Washington D.C., February 19, 2002—
As private capital flows to infrastructure projects in developing countries slow in light of the global economic slowdown and investment uncertainties in the wake of September 11, the International Finance Corporation, the private sector arm of the World Bank, remains committed to supporting global infrastructure projects, IFC Executive Vice President Peter Woicke said.
“Infrastructure investments remain a fundamental part of our mission at IFC,” said Woicke. “When one billion people do not have access to safe drinking water and two billion plus lack adequate sanitation and electricity, it is imperative for IFC to do its part to help provide these most basic services to the poor. The ability of emerging market economies to compete on a global basis and attract foreign direct investment flows is dependent on an efficient infrastructure system—good roads and bridges, safe airlines, sound waste management, reliable electricity, phones that work, and clean water,” he said.
In the last few months, capital flows fell as deterioration in share prices led to a collapse of portfolio flows, and tightening of bank lending depressed commercial loans.
“Current financial strains in the global economy have not changed the obvious need for infrastructure projects,” said Declan Duff, IFC’s Director for Infrastructure investments. “Without adequate infrastructure, industrial inputs cannot reach factories; goods languish en route to market; unpredictable communications undermine commercial transactions; power shortages reduce productivity; and lack of clean water and sewerage facilities threatens community health. Obviously, the prospects for economic growth in such conditions are severely limited.”
Through FY 2001, IFC has arranged financing of US$12 billion in support of infrastructure projects worth $42 billion. In FY 2001, infrastructure and telecommunications accounted for almost 40 percent of all IFC-financed projects. IFC investments have helped build ports, roads, and airports, as well as improve water supplies and sanitation services for the poor.
“We have a very good track record of investing in infrastructure projects that boost the private sector, improve efficiencies, and help the poor. We hope that private companies and public institutions will continue to work with us in our search for the next generation of infrastructure investments,” Duff said.
A sound infrastructure is a critical element of private sector development. A vibrant and healthy private sector is a fundamental tool in the fight against poverty. Building the infrastructure of developing countries is a key component of that fight.
“Developing countries currently spend $250 billion a year in infrastructure,” Woicke, who is also Managing Director for private sector development at the World Bank, said, “While existing investments have played a critical developmental role, it is clear that the public sector and multilateral institutions cannot meet all of the infrastructure needs of developing countries alone. The private sector must step in to play a key role to meet this pressing global challenge that will affect the lives of billions of the world’s poor,” Woicke said.
Private capital has contributed $693 billion to infrastructure investments over the course of the 1990’s. In 2000, the number was $92 billion, up from the 1999 level, but still bellow the pre-Asia crisis amount of $128 billion. During the 1990’s, private infrastructure projects accounted for about one-quarter of overall investments, and IFC’s share of those was approximately six percent.
In addition to its infrastructure investments, IFC’s investments in the power sector have contributed to the expansion of electricity service to many underserved areas and its telecommunications investments have helped build the communications infrastructure that is essential to economic development.
IFC is also helping governments in developing countries to privatize and rehabilitate basic infrastructure, including telecom, transport, and utilities. IFC offers advisory services to help privatize public sector companies and to establish an environment that is friendly to the private sector.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
For more on IFC’s operations in infrastructure, ICT, and power, please go to:
http://www.ifc.org/infrastructure/
http://info.worldbank.org/ict/
http://www.ifc.org/power/
