Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and Jobs: The FIAS FY22-26 Strategy Cycle Fias THE FACILITY
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Strategic plan for
FIAS operations from
July 1, 2021, through
June 30, 2026
Upstream Advisory for
Creating Investment Opportunities,
Sustainable Growth, and Jobs:
The FIAS FY22–26 Strategy Cycle
Fias
THE FACILITY
FOR INVESTMENT
CLIMATE ADVISORY
SERVICES
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital,
expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries,
leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
© International Finance Corporation. July 2021. All rights reserved.
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About the Facility for Investment Climate Advisory Services (FIAS)
Through the FIAS program, the World Bank Group and donor partners facilitate reforms in developing countries to foster open, productive, and competitive markets and to unlock sustainable private
investments in sectors that contribute to growth and poverty reduction. The FIAS program is managed by the International Finance Corporation (IFC), a member of the World Bank Group, and
implemented by IFC Advisory Services teams. For more information, visit https://www.thefias.info.
2 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsTable of Contents
About FIAS 4 Part 3: What FIAS Will Do 24
Executive Summary 6
FIAS Priority Areas 25
Part 1: Results and Learning—the Evolution of FIAS 9
Client-Facing Projects 26
From Economy-Wide to Sector-Specific 9
Pillar 1: Improve the Business Environment 27
‘Foreign’ Becomes ‘Facility’ 9
Pillar 2: Expand Market Opportunities and Increase
The Past Three Strategy Cycles 9 Firm-Level Competitiveness 28
Global Knowledge Development Projects 30
Part 2: FIAS and Upstream in the COVID-19 Context 12
FIAS Programmatic Themes 33
COVID-19 Undermining Investor Confidence 12 Gender and Inclusion 33
IFC Upstream Well Timed to Respond 13 Green Competitiveness 36
Policy Changes Can Set Stage for Recovery 13 Digitalization 37
FIAS Supporting the Full Spectrum of IFC Advisory Services 14
Part 4: Monitoring & Evaluation 38
FIAS Positioned to Support Upstream 21
Strategic Shift Required 22 The FIAS FY22–26 Scorecard 38
Coordination and Collaboration with World Bank 23 FIAS Priorities and Targets 39
A Note of Thanks 42
The
TheFIAS
FIAS
FY22–26
FY22–26
Strategy
Strategy
Cycle
Cycle 3About FIAS
Founded in 1985, the Facility for Investment Climate Advisory Services (FIAS) supports
World Bank Group projects that foster open, productive, and competitive markets, and unlock
sustainable private investment in business sectors that contribute to growth and poverty
reduction. FIAS is managed by IFC and supported by nearly 20 Development Partner countries
and donor institutions and co-financed by the World Bank Group. FIAS is one of the Bank
Group’s oldest and largest multi-donor trust funds.
FIAS operates at the intersection of government investment and increase their participation in (IDA), the Sub-Saharan Africa (SSA) region,
and private enterprise to ensure that business international markets. and countries in fragile and conflict-affected
environments—as reflected by laws, regulations, situations (FCS). Through four years of the
and other elements—enable private sector The FIAS program is administered by the five-year FY17–21 strategy cycle, FIAS provided
growth and avoid imposing unnecessary International Finance Corporation (IFC), a support for 177 projects that generated 153
regulatory burdens. Through economy-wide member of the World Bank Group. Since 1997, enabling environment and sector reforms in 57
and sector-specific work, FIAS aims to develop $539.2 million has been contributed in support of client countries, with 60 percent of the reforms in
dynamic and resilient economies that promote FIAS activities: $358.4 million from donors; $170.3 IDA, 44 percent in SSA, and 26 percent in FCS.
economic inclusion through investment growth, million from the World Bank Group; and $10.4
economic diversification and innovation, and million from client countries. Donors supporting For the FY22–26 strategy cycle, IFC anticipates
inclusive job-creation. FIAS is supporting an FIAS in the FY17–21 strategy cycle were Australia, operating FIAS with an annual budget of
ambitious and proactive agenda that includes Austria, the Bill & Melinda Gates Foundation, $40 million, with expanded work in the
a strong programmatic focus on gender themes Canada, the European Union, France, Ireland, the thematic areas of gender, climate change,
and greatly increased emphasis on helping Republic of Korea, Luxembourg, the Netherlands, and digitalization, and a sharp increase in the
clients build green, and develop and expand their Norway, Switzerland, Sweden, Trademark East proportion of work devoted to sector-specific
digital economies. By increasing their economic Africa, the United Kingdom and the United States. projects supporting IFC’s Creating Markets
competitiveness, FIAS helps developing Upstream Agenda. For more information, visit
FIAS prioritizes work in borrowing countries https://www.thefias.info.
economies attract greater domestic and foreign of the International Development Association
4 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsCONTRIBUTIONS TO Through four years of
FIAS SINCE 1997 the five-year FY17-21
strategy cyle, FIAS
$539.2 m provided support for:
For the FY22–26
IN SUPPORT OF FIAS
ACTIVITIES 177 PROJECTS strategy cycle,
IFC anticipates
GENERATING operating FIAS
$358.4 m 153 enabling environment with an annual
FROM DONORS and sector reforms in 57 client budget of
countries:
$170.3 m
FROM THE WORLD
60 % of reforms
in IDA $40 m
BANK GROUP
44 % of reforms in
Sub-Saharan Africa (SSA)
$10.4 m
FROM CLIENT COUNTRIES 26 % of reforms
in FCS
The FIAS FY22–26 Strategy Cycle 55Executive Summary
Confronting an unprecedented global economic challenge, the FIAS partnership enters the
next five-year strategy cycle with the agility to evolve and meet urgent client needs, combined
with the stability to continue supporting the core mission of improving the climate for private
sector growth in some of the world’s most vulnerable countries.
The next five years of FIAS-supported work countries that have already begun to show
will be dominated by a focus on recovering dynamism and resilience will need to redouble
and rebuilding from the economic devastation their efforts.
caused by the COVID-19 pandemic. The COVID
crisis profoundly reshaped the global economic In the FY22–26 strategy cycle, FIAS-supported
landscape, creating circumstances that require advisory services will undergo a decided shift
daring new approaches by governments, firms, in emphasis from supporting mainly economy-
wide reform efforts to focusing on sector-specific
FIAS aims to become a key
and households to repair the damage as quickly
and firm-level reforms that lead client countries source of support in enabling
as possible and embrace emerging opportunities.
New policies will be needed to allow capital, and key private sector firms and investors in the development goals of
labor, skills, and innovation to shift to new the direction of investments with job- and the IFC 3.0 Creating Markets
income-producing potential. FIAS will be setting
purposes to build a greener, stronger post- Upstream Agenda and
COVID economic environment. Domestic and ambitious targets for advancing the economic
prospects of women and the green economic building the private sector’s
foreign investment in developing countries, a
priority area of FIAS-supported work, collapsed development agenda. The FY22–26 portfolio potential in IFC’s client
in 2020. Countering the investment headwinds will also include a set of focused interventions countries.
will require a major push to improve business in advancing the digitalization of developing
environments. The most vulnerable countries, economies. The FIAS strategy sees climate
which form part of the FIAS client country change not only as an environmental threat that
portfolio, will need help in rebuilding vibrant harms livelihoods and threatens health but also
private sectors laid low by the pandemic. Even as a tremendous business opportunity.
6 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsFIAS aims to become a key source of support in anticipates that COVID-oriented engagements but the program will place much greater
enabling the development goals of the IFC 3.0 in the Upstream context will dominate the emphasis on sector-specific work in fields such as
Creating Markets Upstream Agenda and building FY22–26 strategy cycle. Advisory geared toward agribusiness, manufacturing, and services, and
the private sector’s potential in IFC’s client COVID recovery will vary from client to client but on firm-level work, particularly in cases where it
countries. Upstream activities help stimulate and with common themes. In the investment policy might lead to the creation of new IFC investment
create conditions that result in the flow of private and promotion space, for example, advisory opportunities under the Upstream initiative. This
capital—domestic and foreign—into productive teams working in the COVID-19 environment sector-level focus will include targeted thematic
investment in IFC’s countries of operation. are focused on helping client countries retain interventions that support advances in the cross-
Upstream work can be accomplished as quickly the investment they have already secured in the cutting thematic areas of climate, gender, and
as in a few months or take several years. It can face of sharp declines in new investment. Other digitalization.
entail both regulatory reforms that will unlock interventions that are already part of IFC’s COVID
more private investment and the creation of response include helping clients transition from Part 1 presents a summary of FIAS work since
projects that lead to specific opportunities emergency economic policies to reformed and the beginning of the multi-donor trust fund in the
attractive to potential investors. The Upstream streamlined regulatory regimes, assisting sectors mid-1980s.
approach recognizes that development such as tourism that have been hard hit by the
institutions can no longer achieve their goals pandemic, and identifying sectors and individual
by waiting for investment opportunities to firms with the best chance of weathering the
come along. Rather these institutions must crisis.
work to create opportunities through proactive
interventions and activities that support the This FY22–26 strategy document is titled
creation and realization of specific projects, for Upstream Advisory for Creating Investment
which IFC is a likely financing partner. Opportunities, Sustainable Growth, and Jobs
to reflect the urgent mission of IFC Advisory
The Upstream initiative was conceived prior to Services (AS), supported by FIAS, over the next
the emergence of the COVID-19 pandemic in five years. FIAS is evolving and expanding beyond
2020 but it is highly relevant to the efforts to its longstanding mission of economy-wide
help developing countries through the phases advice on reforms that, in a general way, make
of relief, restructuring, and resilient recovery. it easier for the private sector to do business,
Given the severity of the economic damage get permits, build new factories, connect to
caused by the pandemic and the long recovery the power grid, and trade across borders. This
period anticipated, the FIAS Program team reform work remains part of the FIAS agenda,
The FIAS FY22–26 Strategy Cycle 7Part 2 outlines the development challenges cross-cutting work planned under the Gender retained—a priority in the difficult economic
confronting IFC client countries, particularly and Inclusion, Green Competitiveness, and conditions created by the COVID-19 pandemic.
low-income and conflict-affected states, and Digitalization thematic areas. FIAS will be developing an approach for
describes how the Upstream approach can play measuring and reporting on the integration of
a crucial role in helping economies hobbled by Part 4 focuses on FIAS Monitoring & Evaluation digitalization components into client-facing
COVID-19 ‘build back better.’ This section also (M&E), beginning with a revised FIAS Scorecard projects.
describes the interrelationship between IFC for the strategy cycle, with new measurements in
regional advisory strategies and the advisory the areas of investment, gender, climate change, FIAS-supported work has demonstrated the
work supported by IFC industry and operational and jobs. This will include new measurements importance of a conducive business environment
teams, and how FIAS, in funding projects that made possible by a jobs pilot project examining to private sector development. At the same
emerge from these agendas, will be supporting FIAS impact on job creation in both economy- time, it has shown that an adequate business
a broader spectrum of advisory work than in wide and sector-specific spheres. The Scorecard environment is necessary but insufficient,
previous strategy cycles. Part 2 also covers the will track gender and climate-change-related especially as economies deepen and broaden
important continuing collaboration between the activities in the FIAS portfolio, including the goal sector diversification. Developing countries
World Bank and IFC through FIAS. of doubling the corporate climate and gender need to engage with strategies and policies
commitments from the FIAS Core Account. This geared to sector and firm levels so that their
Part 3 describes in detail what FIAS will do over will position FIAS as a key driver in advancing private sectors can recover from the COVID crisis,
the next five years through a program supported the gender inclusion and climate-related work retain and expand their domestic and foreign
by two strategic pillars—Improve the Business across IFC. It will also report on the strong and investment flows, and generate transactions and
Environment and Expand Market Opportunities continuing linkages between FIAS-supported investments that produce income and create
and Increase Firm-Level Competitiveness— work and Development Policy Financing (DPF) jobs. FIAS, which is under IFC management
and by developing advisory programs tailored and Development Policy Operations (DPOs) as of FY21, is eager to move ahead with its
to the specific needs of countries and regions. undertaken by the World Bank. The revised Development Partners in pursuing this exciting
The strategy document outlines the mutually Scorecard will collect impact data not only on and challenging agenda.
supportive role of both client-facing and global new investment generated with the help of
knowledge development projects and the FIAS-supported projects but also investment
Developing countries need to engage with strategies and policies geared to sector and firm levels so that
their private sectors can recover from the COVID crisis, retain and expand their domestic and foreign
investment flows, and generate transactions and investments that produce income and create jobs.
8 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsPart 1: Results and Learning—
the Evolution of FIAS
From Economy-Wide contributions from clients. From FY97 through their indigenous economies and become more
to Sector-Specific FY20, $539.2 million has been contributed attractive to international investors and traders.
to support FIAS activities: $358.4 million in
FIAS got its start in the mid-1980s as a single- donor contributions; $170.3 million in Bank Looking at the priorities established by the
client endeavor helping the government of China Group contributions; and $10.4 million in client FIAS Development Partners over the past three
revamp its economy to be more conducive to contributions. strategy cycles stretching back a dozen years, a
attracting foreign direct investment (FDI) and trajectory toward more fine-grained, investment-
more competitive with global industrial peers. ‘Foreign’ Becomes ‘Facility’ and job-oriented work comes across clearly. This
IFC’s initial success led to the development trajectory continues into the new cycle, with an
Originally the ‘F’ in FIAS stood for ‘foreign,’ as the intensified focus on investment generation and
of an advisory project and, eventually, an program focused on helping developing countries
advisory services program supported over the the Upstream initiative geared toward leading
attract greater cross-border investment. This to specific private sector investment response,
ensuing decades by more than 20 Development remains a priority for FIAS and, in fact, will grow
Partners—both countries and philanthropic including IFC investments.
in importance during the FY22–26 strategy cycle.
institutions. The list of donors has included But the emphasis in international development
Australia, Austria, the Bill & Melinda Gates The Past Three Strategy Cycles
evolved to include building domestic economies
Foundation, Canada, Denmark, the European by assisting in business formation and FY08–11 Strategy Cycle: Client-facing projects
Union, the Ewing Marion Kauffman Foundation, formalization, supporting initiatives to promote were economy-wide in scale. The approach to
Finland, France, Iceland, Ireland, Italy, Japan, the the growth of small and medium enterprises client needs was product centric. The use of
Republic of Korea, Luxembourg, the Netherlands, (SMEs), and helping client governments establish indicators and benchmarking was centered on
New Zealand, Norway, Portugal, Spain, Sweden, special enterprise zones (SEZs)and other the Doing Business model. The role of FIAS-
Switzerland, Trademark East Africa, the United initiatives to encourage domestic investment funded activities was to design solutions and
Kingdom, the United Nations Development and growth. FIAS thus became a Facility for support implementation. Teams managed for
Programme, and the United States. FIAS has Investment Climate Advisory Services, supporting outcomes. Cross-cutting themes were accorded
been co-financed by the World Bank Group and initiatives to help countries simultaneously build little emphasis and only anecdotal results were
Development Partners, with modest additional available as to their outcomes.
The FIAS FY22–26 Strategy Cycle 9FY12–16 Strategy Cycle: A majority of client- IN FY12–16, FIAS-SUPPORTED
facing projects were done on an economy-
wide basis, with the addition of projects in the FIAS-SUPPORTED PROJECTS GENERATED:
agribusiness and tourism sectors. The approach PROJECTS RECORDED
to client needs increasingly emphasized issue-
based programmatic approaches. Benchmarking
highlighted investment climate indicators and 341 $208m
product-level assessments. The role of FIAS- IN COMPLIANCE COST
funded activities was to promote innovation and REFORMS DURING
SAVINGS REFLECTING
facilitate and catalyze the incubation of ideas. THE FIVE-YEAR CYCLE
Teams managed for development impact. Key LOWER BUSINESS COSTS
cross-cutting themes were identified in the areas DUE TO STREAMLINED
83
of social inclusion, economic governance and
transparency, the promotion of competition, and REGULATIONS
green growth. Global knowledge development IN AND PERMITTING
products (KDPs) were increasingly emphasized
as the Global Practices structure was launched in
DEVELOPING PROCESSES.
FY14, with FIAS coming under joint World Bank- COUNTRIES
IFC oversight in the Trade & Competitiveness
$1.58b
Global Practice. FIAS-supported projects
recorded 341 reforms in 83 developing countries, EXCEEDING THE
well above the target of 250 reforms for the
five-year cycle. Nearly three-quarters of the
TARGET OF
250 IN NEW INVESTMENT
reforms were recorded in IDA, two-thirds in Sub-
Saharan Africa, and one-third in FCS countries.
FIAS-supported projects generated $208 million
TO CLIENT
in compliance cost savings, reflecting lower
REFORMS WERE COUNTRIES.
business costs due to streamlined regulations
and permitting processes. FIAS-supported teams ACHIEVED DURING
helped generate $1.58 billion in new investment THE FIVE-YEAR CYCLE
to client countries.
10 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsFY17–21 Strategy Cycle: Client-facing projects reforms, with 60 percent in IDA countries, 44 FY17–21 Strategy Cycle:
incorporated economy-wide endeavors and an percent in Sub-Saharan Africa, and 26 percent in
93 % client
expanded agenda focused on the competitiveness FCS. The cumulative client satisfaction rating for satisfaction rating
of specific sectors in client countries. The the cycle was 93 percent (against a target of 90 for the cycle
approach to client needs integrated solutions percent), and 75 percent of completed projects
for connectivity and open markets. Indicators received positive Development Effectiveness
75%
of completed projects received
and benchmarking involved diagnostics that ratings, ahead of the 71 percent average for all positive Development
helped clients define their competitive position IFC AS over the same period. Effectiveness ratings
and options. FIAS-funded activities sustained
implementation results, leveraged World The independent Mid-Term Evaluation conducted
Bank Group instruments and private sector by Economisti Associati found the FIAS program
engagement, and established global thought to be well aligned with current World Bank Group
• Active engagement to streamline the
leadership. Competition policy worked to address strategy. The evaluation noted that while FIAS
allocation process and ensure timely
price-fixing cartels, strengthened competition is performing well at the project level, frequent
deployment of available funds to FIAS client-
laws and policies, eliminated unreasonable reorganizations have contributed to weaknesses
facing and global knowledge projects.
constraints on competition, and enhanced the at the program level and had yet to make good
technical capacity of government agencies on commitments to expand impact targets, for • Development of a methodology for jobs
that work to ensure open and competitive example, to measure the job-creation effects of measurement to provide another indicator
markets. Teams managed for impact in jobs and FIAS-supported work. Well before the completion for FIAS-supported projects.
productivity geared toward achieving the Bank of the Mid-Term Evaluation, the FIAS team was
taking proactive steps to address the issues • Strengthened organizational ties between
Group’s Twin Goals. Themes were mainstreamed
raised. These include: the FIAS program and IFC, whose personnel
across the three FIAS pillars (Improve the Business
do most of the client-facing advisory work
Environment, Expand Market Opportunities, • Stabilization of program management under supported by FIAS.
and Strengthen Firm Competitiveness) and were a newly appointed FIAS Program Manager
monitored through improved results tracking. with extensive experience with IFC AS and These steps have placed FIAS on a solid footing
Reorganization of the Global Practices culminated trust fund management. to move ahead into the FY22–26 cycle playing a
in FY21 with the shift of FIAS management from leading role in mobilizing Development Partner
the joint Equitable Growth, Finance & Institutions • More frequent direct interaction with support for a more sector-focused advisory
(EFI) practice group to IFC management. Development Partner representatives in strategy. It is geared toward creating the
bilateral meetings between FIAS donors conditions for investment opportunities to be
Through four years of the five-year strategy cycle, and the FIAS program Global Director and initiated and actuated by IFC teams under the IFC
FIAS-supported teams helped bring about 153 Program Manager. 3.0 Creating Markets Upstream strategy.
The FIAS FY22–26 Strategy Cycle 11Part 2: FIAS and Upstream in the COVID-19 Context
The pandemic has triggered the deepest global recession in decades, and what may turn out to
be one of the most unequal in terms of impact,” World Bank Group President David Malpass told
G20 Finance Ministers and Central Bank Governors in July 2020. “For the poorest countries,
poverty is rising rapidly, median incomes are falling, and growth is deeply negative. Debt
burdens—already unsustainable for many countries—are rising to crisis levels.
As the FIAS FY22–26 strategy cycle began on with as many as 100 million people being pushed COVID-19 Undermining Investor
July 1, 2021, the COVID-19 pandemic had been into extreme poverty by the economic effects of Confidence
wreaking havoc on global health and global the pandemic.
economies for nearly 18 months. Even the The pandemic has worked to depress investor
most optimistic forecasts on the distribution “The pandemic has triggered the deepest confidence to historic lows, according to analysis
of vaccines to prevent the disease envision global recession in decades, and what may turn by the FIAS-supported Indicator-Based Reform
continuing health risks—and associated out to be one of the most unequal in terms of (IBR) team. COVID-19 and government measures
economic fallout—for an extended period. IFC impact,” World Bank Group President David to contain the health crisis, coupled with
estimates that domestic private investment and Malpass told G20 Finance Ministers and Central international production networks and globalized
FDI in emerging economies will have fallen in Bank Governors in July 2020. “For the poorest consumption, disrupt business activities through
2020 by almost $700 billion and $250 billion, countries, poverty is rising rapidly, median four distinct channels: falling demand, reduced
respectively, and may not return to pre-crisis incomes are falling, and growth is deeply supply, deteriorating credit conditions and
levels until 2023 or later. The impact of the negative. Debt burdens—already unsustainable liquidity, and rising uncertainty. The crisis is
pandemic is expected to be especially severe for many countries—are rising to crisis levels.” disrupting the pathways through which countries
on the world’s most poor and vulnerable, achieve productivity growth—and, by extension,
jeopardizing decades of hard-won development World Bank Chief Economist Carmen Reinhart job and wage growth. Disruptions in international
gains. For the first time since 1998, the World calls the pandemic-driven economic downturn “a production threaten spatial integration, for
Bank is warning of an increase in global poverty, once-in-a-century global—truly global—crisis.” example, while reduced cross-border investment
is undermining technological upgrading.
12 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and JobsThe economic effects of the pandemic create opportunities. The essence of Upstream is Group scale its private sector development
are expected to persist long after cases of that rather than passively waiting for investors, impact on the ground through increased high-
COVID-19 subside. This means that virtually IFC will approach them directly with investment quality private sector investment and the
the entire FY22–26 FIAS strategy cycle will be proposals. It is about creating public good as generation of new transaction opportunities in
taken up with the task of relief, recovery, and Upstream increases investment opportunities sectors and places where none existed.
restructuring from the pandemic’s economic for the global investing community by growing
impact to build resilience against future shocks. the pie and, as a result, channeling funds into Policy Changes Can Set the Stage
Much of the challenge that lies ahead centers on developing economies. for Recovery
policymakers—the ministers, parliamentarians,
and other senior government officials who need Upstream interventions are grouped into two With FIAS support, IFC AS will play a critical role
to craft effective strategies to preserve and broad categories: in this process. Government actions designed
improve their countries’ investment climates and to control or limit the spread of the novel
expand the private sector’s role in driving jobs • Creating Markets with Sector Interventions coronavirus were a prime factor driving the
and economic transformation. This is the core seek to create markets via sectoral or COVID-related economic downturn. It follows,
area of FIAS work. market-wide intervention that will facilitate then, that government action will be integrally
private sector investment and for which IFC involved in unlocking the private sector to set
IFC Upstream Well Timed could be a potential financing partner. FIAS country economies on a course to recovery.
to Respond will be supporting these sector Upstream Accelerating private investment will require
interventions. policy and regulatory reforms to create the
A timely coincidence has brought the IFC 3.0 right conditions for business, and to generate
Creating Markets Upstream approach to the fore • Creating Markets with Project Interventions bankable projects. This was true before the
just as the relief, recovery, and restructuring work seek to create markets by supporting the pandemic, and the urgency of reform is even
in response to the COVID-19 economic crisis gets creation and realization of specific projects greater now.
underway. Though the Upstream strategy was that will provide wider demonstration or
developed before the pandemic hit, the timing set broader market precedent, for which Across emerging and developing economies,
of its rollout into operations could not have IFC is a likely financing partner (e.g. early- economic recovery over the next two to five years
been more fortuitous. The concept underlying stage project development or transaction will need to focus on how to reenergize firms
the Upstream approach is that IFC will engage advisory). and recreate and strengthen markets damaged
in activities that help to stimulate and create
by the pandemic’s effects. As they were prior
conditions that result in the flow of private IFC AS, which form the heart of FIAS-supported to the COVID-19 pandemic, FIAS-supported IFC
capital—domestic and foreign—into productive client-facing operations, are part of an integrated AS teams are being urged to look for reform
investment in IFC’s countries of operation. approach tied to World Bank Operations, IFC recommendations on how best to leverage
If countries with economies hobbled by the Upstream, IFC Investment, and an expanding and incentivize the private sector. The new
pandemic are to attract investors, they need to IFC portfolio. The goal is to help the World Bank context places greater emphasis on assessing
The FIAS FY22–26 Strategy Cycle 13constraints and reform roadmaps to support from EFI management to IFC. The trust fund now country-level engagements and globally
the restructuring and recovery of key sectors resides in IFC Corporate Operations Management, applicable platforms. Upstream work can be
and firms—which will be a key task of the teams placing FIAS institutionally at the center of IFC’s accomplished as quickly as in a few months;
undertaking Country Private Sector Diagnostics operations. Shifting FIAS to IFC management the strategy envisions an investment line of
(CPSDs) that identify both constraints and means that the trust fund will now be able sight of no more than five years. As noted
opportunities for creating dynamic, sustainable to support a broader range of advisory and above, FIAS will be supporting Creating
economies. Upstream activities originated and implemented Markets with Sector Interventions through
by IFC regional and industry teams. One result of sectoral or market-wide interventions that
Upstream is core to realizing the mandate of IFC this should be a closer connection between FIAS- will facilitate private sector investment and
3.0. The Upstream agenda focuses on generating supported activity and tangible economic results, for which IFC could be a potential partner.
investment opportunities to grow IFC’s potential including investment and job creation. FIAS will not be involved in Creating Markets
pipeline and meet the development finance with Project Interventions linked to specific
commitments made by IFC in gaining support With this background, IFC AS and Upstream projects in which IFC is a likely financing
for the capital increase. The Upstream approach Services supported by FIAS can be partner.
builds on relevant experience from investment conceptualized in four ways: first, the type
and advisory initiatives that successfully created of advisory service; second, the category of • Firm-Level Advisory: Supports new and
new market opportunities and applies innovative donor support; third, the client country and portfolio clients by building capacity,
models around staffing, funding, indicators, and region involved; and fourth, the IFC industry or expanding impact, and managing risks for
operations to enable delivery. operational team most closely associated with long-term success. It can be accomplished
the services to be delivered. quickly over a few months or involve a
FIAS Supporting the Full Spectrum long-term relationship over several years.
of IFC Advisory Services Advisory type: Under the Creating Markets The sector work and select firm-level work
Upstream approach, IFC AS will fall into one of supported by FIAS can help identify key
IFC has completed the integration of AS into three types: insights related to industry challenges and
industry and services departments, a process that test potentially scalable solutions, thereby
began in 2015. IFC’s 2018 Advisory update to the • Enabling Environment AS: Aims to improve helping policy makers, firm-level clients,
Board covered the integration of the standalone client country business environments to and IFC.
Cross-Cutting Advisory Department into IFC unlock a broad range of new private sector
operations. The relocation of IFC AS teams from investment opportunities—a longstanding Category of donor support: Donor contributions
EFI to IFC Operations (industry and regional area of service delivery supported by FIAS. to FIAS break out into three categories: core
departments) on July 1, 2020, completed this contributions, programmatic contributions, and
process. FIAS moved as part of this restructuring • Upstream AS: Supports the development project specific support. IFC encourages donors
of investable projects and markets with to earmark roughly half of their contribution
14 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and Jobsto FIAS Core in support of the overall trust
fund strategy. From FY17 through FY20, donor FIAS Donor Contributions by Category
contributions to FIAS Core made up 23 percent of
all donor contributions. Programmatic projects
made up 45 percent of all donor contributions. In the FY12–16 strategy From FY17 through FY20,
Project-specific contributions represented 32 cycle, donor contributions donor contributions to
percent of all donor contributions. In the FY12–16 to FIAS Core made up FIAS Core made up
35% 23%
strategy cycle, donor contributions to FIAS Core
made up 35 percent of all donor contributions.
FIAS Core donor support provides the flexibility
to allocate FIAS funds in support of FIAS strategic of all donor contributions. of all donor contributions.
priorities—including IDA, Sub-Saharan Africa,
and FCS projects. It also enhances the ability
Programmatic projects Programmatic projects
of IFC teams to respond rapidly to emerging made up made up
42% 45%
challenges such as the economic fallout of the
COVID-19 pandemic. In addition, Core funding
supports the design and development of global
knowledge products which inform and facilitate of all donor contributions. of all donor contributions.
innovative client-facing solutions. Programmatic
and project-specific contributions are best when
Project-specific Project-specific
they can be applied as broadly as possible. For
contributions represented contributions represented
example, support to investment climate advisory
in the countries of the Organization for the
Harmonization of Business Law in Africa (OHADA)
would support a single project but one that
23%
of all donor contributions.
32%
of all donor contributions.
would be applicable to the 17 member countries
of OHADA.
Total Donor Contributions
Client country regions: Implementation of IFC
$134.5 m $91.5 m
AS happens at the country level. IFC regional
management is closely involved in decision
making on which of the projects in their regions
get FIAS support, while the FIAS Program through 5-year cycle. through 4 years of 5-year cycle.
The FIAS FY22–26 Strategy Cycle 15Management team ensures projects fit the are being identified by joint World Bank–IFC Sub-Saharan Africa: Regional challenges include
agreed FIAS Strategy. This approach reflects CPSDs and integrated into IFC country strategies weak institutions and poor policy and legal
the World Bank Group’s increasing emphasis (for more on CPSDs, see page 32). It is IFC’s frameworks, fragility and conflict, and displaced
on aligning financial and advisory services ambition to intentionally drive the IFC business populations. Urbanization is happening at
with country strategies developed jointly and based on the recommended interventions the highest rate in the world. The region’s
tailored to client country needs. To be sure, some highlighted in the country strategy instead of economies suffer from weak industrialization,
strategies and best practices apply equally well taking on projects opportunistically. These with Africa accounting for less than 1 percent
across regions—for example, helping developing will be the source of FIAS-supported project of global manufacturing output. Population
country exporters meet food safety standards in implementation plans for the next strategy growth means that the region’s workforce will
major markets such as the European Union—and cycle. FIAS supports projects in all regions, but continue to increase by 30 million per year.
the World Bank Group continues to deploy global it is important to note that Sub-Saharan Africa Women remain at a disadvantage in many of
expertise. However, tailored solutions aligned is a FIAS priority region, and the Multi-Country the region’s economies, held back by outdated
with country strategies developed through Investment Climate Program (MCICP), which is laws and regulations. A digital divide—with
deep dives, analytics and diagnostics, and part of FIAS, prioritizes Europe and Central Asia. less than a quarter of the region’s population
close working relationships with clients, are the Here are some of the key advisory themes and able to access the internet—hampers economic
dominant theme. Upstream is also deeply rooted work areas identified by IFC regional teams as growth. Of the 25 least connected countries
in country strategies. IFC took bold moves to priorities: in the world, 21 are in Africa, but the pace at
reform its budgeting process in FY21 to hardwire
the links between country strategies, IFC AS and
Upstream pipeline, and resource allocation by
introducing a targeted country-driven budget
21
of Africa’s countries lack connectivity
allocation. Upstream budget is allocated at the
country level based on Upstream initiatives Of the 25 least connected countries in the world,
prioritized through country business plans. 21 are in Africa, but the pace at which the internet
Country Managers now have the authority to is growing in Sub-Saharan Africa is also one of the
release funds to approved Upstream initiatives. fastest in the world.
FY20: FIAS
Accordingly, each IFC regional team has
developed a suite of country strategies aimed
projects in 16
FCS countries
in Africa.
2.5%
at addressing the most urgent development GDP per capita increase with mobile broadband
problems of clients in those regions and
Research shows that a 10 percent increase in mobile
countries. Development obstacles and broadband penetration in Africa would result in an
opportunities to be addressed in these strategies increase of 2.5 percent of GDP per capita.
16 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and Jobswhich the internet is growing in Sub-Saharan Europe and Central Asia (ECA): The main foundations for inclusive growth by expanding
Africa is also one of the fastest in the world. The challenges are declining competitiveness, opportunities for women. The cities agenda and
potential benefits are enormous: research shows underdeveloped financial markets, challenging Public-Private Partnerships (PPPs) will be key
that a 10 percent increase in mobile broadband climate change effects, insufficient digitalization, parts of the connectivity agenda. Enhancing
penetration in Africa would result in an increase inefficient public sector governance, inefficient competitiveness through reforms in key sectors,
of 2.5 percent of GDP per capita. Priority advisory state-owned enterprises, and geopolitical risks. entrepreneurship, and disruptive technologies
activities for the region: improving access to As one of the more industrialized developing will be among other areas of activity.
power, reforming laws and regulations relating to regions, ECA stands to benefit from IFC Advisory
getting electricity, supporting better functioning geared toward green growth and climate change Middle East and North Africa (MENA):
power grids; advisory in support of agribusiness mitigation. The ECA program seeks to develop Development obstacles include persistent
growth and agro-processing; skills development; competitive markets, address climate change and low growth, limited opportunities for women,
sector work in tourism and manufacturing; inclusiveness, foster connectivity and integration, and high poverty and unemployment. MENA
commercial property reform; digital financial and work in sectors including agri-finance and has five FCS countries (Iraq, Lebanon, Libya,
services, particularly in the mobile sector; supply chains, financial infrastructure, climate Syria, and Yemen) and one territory (West
financial products geared toward micro, small, finance, digital financial services, cities issues, Bank and Gaza) with significant internally
and medium enterprises (MSMEs); investor and energy. The program is trending away from displaced and underserved populations. State-
protections; modernized ICT and broadband economy-wide engagements in favor of sector owned enterprises dominate in many of the
systems; better data access. development in support of industry priorities. region’s economies resulting in weak private
Priority countries Ukraine and Uzbekistan, and sector engagement, low levels of competitive
East Asia and Pacific (EAP): The regional team the Central Asia region, will receive focused neutrality, entrepreneurship constraints, and an
is prioritizing the recalibration of the advisory attention. underdeveloped digital economy. Infrastructure
portfolio to create space for new programs to gaps include poor access to electricity,
ensure strategic alignment, with a bigger focus on Latin America and Caribbean (LAC): The broadband, and multi-modal transport facilities.
Upstream-related advisory. Key advisory themes: advisory agenda is limited in LAC because Global warming threatens agricultural production
inclusion; support to supply chains; access to much of the region consists of middle-income in an already arid region. The advisory program
financial services; sector work in agribusiness countries. But teams will focus on Haiti, an IDA envisions focusing on COVID-19 responses to
and tourism; support to the sustainable cities and FCS country, and struggling Caribbean minimize the destruction of markets and bring
agenda, including transportation, green economies. FIAS and MCICP also support a robust about economic recovery and job creation.
buildings, resource efficiency, and climate advisory agenda in LAC, including in middle- Markets will need to be restructured to support
smart agriculture; innovation and disruptive income countries such as Peru and Colombia. private sector activities, setting the stage for
technologies; broadband infrastructure; COVID Furthering regional integration will be a key sustainable recovery by ‘building back better.’
recovery. goal in addition to building climate resilience by Features of the advisory program include
promoting green buildings and strengthening the support for entrepreneurship, the creation and
The FIAS FY22–26 Strategy Cycle 17expansion of SMEs, expansion of the digital improving the business environment—a core FIAS Here are some examples of the strategic
economy, and increased access to finance for area of work—developing clean energy, energy approaches under implementation:
small firms, including firms owned and led by efficiency, green building, resource efficiency,
women. Economy-wide reforms to improve the climate smart agriculture, and green finance. FIG: Seeks to support women
investment climate are still needed in many Inclusion encompasses support for financial and customers and SMEs through financial
client countries across the region. Country teams social inclusive growth by fostering SME value intermediaries to help clients
will support steps to close infrastructure gaps. chains, digitalization, affordable housing, support close gender gaps in the private sector. The
Climate and gender will be the key cross-cutting to supply chains, and access to basic financial strategic objective involves funding new IFC
themes. and health facilities. In addition to the gender AS in the Banking on Women program, as well
and climate cross-cutting themes, the program as delivering global research and knowledge
South Asia Region (SAR): Afghanistan, will also seek to enhance competitiveness products. In the Upstream space, FIG is engaging
Bangladesh, Bhutan, Nepal, and Pakistan are all through disruptive and innovative technologies. with stakeholders to conduct policy dialogues to
IDA borrowing countries. India has one-fourth validate the viability of proposed programmatic
of the world’s poor. The pillars of the advisory Industry and operational teams: The areas changes. FIG advisory helps clients increase the
strategy in SAR are infrastructure, sustainability, of work that make up these regional advisory reach and breadth of financial services to people
and inclusion. The program seeks to address strategies span IFC industry and operational who currently have limited or no access through
development gaps in infrastructure by supporting structures and teams are: the Financial the expansion of digital financial services. IFC
the energy, transport, and logistics sectors in Institution Group (FIG); Manufacturing, actively champions and supports responsible,
addition to the cities agenda. The sustainable Agribusiness & Services (MAS); Creating Markets innovative solutions to reach unserved and
infrastructure program will focus on renewable Advisory (CMA); Infrastructure (INFRA); Disruptive underserved populations at scale.
energy. The sustainability agenda focuses on Technology and Funds; Energy and Mining;
Telecom, Media & Technology; Climate Business; MAS: Seeks to improve productivity
The sustainability agenda focuses Gender; PPPs; Environmental Social Governance at the factory level to increase
(ESG); and Upstream. Advisory and Upstream competitiveness and add a gender
on improving the business
groups within these units have updated their lens for inclusive job creation. Advisory efforts
environment—a core FIAS area of delivery strategies designed to align with the involve increasing professionalism in supply and
work—developing clean energy, overall IFC 3.0 Creating Markets Upstream distribution chains. In agribusiness, advisory
energy efficiency, green building, strategy and with the tailored regional and provides a blend of technical and commercial
country strategies. Working in coordination with approaches to increase efficiency of value
resource efficiency, climate smart
the regions, these teams will be able to put forth chains, build competitiveness to enable client
agriculture, and green finance. ideas for advisory projects that may be eligible integration into regional and global value
for FIAS support. chains, address core environmental and social
18 Upstream Advisory for Creating Investment Opportunities, Sustainable Growth, and Jobssustainability issues at the sector level (including Climate Business: The development access to health, finance, insurance, housing,
gender), and pilot and scale ag-tech solutions. gaps to be addressed by Climate and technology. Increasing employer-supported
MAS will also work on supporting hotel reopening Business advisory include a lack of childcare can help in redistributing the unpaid
with proper protocols that address cleanliness, commercially viable business models, regulatory care workload. FIAS has a strong record of
health, and safety. and financial incentives, and private sector support for removing legal barriers to women
finance. Projects in this area will seek to develop identified by the Women, Business & the Law
CMA: Prioritizes areas including and scale up investment in biodiversity and program (WBL) and will be pushing to exceed
enabling environment, enabling nature finance, clean energy, green buildings, institutional targets for including gender
sectors, and enabling finance and climate-smart cities programs, climate-sensitive components in IFC AS projects.
investment. Developing country regulatory agriculture, and green finance.
regimes often discourage risk-taking, suppress Digitalization: Digital technologies
competition and innovation, and impose undue Gender: Women are severely provide a unique opportunity for
costs and constraints—obstacles amplified by underrepresented in private sector countries to accelerate economic
COVID-19. The economic effects of COVID-19 leadership and do not participate growth and connect citizens to services and
exposed sector-level weaknesses, particularly equally in the formal workforce. Women shoulder jobs. FIAS will be supporting advisory services
in industries such as travel and tourism. The a disproportionate share of unpaid care work. that help clients unlock innovative solutions
pandemic also collapsed FDI, undermining client Access to technology, finance, insurance, basic to complex development challenges and help
country growth strategies and threatening the services, and infrastructure are constrained for countries accelerate their pace of development
withdrawal of investments that client countries women entrepreneurs. Women experience more in areas from digital banking to blockchain and
have already secured. CMA is built around the legal discrimination than men, stifling their full telemedicine. Fostering digital inclusion is of
notion that job creation does not happen at economic participation. Women experience high paramount importance. With potential tie-ins
the economy-wide level but at the sector and levels of sexual harassment and violence. These to project activities in gender, climate change,
firm level. CMA leverages analytics and applies and other gender gaps lead to macroeconomic Africa, and COVID-19 recovery, to name just a
experience and expertise on reforms and and firm losses. The private sector can help few, FIAS will be providing extensive support to
strategies to address private sector constraints, close these gender gaps by enabling men and digitalization advisory in the coming strategy
either economy-wide or sector-specific. CMA women to participate more equally in corporate cycle.
helps deliver solutions in the investment leadership, in the workforce, as consumers,
policy and promotion and business regulation and as suppliers. Strategic priorities of the IFC In summary, IFC’s current overall approach
space that promote sector- and firm-level gender strategy include enhancing women’s to development is called Creating Markets
diversification in the most promising areas for access to assets and services through increased Upstream. Under this initiative, IFC and other
recovery and growth. participation by women in business leadership members of the World Bank Group work closely
and the labor force, and by increasing women’s together on comprehensive approaches to
The FIAS FY22–26 Strategy Cycle 19development that link policy reform, advice, Can IFC Engage in this Country?
• Macroeconomic analysis NOT
investment, and the mobilizing of additional • Security situation
OK:
EXIT
finance. The approach is closely associated with • Governance
the World Bank Group’s Maximizing Finance for
Development (MFD) program, which prioritizes OK
private sector solutions, where possible, to
Are there Viable Market Opportunities for Private Enterprise?
conserve scarce public resources. It also fosters • Input from IFC networks, local offices, and client relationships NOT
OK
the private sector’s contributions to achieving • CPSDs
the Sustainable Development Goals (SDGs) and
the 2040 Agenda. The Creating Markets Upstream Creating Markets Approach: Upstream
OK project development, policy reform and
approach is especially important in FCS, where capacity building to create viable markets.
extensive efforts are required to improve policy,
build capacity, address environmental issues, ESC Performance Integrity Due Diligence
NOT • Are ESC and conflict • Are there investors/firms NOT
and mitigate risks to enable the private sector OK
issues manageable? we can work with?
OK
to thrive. The strategy development process
can identify the most appropriate focus areas Work with investor/firm to Encourage FDI, venture capital for
identify ways to manage or OK start-ups, and capacity building for
for engaging the private sector, as well as the mitigate the risks. clean, but weak sponsors.
instruments needed to foster private sector
growth and economic development. Commercial Viability Impact (for Development Finance
NOT • Viable investment plan Institutions/Impact Investors)
OK NOT
• Qualified investor/firm • Anticipated Impact Measurement and OK
Engaging in IDA and FCS: The adjacent figure • Financial operational risks Monitoring (AIMM) framework results -
illustrates the overall process that IFC follows is the impact assessment satisfactory?
in its approach to investing in FCS and IDA. In
practice the steps are far from linear, with several Market Creation: Advice for Improve Impact: linkages, gender
upstream project development, OK interventions, corporate social
iterations involved at different investment stages. capacity building. responsibility (CSR) for non DFIs.
These include preliminary engagement with
Can the Project be Financial on
investors and firms, an early look at projects, NOT
Commercial Terms, with IFC Participation? OK
detailed field appraisal, and a formal review • Given the risk/return profile
before decisions are made. Nevertheless, the
illustration captures four important aspects of Invest and implement with project Structuring, guarantees, blended finance to
IFC’s investment process: (1) early engagement development and risk mitigation OK improve the risk/reward balance if there are
instruments, as needed. important external benefits (e.g., climate
on critical fragility issues such as integrity resilience, poverty reducing).
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