World Bank Mobilizes Record $112 Billion in Private Capital

Key Takeaways

The World Bank attracted $112 billion in private capital in the year ended June, up from $69 billion a year earlier.
World Bank President Ajay Banga aims to more than double private capital to over $200 billion within two to three years.
The bank is working to standardize and package loans to appeal to institutional investors like pension funds and asset managers.

The World Bank has announced a significant increase in private capital mobilization, attracting $112 billion in the year ended June, compared to $69 billion a year earlier. This marks a substantial rise and highlights the bank's efforts to tap into larger financial pools.

Ajay Banga, the World Bank's president, has made attracting private capital a priority, given the vast financial needs of developing countries. These needs include funding for energy transition, education, healthcare, and agriculture, amid a decline in official development assistance.

Banga emphasized the importance of finding ways to get private capital, noting that there are trillions of dollars available in the private sector, which is looking for good investment opportunities and a good return. He stated, 'There aren’t trillions in the system with governments or us, or even philanthropy. So what you need to do is to find a way to get private capital, of which there is plenty, which is looking for good investment opportunities and a good return.'

The size of the market for managed institutional capital is over $280 trillion, with only 5% to 8% historically going to developing economies. Banga has convened a Private Sector Investment Lab to address regulatory uncertainty, political risk, and challenges with local currencies, aiming to make developing countries more attractive to private investors.

To streamline its operations, the World Bank has implemented several initiatives. These include assigning a single manager as country liaison, streamlining project approval processes, and cutting average project approval times from a year or more to nine months, or shorter for simple projects.

Banga also highlighted that borrowing countries are increasingly keen to attract private investment instead of relying on external aid. He stated, 'Countries need to work on improving infrastructure, raising revenue, and enacting regulatory reform.'

The bank plans to more than double private capital to over $200 billion within two to three years. Banga noted, 'That’s where the large pools of money are, and they don’t come for individual projects.'

World Bank lending last fiscal year saw about 40% going into infrastructure, while 26% went to projects focused on other areas. The bank is working to standardize and package loans to appeal to institutional investors such as pension funds, insurance companies, and asset managers like BlackRock.

Banga’s efforts are part of a broader strategy to support the transition to investment-led growth in developing countries, ensuring that these nations can access the capital needed for sustainable development.

There aren’t trillions in the system with governments or us, or even philanthropy. So what you need to do is to find a way to get private capital, of which there is plenty, which is looking for good investment opportunities and a good return.
Ajay Banga, World Bank President