The World Bank Group has steadily increased its support of the private sector over the years and its private sector lending arm, the International Finance Corporation (IFC), is an increasingly important facilitator of private investment in the developing world. A part of the World Bank Group whose mission as a development institution is to promote development and alleviate poverty, IFC's lending to the private sector is often at odds with this mission.
Much of IFC's portfolio is oriented toward the interest of corporations, not necessarily the interest of the poor or environmental protection in the developing world. The report highlights certain sectors that often cause more developmental problems than benefits, such as the extractive industries -- oil, gas and mining -- which tend to cause severe environmental and social problems for communities. Other types of projects, including large agribusiness, coal-fired power plants that exacerbate global climate change, and luxury hotels chains, are not really delivering on the IFC's development mission.
The report also points out that many of the beneficiaries of IFC lending are some of the largest corporations in the world and calls on IFC to be more proactive, rather than reacting to the agenda and priorities set by the private sector. The report recommends that IFC cease financing companies with poor environmental and social records until they change their practices. If IFC wants to improve corporate behavior, it can work with companies individually to assist them. Companies with poor corporate records should not be rewarded with public assistance, otherwise there are no incentives for them to change.
Read the report | Read the letter signed by 76 NGO's demanding greater transparency from IFC
