Loans and grants to developing country governments and loans to private sector financial institutions and businesses, large and small, make up a significant part of the work of the World Bank Group, which is to promote economic growth in order to alleviate poverty. This page briefly describes the Bank Group's lending operations and contains information about how to apply for loans and gain access to the extensive range of financial services available.
Private Sector Finance from the International Finance Corporation (IFC) The IFC offers the private sector in developing countries access to numerous financial products. These products include loans for IFC's account, syndicated loans, equity finance, quasi-equity finance, equity and debt funds, and structured finance. IFC also helps private companies in the developing world mobilize financing in international financial markets, and it can and does provide technical advice. To be eligible for IFC financing, a project must be located in a developing country that is an IFC member; technically, environmentally and socially sound; benefit the local economy; and have good prospects for profitability. For information about IFC's products and services and tips on submitting investment proposals, as well as contact information for industry, sector and regional departments, click here.
Financing Syndicates and Partnerships IFC funds lent to financial intermediaries are used to extend long-term financing to private-sector businesses—particularly small and medium sized firms—that usually carry high transactional costs. Examples include IFC credit and equity lines to local banks for lending to local companies, private equity placements, and investments in emerging market and venture capital funds. Partnering with and investing in local financial institutions in developing countries helps channel capital to companies that large investors usually disregard.
Small and Medium Enterprise Department IFC promotes small business growth in developing countries through building business enabling environments. This often means governments putting in place more business-friendly regulatory, tax and trade policies. IFC also offers direct technical assistance and capacity building programs to improve the skills of small and medium enterprise owners and strives to increase their access to capital and information technology.
Consultative Group to Assist the Poorest (CGAP) The World Bank is a donor member of CGAP, a consortium of 33 public and private development agencies that work together to expand the access of poor people in developing countries to permanent financial services. CGAP supports microfinance institutions and provides services such as advice, training, research and development, consensus building on standards, and information dissemination. The clients of microfinance are female heads of households, pensioners, displaced persons, retrenched workers, small farmers, and micro-entrepreneurs. They all need loans to start and grow their small businesses; and they fall into four poverty levels: destitute, extreme poor, moderate poor and vulnerable non-poor.
Lending Instruments The World Bank (IBRD/IDA) offers two types of lending instruments to client governments:
Investment loans finance goods, works, and services in support of economic and social development projects in a broad range of sectors. They provide long-term (5-10 year) financing for a range of activities aimed at creating the physical and social infrastructure necessary for poverty alleviation and sustainable development.
Development Policy loans provide quick-disbursing, short-term (1-3 year) assistance to countries with external financing needs, to support structural reforms in a sector or the economy as a whole. They support the policy and institutional changes needed to create an environment favorable to sustained and equitable growth and focus on structural, financial sector, and social policy reform, and on improving public sector resource management.
Investment and Development Policy Operations provides information on both types of lending instruments, including eligibility, design features, disbursement of funds and examples of different forms of Investment and Development Policy loans.
International Development Association (IDA) long term loans (credits) are interest free but do carry a small service charge of 0.75 percent on funds paid out. IDA commitment fees range from zero to 0.5 percent on un-disbursed credit balances; for FY09 commitment fees have been set at zero percent.
For complete information about IBRD financial products, services, lending rates and charges, please visit the World Bank Treasury. Treasury is at the heart of IBRD's borrowing and lending operations and also performs treasury functions for other members of the World Bank Group.
Guarantees and Risk Management Products A range of investment guarantees, hedging and political risk insurance products are offered in an effort to boost direct foreign investment in developing countries. Covering risks the private market is unable to bear, the Bank Group's guarantees and risk management products open new investment opportunities for businesses in developing countries.
Grants A limited number of World Bank grants for development projects are available to encourage innovation, collaboration with other organizations, and participation by stakeholders at national and local levels. Many are designed for small and medium enterprises and are either funded directly or managed through partnerships.
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