World Bank Group to work with private sector to scale up investment in emerging markets

By On Jun 24, 2023

The World Bank Group has launched the Private Sector Investment Lab, which will focus on scaling transition finance, with an initial sectoral focus on renewable energy and energy infrastructure.
The Lab will be comprised of senior leaders from private finance and business who have experience in financing, investing, and doing business in emerging markets and developing economies.
The Lab will meet regularly and will report directly to the World Bank Group President Ajay Banga and World Bank Group leadership.

The World Bank Group has launched the Private Sector Investment Lab, a concrete step in a broader effort to develop, and rapidly scale, solutions that address the barriers preventing private sector investment in emerging markets.

This is contained in the group’s press statement seen by Nairametrics.

Ajay Banga, World Bank Group President announced the new initiative at the Summit for a New Global Financing Pact, alongside the Lab’s two co-chairs – Mark Carney and Shriti Vadera.

Trillions of dollars of investment are required annually:

According to the statement, trillions of dollars of investment are required annually in emerging markets and developing countries to make adequate progress toward climate goals, manage the risks of climate change, and tackle poverty.

The global bank said the scale of the challenge requires the private sector to play a significant role alongside the World Bank Group and other development institutions.

“The World Bank Group is approaching this work with urgency and purpose bringing to bear its leadership capacity, knowledge, and resources to pursue tangible results.
The Lab’s work will include an emphasis on scaling transition finance, with an initial sectoral focus on renewable energy and energy infrastructure.
It will build on the World Bank’s current work to address existing barriers and ensure a bias toward ideas that can be implemented quickly.
The core group will be charged with utilizing new approaches and recommendations that support the World Bank’s capital mobilization at the scale needed.
This includes ideas for improved financing structures, ways to better align the World Bank Group with the needs and speed of private finance mobilization, approaches to balancing and allocating risks across investors, and new partnerships, as well as other areas where there is an opportunity to better catalyze private investment,” the bank said.

The lab will be comprised of senior leaders from private finance and business:

The bank noted that the Lab will be comprised of senior leaders from private finance and business who have experience financing, investing, and doing business in emerging markets and developing economies.

“That team will be announced in the coming weeks. They will work closely with experts from government, regulatory policy, and civil society – across regions and sectors.

The Lab will meet regularly and will report directly to the World Bank Group President Ajay Banga and World Bank Group leadership including Axel van Trotsenburg, Hiroshi Matano, Anna Bjerde, and Anshula Kant. Makhtar Diop, Managing Director of the International Finance Corporation will oversee coordination and serve as a day-to-day point of contact into the World Bank Group,” the bank said.

What Stakeholders said:

Ajay Banga, World Bank Group President said:

“For years, the World Bank Group, governments, and other multilateral institutions have tried – and fallen short – to mobilize meaningful private investment in emerging markets. Given the urgency and scale of our intertwined challenges, we must try a new approach – and the World Bank Group has a central role to play in this effort by using its resources, convening power, and knowledge to catalyze private capital more effectively.”

Mark Carney, UN Special Envoy on Climate Action and Finance and co-chair of GFANZ said:

“Investment in emerging markets and developing economies must scale fourfold. Business as Usual will not work.
Public institutions can and must do more to mobilize private finance, and private finance must work with development partners to create blended finance vehicles that can be rapidly scaled.
I, therefore, welcome Ajay’s leadership in establishing the World Bank’s Private Sector Investment Lab to bring together private finance, MDBs, and development finance institutions.
And I look forward to working with him and Shriti to help deliver this vital component of the transition finance the planet needs and its people deserve.”

Shriti Vadera, Chair of Prudential plc said

“I am delighted that Ajay Banga is prioritizing how the World Bank can leverage and crowd in private finance that will not otherwise be available for global public goods like climate transition, growth, and poverty reduction, and that he is focused on delivery and implementation, moving beyond promises and pledges to credible execution.
And that is why I am so honoured to be working with him alongside Mark Carney, and I hope many other colleagues in the public and private sectors to try and have a real impact on the ground.”