Urgent action is needed to mobilize, redirect and unlock trillions of dollars of private resources to ensure global growth and shared prosperity.
Since 1956, the International Finance Corporation (IFC), the World Bank Group’s member focused exclusively on the private sector, leveraged $2.5 billion in paid-in capital from its shareholders to invest over a trillion dollars for private sector development. IFC’s 60 years of experience has demonstrated the private sector’s ability to create innovative, commercially viable solutions that deliver development impact.
“A year ago, we all signed up to the Sustainable Development Goals. The only way to achieve these goals is if private capital funds them and private business implements them,” said Gavin Wilson, CEO of IFC’s Asset Management Company (AMC) during the World Bank Group/IMF Annual Meetings 2016.
“That’s why we came up with the phrase ‘Billions to Trillions’ last year with our multilateral institutions in the run-up to the Addis conference on financing for development,” he added.
But what does “Billions to Trillions” actually mean? Wilson explained that “we must convert billions of official assistance … to the trillions in total financing.” But he raised a very important question:
Estimates of the financing gap for emerging market infrastructure range from nearly half a trillion USD to more than US$1 trillion a year over the next decade. The range reflects the difference between the estimated level of infrastructure needed to sustain growth across emerging markets and the actual level of such investment.
The challenges are immense, and resources are scarce. Of the financing that does exist, more than 70% comes from national government budgets; the second largest source (roughly 20%) is the private sector; and remaining resources come from overseas development assistance or aid from developed economies1. Given the overstretched demands of public sector budgets in developed and developing countries alike, any increase is likely to come through more partnership and co-financing from the private sector.
While many of us work hard to postpone growing old, ageing populations as a whole are inevitable, predictable and something countries can prepare for.
As developing countries prosper, their citizens will live longer and, hopefully, healthier lives. By 2050, the number of people in the world 65 and older will have doubled from 10% to 20%. By then .
Are these countries set up to care for these forthcoming senior citizens and ensure they have the resources to live in dignity in old age? Will countries be able to ensure fairness between the generations and resources?
Current pensions systems leave many pockets of society uncovered:
- As countries become more urbanized and families have fewer children, traditional family-based care for the elderly is breaking down, without adequate formal mechanisms to replace it.
- Traditional employment-based pensions systems don’t cover most informal sector workers in developing economies. In some regions, these workers account for two-thirds or more of the working age population. Even for those with formal sector jobs, pension coverage has been declining for people who’ve entered the workforce since 1990 in terms of years contributed over lifetime, according to World Bank Pensions Database. This has a major impact on the amount of retirement income they will eligible to receive.
Since natural disasters can strike anywhere and anytime, making far-sighted preparations is much more effective than scrambling to respond to a crisis. I recognized this after Hurricane Mitch ravaged Honduras and my grandmother had to be evacuated because the local river swelled to the second floor of her home.
As climate change intensifies extreme weather events across much of the planet, countries are seeking the World Bank Group’s support to improve both their physical and financial resilience to disasters.
We are increasingly working with governments to devise sound financial planning and risk management before a disaster strikes, not just to assemble financing to help countries recover in its wake.
Market-based instruments – such as insurance -- can act as shock absorbers in case of natural disaster, helping countries avoid the worst of a crisis’ financial impact.
Last month, I traveled to Mexico to attend the launch of the country’s national financial inclusion policy.
The launch was an important milestone for the country, since just 44% of adults have access to a financial account, according to Mexico’s latest national survey on financial inclusion. The policy outlines a vision of how to extend access to formal financial services to the unbanked half of the population, and provides a roadmap for how to get there.
Worldwide, there are 2 billion unbanked adults and the international development community considers financial inclusion necessary to reducing poverty and boosting shared prosperity.
Mexico accounts for 2.6% of that global number. The country is also among the 25 countries the World Bank Group and partners have prioritized in the Universal Financial Access by 2020 initiative. The goal of this initiative is to enable access to a transaction account to store money, and send and receive payments by adults who are not a part of the formal financial system.
Financial technology — or FinTech — is changing the financial sector on a global scale. It is also enabling the expansion of financial services to low-income families who have been unable to afford or access them. The possibilities and impact are vast, as is the potential to improve lives in developing countries.
The financial sector is beginning to operate differently; there are new ways to collect, process, and use information, which is the main currency in this sector. A completely new set of players is entering the business. All areas of finance — including payments and infrastructure, consumer and SME credit, and insurance — are thus changing.
By 2030, almost 60 percent of 8.3 billion people will live in cities, according to UN estimates.
Almost 1400 of the world’s cities will have half a million or more inhabitants.
Cities can connect people with opportunities, incubate innovation and foster growth, but they require urban planning, infrastructure, transport and housing.
To get the pulse of an institution’s financial management and its room for growth, we must first look at its financial statements. The information in these statements is, of course, essential but often provides only a partial picture focusing on short-term returns.
To understand the true value created by an organization, we need to look more broadly. This necessitates going beyond traditional financial reports and spending time understanding how the institution manages its non-financial resources.
Turkey, Egypt, Lebanon, France, Mali, Nigeria. Tunisia. To go back further in time – Kenya, Somalia, Tunisia, Cameroon. In no way a comprehensive list.
Paris is my home. I have also visited many countries affected by terrorist acts. Global terrorism hits home for me, and affects so many friends and colleagues. I mourn all these casualties, all this shocking horror.
They also hit home because my work over the last 15 years has focused on combatting the financing of terrorism (CFT). I have been wondering a lot over the last months –