International finance institutions critical for job creation in emerging markets

A new report finds that international finance institutions play a key role in catalysing job creation and growth through the private sector in emerging markets, particularly as governments face increased pressure on public resources.
The report, International Finance Institutions and Development through the Private Sector, was produced by 31 international finance institutions (IFIs) and was launched during the World Bank-International Monetary Fund (IMF) annual meetings.
The IFIs provide the private sector in developing countries with critical capital and knowledge, it said, adding that private sector direct foreign investment finance has reached over $40 billion in commitments a year–about five per cent of capital flows to emerging markets.
They help companies set standards and manage risk in areas like environmental and social standards; corporate governance; health and safety, sponsor and business integrity; labour and human rights; revenue transparency; and international financial reporting.
IFIs catalyse additional financing from other private sector players. Each $1 of capital supplied to IFIs can lead to $12 in private sector project investment. They support entrepreneurship and innovation, helping demonstrate the viability of private solutions in new or challenging areas. "More jobs mean higher incomes for families and are key to reducing still-high poverty in Asia and elsewhere in the world. Since the private sector generates most of the jobs, development institutions should focus on helping create dynamic and sustainable private sector firms,” said vice -president (Private Sector and Cofinancing Operations) at the Asian Development Bank (ADB) Lakshmi Venkatachalam.
ADB that has helped produce the report aims to scale up private sector development and private sector operations to 50 per cent of the Bank’s annual operations by 2020.
The report was initiated under the sponsorship of the Private Sector Development Institutions Roundtable, an annual meeting of the heads of IFIs that focus on the private sector.
The private sector is recognised as a critical stakeholder and partner in economic development, a provider of income, jobs, goods, and services to enhance people's lives and help them escape poverty.
International Finance Institutions (IFIs) play a significant role in supporting the private sector in developing countries by encouraging entrepreneurial initiatives that help developing countries achieve sustainable growth. This role is becoming increasingly important for development institutions, along with more traditional aid and loan programmes to governments.
The report is a joint effort of 31 multilateral and bilateral development institutions that have significant programmes to promote private sector investment and assistance. The content benefited from an extensive interchange of ideas and materials among all participating institutions.
The report was initiated under the sponsorship of the Private Sector Development Institutions Roundtable, which is an annual meeting of the heads of IFIs focusing on private sector development.
"More jobs mean higher incomes for families and are key to reducing still-high poverty in Asia and elsewhere in the world. Since the private sector generates most of the jobs, development institutions should focus on helping creating dynamic and sustainable private sector firms," it added.