Climate projects, micro, small, and medium-sized enterprises (MSMEs), women and farmers in Asia and the Pacific have benefited from “record amounts” of funding from the International Finance Corporation
(IFC). The funds will alleviate poverty and increase prosperity in the face of overlapping crises and challenges, including climate change, gender inequality, food and energy insecurity, and higher inflation, IFC believes.
IFC, the largest global development institution focused on the private sector in emerging markets, committed a record $11 billion to 108 projects in Asia and the Pacific in the fiscal year ending on June 30, a 10 percent year-on-year increase. This comprised $4.7 billion in long-term financing from its own account, $3.4 billion in mobilization, and $2.9 billion in short-term trade and supply-chain finance to facilitate trade flows, according to a press release from IFC.
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Thirty-nine percent of long-term financing from IFC’s own account was invested in projects that will help tackle climate change and marine-plastic waste, critical issues in a region home to many countries that are most vulnerable to climate change and key contributors of plastic waste. Projects ranged from investments in Mongolia’s first green bond and blue finance in Thailand, to electric vehicles in India and sustainability-linked finance with pricing incentives tied to supporting the energy transition in South and Southeast Asia.
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A record $4.7 billion was committed to financial institutions in the region, which are expected to improve access to finance for MSMEs through the provision of more than 1.6 million loans, with specific targets for women-owned businesses. MSMEs are the backbone of the region’s economy, accounting for more than 97 percent of its businesses and employing over half its workforce. Improving their access to finance, particularly in a high interest-rate environment and as banks retreat from riskier lending, is critical to creating jobs, spurring economic growth, and fostering more inclusive societies.
IFC’s investments in financial institutions also helped increase access to insurance for underserved people. Other projects are expected to provide more than 500,000 loans for affordable homes, many of which are for green housing, improving financial inclusion across the region.
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A record $2.4 billion of investments and 69 percent of advisory projects included a focus on improving gender equality, against a target of 45 percent. Women represent 69 percent of IFC nominee directors on client company boards in the region, well ahead of the global corporate target of 50 percent by 2030. At the current rate of progress, it will take another 189 years to close the gender gap in East Asia and the Pacific and 149 years in South Asia, against a global estimate of 131 years.
Converging crises put the region’s already stretched food systems under significant strain, pushing millions of people into poverty and erasing years of development gains. IFC invested in projects to improve food security in the region, including an investment to promote a resilient rice market in Bangladesh. This is IFC's first investment from its new Global Food Security Platform, a $6 billion global facility set up to counter the food crisis. IFC projects in the last fiscal year are expected to improve the livelihoods of over 130,000 farmers in the region, with specific targets for women farmers.
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“In the face of a multitude of challenges, the vibrant private sector in Asia and the Pacific is playing an increasingly critical role in helping the region to overcome its biggest development issues,” said Riccardo Puliti, IFC’s Regional Vice President for Asia and the Pacific. “This record year cements our regional leadership in supporting the private sector and positions us to deliver on the aspirations of the World Bank Group’s Evolution Roadmap.”
Digitalization as a driver of connectivity and inclusion in Asia and the Pacific was also a focus of investment this past fiscal year. Projects ranged from investments in the Maldives to help connect it to the internet global superhighway via a state-of-the-art submarine cable system and a social commerce startup dedicated to solving challenges facing MSMEs in Indonesia, to advising the governments of Fiji, Samoa, and Solomon Islands on building digital national payment systems.
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Other projects will increase access to healthcare in Indonesia, childcare in Fiji, improve logistics infrastructure in Cambodia, and support Sri Lanka amid an ongoing economic crisis, with a cross-currency swap facility to three of the country's national banks.