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
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.