The World Bank is exploring the potential of emerging markets in seeking new ways to open up channels for development assistance.
As industrialized countries struggle to recover from the financial crisis, the developing world seems to be doing better – and the multilateral development organization is “giving big investors a new means to capitalize on [that],” said Brian Wingfield, Washington bureau chief of Forbes.
World Bank President Robert Zoellick has been looking for new streams of development capital in response to the crisis. The bank is currently enticing big investors to take advantage of booming markets.
“Through IFC Asset Management Company, established last year, the bank is drawing money from sovereign wealth and pension funds to make private-equity investments in Africa, Latin America and the Caribbean,” writes Wingfield. “Within the past month, the company’s $950 million “ALAC” Fund has announced its first investments, including a $35 million upgrade of HeidelbergCement’s operations in West Africa and an $18.8 million convertible loan to Ecobank Transnational, a banking group that stretches across the African continent. An investment in the First Bank of Nigeria is expected soon.”
Through the ALAC Fund, the World Bank is “for the first time pooling outside money into a fund that makes equity investments in developing countries,” according to Wingfield.
The fund gives investors the opportunity to profit from growth in emerging markets, which the World Bank hopes would create new channels for development assistance.
“I’m going to where the money is, to tap sovereign funds and connect them to development. But first I had to explain to the sovereign funds that this is not foreign aid, this is not giveaway assistance. I believe that there are good returns there,” Zoellick told Forbes in a recent interview.