World Bank and Finance and Markets

Government policies have a decisive impact on shaping the business environment for the private sector. The international development community can best support government policies for the business environment in five key areas:

• Developing a regulatory environment that fosters opportunities for entrepreneurship and job creation

• Facilitating access to a broad range of financial services—for firms and for households

• Mobilizing the private sector to offer better services, such as housing finance and insurance, to the poor as consumers

• Supporting developing countries in building robust financial systems that are resilient to shocks

• Measuring the development results of the World Bank Group's private sector activities and helping to advance results measurement in the development community

Financing Instruments. Financing instruments include the following:

• Investment project financing provides IBRD loan, IDA credit/grant, and guarantee financing to countries for activities that create the physical and social infrastructure necessary to reducing poverty and creating sustainable development.

• Development policy financing provides IBRD loan, IDA credit/grant, and guarantee budget support to governments (or a political subdivision) for a program of policy and institutional actions that help achieve sustainable shared growth and poverty reduction.

• Program-for-Results links disbursement of funds directly to the delivery of defined results, helping countries improve the design and implementation of their own development programs and achieve lasting results by strengthening institutions and building capacity.

• Trust funds and grants allow scaling up of activities, notably in fragile and crisis-affected situations; enable the Bank Group to provide support when its ability to lend is limited; provide immediate assistance in response to natural disasters and other emergencies; and pilot innovations that are later mainstreamed into Bank Group operations.

• Private sector options for financing, direct investment, and guarantees are provided by IBRD, IDA, IFC, and MIGA.

• Customized options and risk management.

• Investment project financing is used in all sectors, with a concentration in the infrastructure, human development, agriculture, and public administration sectors. It is focused on the long term (5- to 10-year horizon) and supports a wide range of activities, including capital-intensive investments, agricultural development, service delivery, credit and grant delivery (including microcredit), community-based development, and institution building.

The Bank's investment project financing not only supplies developing countries with needed financing but also serves as a vehicle for sustained global knowledge transfer and technical assistance. This assistance includes support to analytical and design work in the conceptual stages of project preparation, technical support and expertise (including project management and fiduciary and safeguards activities) during implementation, and institution building throughout the project.

Technical Assistance. The World Bank Group's professional technical advice supports legal, policy, management, governance, and other reforms needed for a country's development goals. The Bank Group's wide-ranging knowledge and skills help countries build accountable, efficient public sector institutions to sustain development in ways that benefit their citizens over the long term. Bank staff members offer advice and support governments in the preparation of documents, such as draft legislation, institutional development plans, country-level strategies, and implementation action plans. The Bank Group can also assist governments in shaping or putting new policies and programs in place.

Reimbursable Advisory Services. By client request, the World Bank can provide reimbursable advisory services, which can be used when the Bank cannot fully fund an activity within the existing budget. This service can include traditional knowledge and advisory work as well as convening services. Subject to appropriate safeguards and risk management, the Bank may provide technical assistance for project-related preparation and implementation support services—except for advice directly related to engineering or final design.

Economic and Sector Work. In collaboration with country clients and development partners, Bank country staff members gather and evaluate information (data, policies, and statistics) about the existing economy, government institutions, or social services systems. These data provide a starting point for policy and strategic discussions with borrowers and help enhance a country's capacity and knowledge. Studies and analytical reports support clients in planning and implementing effective development programs and projects.

Donor Aid Coordination. The World Bank Group acts on occasion as a coordinator of organized regular interaction among donors (governments, aid agencies, humanitarian groups, foundations, development banks). Activities range from simple information sharing and brainstorming, to cofinancing a particular project, to joint strategic programming in a country or region. It also includes the preparation of donor coordination events such as consultative group meetings (joint meetings of partners) focused on a particular issue or country.

IFC and Finance and Markets

IFC blends investment with advice to help the private sector find solutions to today's greatest development challenges. IFC's three business services-investment, advisory, and asset management—are mutually reinforcing, delivering global expertise to clients in more than 100 developing countries.

Sound, inclusive, and sustainable financial markets are vital to development because they ensure efficient resource allocation. IFC's work with financial intermediaries has helped strengthen financial institutions and overall financial systems. It has also allowed IFC to support far more micro, small, and medium enterprises than it would be able to on its own.

Working through financial intermediaries enables IFC to encourage them to become more involved in sectors that are strategic priorities—such as women-owned businesses and climate change— and in underserved regions such as fragile and conflict-affected states as well as in housing, infrastructure, and social services.

In fiscal 2014, IFC commitments in financial markets totaled more than $3.4 billion, about 20 percent of commitments for IFC's own account.

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