What Is the International Finance Corporation?
The International Finance Corporation (IFC) is an organization dedicated to helping the private sector within developing countries. It provides investment and asset management services to encourage the development of private enterprise in nations that might be lacking the necessary infrastructure or liquidity for businesses to secure financing.
How the International Finance Corporation Works
The IFC was established in 1956 as a sector of the World Bank Group, focused on alleviating poverty and creating jobs through the development of private enterprise. To that end, IFC also ensures that private enterprises in developing nations have access to markets and financing. Its most recent goals include the development of sustainable agriculture, expanding small businesses' access to microfinance, infrastructure improvements, as well as climate, health, and education policies. The IFC is governed by its 184 member countries and is headquartered in Washington, D.C.
Example of an International Finance Corporation Investment
In 2017, the IFC invested in Pakistan’s dairy industry. Although Pakistan is the fourth-largest milk-producing country in the world, demand has consistently outpaced supply. Coupled with poor infrastructure and an outdated supply chain, Pakistan’s dairy increasingly falls short of its ability to deliver what’s expected. Small subsistence farms account for nearly 80 percent of the industry’s output, making things inefficient.
The IFC’s contributed $145 million to one of the world’s largest dairy producers, FrieslandCampina, to help it acquire 51 percent of Engro Foods, Pakistan’s leading dairy processor. The Dutch cooperative FrieslandCampina has promised to share its experience and best practices with the smaller farmers who supply Engro Foods, along with the majority of the dairy processors in Pakistan. The goal is to help these small farmers increase productivity and decrease their waste.
The IFC expects that 200,000 farmers and 270,000 distributors will benefit from FrieslandCampina's acquisition of Engro Foods. In addition, the return on investment (ROI) for the IFC will be a projected 1,000 new jobs in the dairy supply chain.
The International Finance Corporation as a Partner Organization
The IFC views itself as a partner to its clients, delivering not only support with financing but also technical expertise, global experience, and innovative thinking to help developing nations overcome a range of problems, including financial, operational, and even at times political.
The IFC also aims to mobilize third-party resources for its projects, often engaging in difficult environments and leading crowding-in private finance, with the notion of extending its impact beyond its direct resources.