IFC, a member of the World Bank Group, and Proparco, a subsidiary of Agence Française de Développement (AFD) devoted to private sector financing, have agreed to collaborate more closely to create markets, mobilize private sector investment, and support economic recovery in developing countries in the wake of the COVID-19 global crisis.
Seeking to address the need for increased collective action among development finance institutions, the Joint Collaboration Framework Agreement (JCFA) will help leverage the partners’ collective strengths to deliver needed development impact in some of the world’s most challenging settings.
The agreement addresses a full range of collaboration activities with an emphasis on three key areas. First, it details the approach for helping to build a pipeline of bankable and high-impact projects aimed at laying the groundwork to attract investors into developing countries. Second, it promotes greater reciprocity in project co-financing arrangements and allows IFC to join transactions originated by other development partners. Third, it underscores the importance of the “Blended Concessional Finance Principles for Private Sector Projects”, a disciplined and targeted approach to blending funds from concessional donor and commercial sources, as an integral part of the activities covered by the JCFA.
“This agreement represents another milestone in our collaboration with Proparco. We have commited to further collaborating on fragile and least developed countries (LDCs) and are intensifying our knowledge sharing on impact investing. This agreement will help to further expand our pipeline of bankable projects in poor countries,” said Philippe le Houérou, the Chief Executive Officer of IFC.
Gregory Clemente, CEO of Proparco, added: “This agreement will allow major development finance Institutions to build on one another’s strengths and to work even more closely together, a necessity in times of economic and social crisis. It also testifies to the strength of our partnership with IFC and illustrates our joint commitment to support the private sector’s fundamental contribution to the Sustainable Development Goals.”
In March, IFC announced that it would make $8 billion available to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19.The bulk of the IFC financing will go to client financial institutions to enable them to continue to offer trade financing, working-capital support and medium-term financing to private companies struggling with disruptions in supply chains. IFC’s response will also help existing clients in economic sectors directly affected by the pandemic–such as tourism and manufacturing—to continue to pay their bills.
Likewise, Proparco is committed to helping alleviate the impact of COVID-19 in developing countries, including through targeted support to its clients in the health sector as part of France’s “Health in Common” initiative. It is also working with the OECD countries’ Development Finance Institutions to identify mechanisms designed to bring liquidity to the market, sustain companies, return them to full production, and restore employment opportunities.
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
Proparco is a subsidiary of Agence Française de Développement (AFD) focused on private sector development. It has been promoting sustainable economic, social and environmental development practices for over 40 years. Proparco provides funding and support to both businesses and financial institutions across Africa, Asia, Latin America and the Middle-East. It seeks to partner projects in key development sectors – infrastructure (with a specific focus on renewable energies), agribusiness, financial institutions, healthcare and education, etc. – and to boost the contribution of the private sector to achieving the sustainable development goals adopted by the international community in 2015. As a means to this end, Proparco finances businesses that are instrumental in creating decent jobs that pay decent wages, in supplying essential goods and services and in battling climate change.
Source: IFC (Published on May 5, 2020)