full description of the situation is given in the case and the task of the students is to analyze the leader and his decisions using various academic concepts and theories (Erskin et al., 2003). Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship

Reforming State-Owned Enterprises (SOES) to Facilitate the Economic Recovery of Sri Lanka

The economic downturn and escalating debt levels prompted Sri Lanka to seek assistance from the International Monetary Fund (IMF), resulting in the formulation of the 17th IMF program. This program, aimed at fiscal consolidation and restructuring, designates SOEs as a pivotal element in the nation's economic recovery strategy. This policy brief addresses the imperative need for reforming State-Owned Enterprises (SOEs) in Sri Lanka. A historical overview reveals the evolution of Sri Lanka's SOEs, from their establishment during World War II to a surge in numbers in the 1980s. Despite their vital role in the economy, SOEs have faced operational inefficiencies, financial struggles, and governance issues, leading to a privatization policy in 1988. The document explores international experiences in SOE reform, drawing insights from successful models in Singapore, China, and India. Current policy measures in Sri Lanka encompass various reform strategies, such as corporatization, restructuring, and commercialization, focusing on enhancing financial transparency and accountability. The establishment of the State-Owned Enterprise Restructuring Unit (SRU) reflects a commitment to effective implementation, with international support from entities like the International Finance Corporation (IFC). In conclusion, the path to economic recovery in Sri Lanka hinges on the successful transformation of SOEs, ensuring financial viability, transparency, and sustainable growth.

Rethinking Cultural Heritage in the International Finance Corporation Performance Standards

AbstractIn 2006, the World Bank's private sector lending arm, the International Finance Corporation (IFC), introduced eight Environmental and Social Performance Standards (PSs) to define IFC clients’ responsibilities for managing their environmental and social risks, including those related to cultural heritage. Since their introduction, the PSs have evolved into a de facto global standard that other development banks and many private sector banks, insurers, and development proponents have voluntarily adopted to help manage their own risk exposure. Although the widespread adoption of such policies can be viewed positively as a reflection of good governance, the PSs were never designed with this purpose in mind. This article traces the development of cultural heritage policy within the World Bank Group, then critically examines the IFC PSs as they relate to cultural heritage, drawing attention to the elements in need of revision to better reflect internationally recognized good practice for the management of cultural heritage. Equally important, we recommend the development and implementation of a bespoke cultural heritage framework for the private sector.

A life in low-cost private education

Two factors – my experience in developing countries coupled with an understanding of the potential role for private education – led to me leading a team that won a grant from the International Finance Corporation to study private education in developing countries. I felt that my life should be concerned with the poor, so was dissatisfied by being an expert in private education, which everyone knew was for the privileged only. My epiphany came in the slums of Hyderabad, India, where I found low-cost private schools serving the poor. I got a grant from the John Templeton Foundation to study the nature and extent of low-cost private education in Africa and Asia. Thus my life’s work in private education began. The work was extremely controversial in the beginning, but I became less of a pariah when in 2005 I won an international private sector development award. Taking four years unpaid leave from academia, I co-created chains and federations of low-cost private schools around the world. Many social entrepreneurs were inspired by my research findings to create loan companies – providing low-cost private schools with much-needed capital – and chains of school – capitalizing on economies of scale to improve low-cost schools even further. Some lessons for young academics are outlined.

Ініціативи міжнародних організацій для розвитку інструментів сталого фінансування

Introduction. The COVID-19 pandemic and the full-scale invasion of the Russian Federation have created many difficulties for doing business in Ukraine. However, despite the existing challenges, representatives of domestic business continue to adhere to the standards of sustainable development. In turn, financial institutions, as well as the financial regulator, continue to stimulate mechanisms and develop trends in sustainable financing. Thus, the National Bank presented the Policy on the development of sustainable financing for the period until 2025. The development of the policy was carried out in the framework of cooperation with the International Finance Corporation, whose experts emphasized the need to develop a roadmap for sustainable financing, which will allow combining the capabilities of the private and public sectors in order to strengthen the practices of sustainable financing with the support of the state. Accordingly, the implementation of sustainable development initiatives in the financial sphere requires state support, and also involves the application of the experience of international organizations and the study of successful international practices of sustainable financing. Problem Statement. Assessment of the role of international organizations in the development of tools for sustainable financing at the level of national economies. The purpose is to substantiate the essential characteristics of sustainable financing tools, evaluate successful practices of strengthening sustainable financing within the framework of initiatives of international and European organizations with the aim of applying them in the process of building a domestic sustainable financing policy and strategy, forming and applying roadmaps for financing sustainable development priorities based on innovative tools. Methods. General scientific and special methods were used, in particular: scientific abstraction and epistemological (content) analysis, synthesis, induction and deduction, analogies and systematization, system-structural analysis, expert evaluation method, index method and grouping method. Results. The article examines the modern characteristics of sustainable financing and its evolution, the typology of sustainable financing. The basics of the spread of sustainable financing practices in Europe, as well as the essential characteristics of sustainable financing instruments (social and green bonds, social and green loans, sustainable development bonds and loans) are considered. An assessment of the volume and distribution of sustainable development financing instruments at the international level was made. At the international level, in connection with the diversification of the priority areas of attracting financial resources by the World Bank Group, there was a need to create separate organizations aimed at financing the priorities of sustainable development. In particular, one of such separate institutions is the International Finance Corporation (IFC). Accordingly, the article emphasizes the inclusive business model of IFC. In turn, the European Bank for Reconstruction and Development (EBRD) was created based on the combined efforts of a number of countries around the world, the European Union (EU) and the European Investment Bank (EIB). The article focuses on the strategic areas of activity and products of the EBRD. A guide to the application of international experience of sustainable financing in Ukraine was considered. Conclusions. Thus, the study of the initiatives of international organizations in the development of sustainable financing tools makes it possible to draw a conclusion about the role of the interaction of the state, business and international organizations in order to accumulate efforts to strengthen sustainable financing through the use of innovative tools, the creation of appropriate policies and the development of sustainable development roadmaps. In Ukraine, the policy of sustainable financing is based on the cooperation of the NBU and the IFC and is implemented through a road map, which is of an applied nature and is intended to monitor the business activity of the NBU in terms of the formation of predictable and stable regulatory foundations with the aim of spreading sustainable financing in the country with specific time norms and taking into account the need to ensure the consistency and adaptability of the banking system and non-bank financial institutions to changes.

Zero Carbon Ready Metrics for a Single-Family Home in the Sultanate of Oman Based on EDGE Certification System for Green Buildings

A single-family house was designed as a new middle-income green residential building in the Sultanate of Oman, according to criteria defined by the green building certification system EDGE (Excellence in Design for Greater Efficiencies), developed by the International Finance Corporation (IFC), which is a member of the World Bank Group (WBG). The design was accomplished through the free cloud-based tool of EDGE. With respect to a base design for the Sultanate of Oman, the green home design achieved savings of 40.86%, 20.22%, and 26.39% in energy, water, and materials (Embodied Energy), respectively. In addition, a saving of 35.48% in greenhouse gas (GHG) emissions was estimated. Based on the completed green building design, four green building-normalized metrics were used to quantify the efficiency of the base case and the design case in terms of the consumption of resources and polluting emissions. These efficiency metrics are: Carbon Emission Index (CEI), Energy Performance Index (EPI), Water Consumption Index (WCI), and Embodied Energy Index (EEI). Out of these green building performance metrics, the EPI is directly provided by EDGE, while the other three are introduced here as additional useful indicators that allow fair evaluations and comparison with other buildings, due to their less stringent dependence on the floor area or the number of occupants.

Analisis Dinamika Sektor Investasi Unggulan dan Iklim Investasi di Kota Palembang: Pendekatan Keuangan Keperilakuan

The aim of this study to determine the leading investment sector, the investment climate in Palembang City is seen from a behavioral finance approach. The studies have been contained in the analysis and discussion of the results of calculations using LQ and SSA analysis. The Location Quotient (LQ) method is an analysis that aims to identify the economic base that is concentrated in an area, while the Shift Share Analysis (SSA) method is used to assess the level of competitive advantage in sectors within a particular region, which is seen from its growth rate. The next step is to conduct a survey to find out the constraints/barriers to investment in the city of Palembang using indicators developed by the International Financial Corporation (IFC). The results show that the basic sector and has high and strong competitiveness against the economic shocks that occurred during the Covid-19 pandemic in Palembang City are 1) Manufacturing Industry, 2) Wholesale and Retail Trade; Car and Motorcycle Repair, 3) Information and Communication, 4) Financial Services and Insurance, and 5) Real Estate. Based on the results of a survey conducted using a questionnaire, the results of the analysis show that the overall investment climate is considered good by business actors in Palembang City. The good investment climate in Palembang City will further affect various aspects such as investor behavior. Viewed from a financial perspective, behavior can affect all aspects, for example facilitating access to finance (making it easier for investors to obtain the necessary financing). Keywords: financial, behavior, investment, SSA, LQ.

How impact investing firms use reference frameworks to manage their impact performance: An industry‐level study

AbstractUsing meaning‐oriented content analysis, we show how impact investing firms use various reference frameworks (e.g., International Finance Corporation (IFC) Performance Standards, Impact Management Project framework, UN Sustainable Development Goals) to manage their impact performance throughout the investment lifecycle. Our study provides an industry‐level picture of the various roles that different reference frameworks play to help impact investors attain their impact goals. We also discuss the potential industry effects on management accounting practice, that is, how reference frameworks used in performance management in the impact investing industry differ from those used in some other industries.

Foreign Experience in Major Repairs

Our world has limited resources to sustain a growing population. According to some estimates, humanity currently uses about 1.5 times more renewable sources than the pace of their renewal. Reducing energy use, for example by improving the energy efficiency of an existing building fund, is one of the main environmental goals along with reducing CO2 emissions and increasing the use of renewable energy sources. According to the International Finance Corporation (IFC), the construction of residential buildings with only low energy consumption or high-quality overhaul will reduce the need for heating buildings by 90 %. This will lead to a reduction in fossil fuel imports, increased energy independence of the state, greater sustainability of the economy in case of emergencies and a reduction in CO2 emissions. When writing the article, such empirical research methods as analysis and synthesis, comparison, generalization, etc. were used. Thus, the goals of major repairs are not only to improve the comfort and safety of housing, but also to improve the energy efficiency of buildings. The article considers the experience of major repairs abroad, ways to preserve the old housing stock and improve its energy efficiency.

Global assessment of the biodiversity safeguards of development banks that finance infrastructure.

Infrastructure development is a major driver of biodiversity loss globally. With upward of US$2.5 trillion in annual investments in infrastructure, the financial sector indirectly drives this biodiversity loss. At the same time, biodiversity safeguards (project-level biodiversity impact mitigation requirements) of infrastructure financiers can help limit this damage. The coverage and harmonization of biodiversity safeguards are important factors in their effectiveness and therefore warrant scrutiny. It isequally important to examine the extent to which these safeguards align with best-practice principles for biodiversity impact mitigation outlined in international policies, such as that of the International Union for Conservation of Nature. We assessed the biodiversity safeguards of public development banks and development finance institutions for coverage, harmonization, and alignment with best practice. We used Institute of New Structural Economics and Agence Française de Développement's global database to identify development banks that invest in high-biodiversity-footprint infrastructure and have over US$500 million in assets. Of the 155 banks, 42% (n=65) had biodiversity safeguards. Of the existing safeguards, 86% (56 of 65) were harmonized with International Finance Corporation (IFC) Performance Standard 6 (PS6). The IFC PS6 (and by extension the 56 safeguard policies harmonized with it) had high alignment with international best practice in biodiversity impact mitigation, whereas the remaining 8 exhibited partial alignment, incorporating few principles that clarify the conditions for effective biodiversity offsetting. Given their dual role in setting benchmarks and leveraging private finance, infrastructure financiers in development finance need to adopt best-practice biodiversity safeguards if the tide of global biodiversity loss is to be stemmed. The IFC PS6, if strengthened, can act as a useful template for other financier safeguards. The high degree of harmonization among safeguards is promising, pointing to a potential for diffusion of practices.

Private healthcare initiatives in developing countries – Building sustainable neurosurgery in Indonesia and Pakistan

IntroductionSevere global shortages in neurosurgery, surgery, and healthcare in general have been documented, especially in low- and middle-income countries (LMICs). Research questionIn LMICs, how do we expand both neurosurgery and overall healthcare? Material and methodsTwo different approaches to improving neurosurgery are presented. Author EW convinced a private hospital chain that neurosurgical resources were important throughout Indonesia. Author TK established a consortium (Alliance Healthcare) to obtain financial support for healthcare in Peshawar, Pakistan. ResultsThe expansion over 20 years in neurosurgery (throughout Indonesia) and in healthcare (for Peshawar and Khyber Pakhtunkhwa (KP) province, Pakistan) is impressive. In Indonesia, neurosurgery centers have expanded from one in Jakarta to over 40 throughout the islands of Indonesia. In Pakistan, two general hospitals, schools of medicine, nursing, and allied health professions, and an ambulance service have been established. Recently US$11 million has been awarded to Alliance Healthcare by the International Finance Corporation (the private sector arm of the World Bank Group) to further expand healthcare infrastructure in Peshawar and KP. Discussion and conclusionThe enterprising techniques described here can be implemented in other LMIC settings. Three keys to success both programs utilized: (1) educating the community (population at large) of the need for surgery in particular to improve overall healthcare; (2) being entrepreneurial and persistent in seeking the community support and the professional and financial support needed to advance both neurosurgery and overall healthcare through the private sector; (3) creating sustainable training and support institutions and policies for young neurosurgeons.

Navigating plural legal constellations at the coal mining frontier in Mozambique

In this article, I will focus on the emergence and dynamics of different laws, standards, and norms in the context of an extractive frontier. The extractive frontier is presented as a place where multiple jurisdictions overlap and in which new governance constellations and practices emerge. This article focuses on the laws and standards related to resettlement processes and compensation for loss of residence, land, and livelihood in the surroundings of two coal mines in Tete province, Mozambique. Resettlement processes are one of the most direct ways in which populations are affected by extractive projects and often associated with human rights violations. The paper focuses on resettlement officers of the mining companies who are at the forefront of planning and implementing such processes. Based on ethnographic fieldwork, including interviews with resettlement officers and participation in their daily lives, the article details how these individuals position themselves in relation to multiple sets of laws and rules (e.g. Standards of the International Finance Corporation, state mining law and resettlement regulation, land law, human rights law) and a variety of actors (e.g. mining companies, international finance institutes, government agencies, local populations, NGOs). Resettlement officers often work with standards that surpass national law but are in their implementation of regulations also curtailed by a seemingly absent state, divergent company policies, critical civil society organisations, and global commodity markets. A focus on the everyday intricacies of the work of resettlement officers, shows their power and constraints, and the dynamics by which hierarchies of rules and laws become unsettled at the extractive frontier.

International Finance Corporation Projects and Increased Armed Conflict

International Finance Corporation Projects and Increased Armed Conflict

Challenges of the Performance Standards of the International Finance Corporation in Financing the African Integrated High-Speed Railway Network and the Way Forward: The Case of Standard Gauge Railway in Tanzania

Challenges of the Performance Standards of the International Finance Corporation in Financing the African Integrated High-Speed Railway Network and the Way Forward: The Case of Standard Gauge Railway in Tanzania

MDB Loans: A New Asset Class for CLOs

Use of structured financings for balance sheet management by multilateral development banks (MDBs) is still in its infancy. Three path-breaking deals by the African Development Bank (AfDB) and International Finance Corporation (IFC) are leading the way, however. The two AfDB deals are both synthetic, with the loans remaining on the balance sheet despite substantial risk transfers. The IFC transaction allows co-funding of private sector loans with other lenders. New insights and opportunities will certainly emerge with rising experience in MDB loan deals. A few imperatives for a robust MDB collateralized loan obligation (CLO) market are already evident: (i) public disclosure of the relevant parts of proprietary historical MDB loan performance data; (ii) more-transparent rating agency criteria for MDB securitizations, and (iii) greater management, investor, banker, and MDB expertise in this asset class.

Instruments and Resources for Sustainable Development Acceleration of Agribusiness in Ukraine

Agribusiness in Ukraine takes one of the most important places in the national economy, but not all subjects conduct it sustainably, because of the lack of resources to finance such transformations. Therefore, it is necessary to investigate the instruments of resource attracting for Sustainable Development Acceleration of Agribusiness in Ukraine. The aim of the article is to determine the current state of basic tools which are used to obtain resources for accelerating the sustainable development of agribusiness in Ukraine, namely agriculture insurance, green bonds and impact investment. The article uses a situational analysis, a monographic method, tabular and graphical methods, scientific generalization to analyze the experience of the use of agriculture insurance, green bonds and impact investment as tools to accelerate the sustainable development of agribusiness. The information sources for this research were the reports of the International Finance Corporation, the sustainability reports of the European Bank for Reconstruction and Development and the reports of the United Nations Development Program in Ukraine. The study of the practice of using agriculture insurance, green bonds and impact investment as tools to accelerate the sustainable development of agribusiness in Ukraine made it possible to determine the embryonic level of their use. This is indicated by the modeling of the development of the agriculture insurance in Ukraine, which showed that this type of insurance is formal and does not perform a real protective function. As for projects, the resources of which are attracted through green bonds and impact investment programs, they are fragmentary and need to be more systemic. This work is one of the first which looks into the practice of applying tools to accelerate the sustainable development of agribusiness in Ukraine, in the context of three dimensions and achieving sustainable development goals. For the further development of both agriculture insurance and green bonds, it is necessary to stimulate the emission of such debt securities by insurance companies and to develop not only insurance of primary agricultural products, but also processed ones, exporting of which brings more foreign exchange earnings to Ukraine. This study aims to highlight current practices in the application of tools to accelerate the sustainable development of agribusiness in Ukraine, including agriculture insurance, green bonds and impact investment, which represent the basis for their promotion and prevalence in the scientific community and among agribusiness professionals.

Duplicitous debtscapes: Unveiling social impact investment for microfinance

Social impact investment for microfinance has become a dominant form of poverty regulation in the global south. These investments aim to alleviate poverty by extending financial services like credit to the world's poor, particularly smallholder farmers. The International Finance Corporation is a major player in this effort. It has channeled finance capital to microfinance institutions around the world through its Social Bond Program, among other mechanisms. In this paper, I analyze how the International Finance Corporation's impact investments depend on an ideological “way of seeing” poverty, informed by representations of agrarian landscapes, which mystifies the exploitative relations of microfinance debt. I term these representations duplicitous debtscapes. My analysis is based on research about Cambodia, where the International Finance Corporation is a key supporter of the country's biggest microfinance institutions. I argue that the duplicitous debtscapes of the International Finance Corporation and its Cambodian partners veil the conditions of production and social reproduction faced by indebted smallholder farmers, thereby legitimizing capital accumulation for impact investors. Yet these debtscapes are also contested. Thus, I further argue that the outcomes of debtscapes are shaped by the struggle over their representation. By studying impact investment in terms of the visual politics of debt, this paper contributes to scholarship about the financialization of poverty in development and financial geography.

Protecting Animals Within and Across Borders: Extraterritorial Jurisdiction and the Challenges of Globalization

Protecting Animals Within and Across Borders: Extraterritorial Jurisdiction and the Challenges of Globalization