The Private Sector Investment lab is a collaborative initiative between the World Bank Group and CEOs of leading global private sector institutions. Its goal is to develop solutions that address existing barriers to private sector investment in emerging markets and developing economies.
The Lab is developing approaches that can be implemented and scaled to effectively mobilize more significant volumes of private capital to tackle the world's most pressing development challenges. Mobilizing more private capital is a WBG priority. It touches on many aspects of our new development playbook and is being tracked in the new WBG Scorecard.
The core goal of this initiative is to enhance WBG's role in mobilizing private capital for emerging markets by mitigating risks for private sector investors and fostering environments that support the development of bankable projects.
The Lab's core group of CEOs and Chairs come from AXA, BlackRock, HSBC, Macquarie, Mitsubishi UFJ Financial Group, Ninety One, Ping An Group, Royal Philips, Standard Bank, Standard Chartered, Sustainable Energy for All, Tata Sons, Temasek, and Three Cairns Group. The Lab's chair is Shriti Vadera, Chair of Prudential plc.
Since the Lab's launch in 2023, private sector leaders have provided the World Bank Group with valuable feedback that has helped us better align our strategies and undertake several new initiatives to increase the speed and scale of private capital flows for development.
Several initiatives are already underway to implement other lab recommendations, such as a Renewable Energy Access program for 300 million people in West Africa, the development of new concessional funding programs from the IFC, and a pioneering capital markets transaction to distribute assets from IFC's balance sheet in the form of asset-backed securities.
Other initiatives being implemented include solutions to mitigate foreign exchange risk in long-term loans to projects in emerging markets, the rollout of the Unified Guarantee Program, and a long-term program to develop mechanisms for mobilizing institutional investor capital for urgent development priorities at scale, using the combined capabilities of WBG.
PSIL will meet twice a year, with the next meeting scheduled for April. The Lab's focus will be supporting the WBG in developing and scaling new approaches and instruments in response to PSIL recommendations.
These new solutions will continue to be tested with PSIL members and other counterparts to achieve proof of concept prior to scaling. It was also agreed that new members may be added, most likely from the real sector, such as project developers.
WBG will engage both with PSIL members and nonmembers to identify and pursue execution opportunities for PSIL recommendations.
Achievements and next steps
To date, the Lab has delivered recommendations in five areas:
- Ensuring regulatory certainty
- Increasing the use and improving the efficiency of WBG guarantees
- Mitigating foreign exchange risk
- Expanding the use of originate-to-distribute models for mobilizing private capital
- Deploying more equity and junior capital
Specific follow-ups include:
Regulatory certainty: WBG is working to enable greater clarity on regulatory policies, taking a sectoral focus and an outcome-oriented approach to this work to create bankable project opportunities for the private sector to participate at scale.
Guarantee program: Our guarantee business has been overhauled to simplify and improve access to guarantees through a single, convenient marketplace. The platform brings all guarantee products under a unified storefront to streamline and clarify offerings to our clients, provide increased and unified advocacy for guarantees, and grow our guarantee business by leveraging the unique value propositions of each of our institutions.
Foreign exchange risk: We are actively developing solutions for foreign exchange risk mitigation, including solutions to increase local currency financing and facilitate private investment, especially for the green transition to a low-carbon economy.
Capital markets and securitization: Exploring options to develop more effective originate-to-distribute programs that crowd in private sector capital into emerging market assets. An IFC-led initial transaction to securitize IFC-originated assets is already underway. This will be followed by a regular issuance program, expanding the originator base to include other multilateral development banks and development finance institutions over time.
Equity and junior capital: IFC plans to significantly grow its equity book to provide long-term capital to support companies' growth and promote higher environmental, social, and governance standards. IFC is also developing a concessional capital vehicle to enhance its capacity to provide junior capital and other forms of credit enhancement for high-impact transactions. This initiative is expected to increase the mobilization of private capital for development priorities significantly.
Last Updated: Mar 06, 2025