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THE PRIVATE SECTOR AND DEVELOPMENT: FIVE CASE STUDIES


Brigid Janssen
Phone: (202) 473-7700
Fax: (202) 974-4384
E-mail: bjanssen@ifc.org

 


WASHINGTON, D.C., September 11, 1998 --  The International Finance Corporation has issued a new book outlining concrete examples of how investment in the private sectors of developing countries has helped to enhance economic development and alleviate poverty.

The Private Sector and Development: Five Case Studies is the second in IFC’s Results on the Ground series.  It illustrates through IFC projects how innovative and well-managed private sector business initiatives can make a measurable contribution to the economy and well-being in developing countries, through employment creation and training, technology transfer, greater competition, a quicker pace of business generation, and improvements in infrastructure and the environment.

The five examples of IFC-supported business ventures in Bolivia, Jordan, Tanzania, Turkey, and Uruguay demonstrate the opportunities for private sector development as well as the challenges inherent in new ventures:

Bolivia: Empresa Minera Inti Raymi, which developed the Kori Kollo gold and silver mine, shows how foreign capital can help provide the modern technology necessary for financial success. The ripple effects from developing this mine have improved lives throughout the local and regional economy, alleviating a traditional resentment of foreign ownership.

Jordan: Al Hikma produces high-quality medicines that much of the Jordanian population can afford and also exports three-quarters of its production. IFC technical assistance and capital investment were important in allowing the company to become internationally competitive, a sometimes difficult accomplishment in a small country where it is not easy to achieve economies of scale.

Tanzania: Tanbreed produces chicks as a first stage in the country’s poultry industry. Those chicks are then raised by small (mainly female) growers and are then moved into the country’s retail food network. A modest infusion of IFC capital produced both financial and development payoffs, by allowing small business owners to benefit from Tanbreed’s access to technology and capital. This case study also illustrates the many risks to which enterprises of this kind are exposed in developing countries.

Turkey: Conrad International operates the Conrad Hotel in Istanbul, a stopping point for many of the country’s tourists and business visitors. Often volatile, the hospitality industry is subject to the whims of the weather and the world economy, but in this case investor persistence and creativity are paying off.

Uruguay: Azucitrus, the largest citrus-growing-and-processing exporter in the country, has faced a number of technical and weather-related problems. It has also been adversely affected by some of the structural changes taking place in the Uruguayan economy. IFC has worked with the company to carry out loan restructurings and expenditure rationalization that have enhanced operating efficiency. As a consequence, the project and its original development objectives are now back on track.

Through such assessments, IFC gauges the success of its efforts to encourage the growth of productive private enterprises and create efficient capital markets. These studies form part of IFC’s comprehensive review of development effectiveness that includes an annual analysis of several projects to determine their contributions to development.

IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.