IFC, the private sector arm of the World Bank Group, committed a record US$12.2 billion to 123 projects in Asia-Pacific in the fiscal year ending June 30, up 11% from the previous year.
The projects sought to address pressing development challenges including climate change, gender inequality, food insecurity, and financial inclusion, while creating jobs and improving services across the region.
The amount comprised US$6.2 billion in long-term financing from its own account, US$3.3 billion in mobilization, and US$2.7 billion in short-term trade and supply-chain finance to facilitate trade flows.
About 36% of long-term financing from IFC's own account was invested in projects aimed at tackling climate change and marine plastic waste. This included investments in the first blue bond and first local currency sustainability-linked bonds in Vietnam, the first distributed generation financing through corporate power purchase agreements in India, sustainability-linked loans to finance industrial decarbonization in India and green buildings in India and the Philippines, a green data centre in Malaysia, as well as the first fund to combine public, private and philanthropic capital with a specialized focus on clean-energy investments in Southeast Asia.
Support for MSMEs
The development agency provided financing and advisory services to financial institutions that are expected to improve access to finance for micro, small and medium-sized enterprises (MSMEs) through the provision of more than two million loans. Projects included the first social bond in Mongolia, the first offshore asset-backed securitization by an Indian non-bank financial institution, and the first gender and climate financing by a development financial institution in Nepal, all aimed at supporting MSME lending.
About 52% of long-term financing projects included a focus on improving gender equality. The projects included an equity investment as a cornerstone investor in an initial public offering of a Thai bank to help develop new products for smaller women-owned or led businesses, and supporting India’s largest private-sector bank to extend microloans under an initiative exclusively focused on women borrowers.
Of the long-term financing projects, 26% were for low-income, fragile, and conflict-affected countries, including an investment in Bangladesh’s first-ever housing bond, intended to improve affordable housing for women in the South Asian nation, and a programme in Papua New Guinea to help women enter and excel in sectors where they have been historically underrepresented.
Job creation
A pivotal outcome of IFC's work in the region is the creation of economic opportunities, with FY24 investments estimated to create up to 570,000 direct and indirect jobs.
"Amid persistent and intertwined global challenges, IFC is resolved to foster innovation and deliver more sustainable private sector solutions across Asia Pacific,” says Riccardo Puliti, IFC's regional vice president for Asia-Pacific. “The private sector continues to play a key role in addressing urgent development needs of countries in the region. Our projects this last financial year reinforce IFC’s commitment to offering targeted solutions that can be implemented at scale to maximize impact, ultimately improving lives and livelihoods across Asia-Pacific.”
Setting a precedent in innovative financial solutions, IFC also invested in an Indonesian ride-hailing, e-commerce and financial-services company using a mezzanine equity investment structure. The investment will ensure more people can benefit from the digital economy. In Bangladesh, IFC also provided flexible US-dollar-denominated working capital funding in the pharmaceutical and food processing sectors to address a critical foreign exchange shortage in the country.
In the pharmaceutical sector, IFC made investments to enhance healthcare access and resilience in Bangladesh and Sri Lanka, supporting the growth of pharmaceutical manufacturing capacity and expanding retail footprints to create sustainable supply chains.
