The World Bank Group mobilised $112 billion in private capital in the latest fiscal year, more than three times the amount recorded four years earlier, but financing for the world’s poorest countries remained at about $3 billion, President Ajay Banga said Friday.
The figures highlight the uneven results of the World Bank’s push to attract private investors to developing economies, where governments face growing demands for infrastructure, jobs and public services.
“In FY22 — the year before our workplan began we mobilised roughly $35 billion in private capital. Last year: $112 billion. A threefold increase,” Banga said in remarks at the World Bank and International Monetary Fund annual meetings in Bangkok.
The World Bank Group’s fiscal year ended June 30.
The increase was not matched by comparable growth in the poorest economies. “Our challenge is that in low-income countries, where attracting commercial capital remains hardest, mobilization held at roughly $3 billion,” Banga said.
The contrast raises questions about whether the institution’s expanding use of private investment can reach countries where commercial investors face greater risks and fewer established business opportunities.
Banga said the World Bank’s strategy increasingly relies on small and medium-sized businesses to generate economic activity in countries where large companies have yet to establish a strong presence.
“The path to the poorest and most fragile economies runs through their small businesses often growing where larger companies have yet to take root,” he said.
The World Bank has expanded the use of guarantees, equity and local-currency financing to reduce barriers that discourage investors, including currency risk and limited access to finance.
Its broader financing, including its own resources, exceeded $230 billion in the latest fiscal year, Banga said.
But the aggregate figures do not establish how much investment reached individual low-income countries, how many sustainable jobs it created or whether local businesses benefited. Private capital mobilization also does not, by itself, demonstrate that investment has produced lasting improvements in living standards.
For low-income countries, the challenge is to attract investment without losing sight of development priorities such as employment, infrastructure and access to essential services.
Banga said the World Bank’s new strategy for micro, small and medium-sized enterprises aims to improve access to finance and markets for smaller businesses.
