World Bank Expands Initiative to Boost Private Sector Investment

By Andrea Shalal
WASHINGTON (Reuters) – The World Bank announced the addition of four top executives, including Bayer AG CEO Bill Anderson and Hyatt Hotels CEO Mark Hoplamazian, to its initiative aimed at overcoming barriers to private sector investment in developing countries.

World Bank President Ajay Banga, a former Mastercard CEO, launched the Private Sector Investment Lab in June 2023. The lab brings together 15 business leaders to find innovative ways to generate jobs in developing nations, noting a significant gap between the 1.2 billion young people entering the workforce and the 420 million jobs available.

Banga emphasized, “You can’t get jobs without development, and you don’t get poverty alleviation and development without jobs,” during a CNBC interview.

The next phase will focus on implementing effective solutions at scale. The bank identified five priorities:
– Regulatory and policy certainty
– Political risk insurance
– Foreign exchange risk
– Junior equity capital
– Securitization

“By expanding membership, we are mainstreaming this work across our operations and linking it directly to our job creation strategy,” Banga stated. “It’s about helping the private sector see a path to investments that will deliver returns and improve conditions for people and economies.”

Founding members include senior executives from firms such as AXA, BlackRock, HSBC, Macquarie, and others. Shriti Vadera, Chair of Prudential Plc, chairs the lab.

The new members, alongside Anderson and Hoplamazian, also include Sunil Bharti Mittal of Bharti Enterprises and Aliko Dangote of Dangote Group, representing sectors crucial to job creation such as infrastructure, agribusiness, healthcare, tourism, and manufacturing.

The bank has already started executing the five identified priorities, which include streamlining guarantee instruments, leading to a 30% increase in issuance and enhanced investor confidence.

To address foreign exchange risk, the bank is scaling local currency financing to strengthen domestic capital markets. Its International Finance Corporation aims for 40% of long-term financing in local currency by 2030.

Additionally, the bank collaborates with institutional investors like Standard & Poors and BlackRock to standardize and securitize portfolios, allowing access to capital from pension funds, insurers, and sovereign wealth funds.