By Victoria Waldersee and Karin Strohecker
(Reuters) – The World Bank’s private investment arm has mobilised nearly $1 billion to rebuild Ukraine’s private sector and is shifting its broader investment focus towards equity, its managing director told Reuters.
Around $620 million of the funds mobilised for Ukraine – part of a $2 billion package announced in December 2022 – are from the investment arm’s own balance sheet and another $360 million from external financing, said Makhtar Diop, managing director of the International Finance Corp (IFC).
But the path ahead is not without its challenges.
“First of all we need to continue to monitor how the political situation evolves and there are some concerns,” said Diop, speaking ahead of the World Economic Forum in Davos.
“We will need to continue mobilising more resources to guarantee a little bit some of the investments that we’re doing because we take a lot of investment on our own balance sheet,” he said, adding that the IFC was more exposed to Ukraine than other development agencies.
Kyiv views mobilising reconstruction funds – estimated at $400 billion – more urgently than ever as signs of donor fatigue are emerging from Europe and the United States.
Providing guarantees to give external investors confidence to deploy resources was the “main challenge” facing the IFC in mobilising further funds for its support package, Diop said.
The corporation had so far funded guarantees worth $304 million in the agricultural sector with the support of the World Bank’s Multilateral Investment Guarantee Agency for critical grain imports and exports, and pre-assembled solar panels and battery storage in partnership with Norwegian energy provider Scatec.
It is also considering investing in offshore wind capacity and distribution generation, but plans are not finalised.
Conflicts elsewhere are on the IFC’s radar as it assesses with the World Bank Group how best to help rebuild Palestinian territories after violence de-escalates, Diop said.
“We need to be prepared…one way or another, there will be an after,” said Diop, adding that specific plans were being discussed but declining to give further details.
Speaking about the IFC’s wider investment focus, Diob said he planned to ramp up equity investments, with African equity markets – often lacking depth – one area of focus.
“We’ll be doing more and more equity, particularly in the productive sector,” he said, declining to give further detail of what share of the IFC’s portfolio should be geared towards that.
In its 2023 annual report, loans made up 71% of portfolio exposure, while equity accounted for 21% with the remainder made up of guarantees and other products.
(Reporting by Victoria Waldersee in Berlin, Karin Strohecker in London; Editing by Kirsten Donovan)