Johannesburg, August 21, 2006—The
International Finance Corporation, the private sector arm of the World
Bank Group, announced today the launch of a partnership with the World
Bank, the Swedish International Development Agency, and the stock exchange
specialist OMX to help develop access to securities markets products in
the region. This partnership, the Efficient Securities Markets Institutional
Development, responds to the growing demand for housing, roads, and other
infrastructure projects in Africa. Such projects face a shortage of long-term
local currency funding to support their construction.
Under the Efficient Securities Markets
Institutional Development, known as ESMID Africa, experts will work with
government regulators and market participants to design new products that
provide this funding and that build or strengthen the marketplaces and
institutions (such as stock exchanges, rating agencies, and securities
firms) that are the core of the securities industry. The collaboration
will help bring to market new types of securities products that will attract
investors and further develop the securities markets.
The goal is to make long-term financing in local currencies more widely
available in the emerging markets, starting in Sub-Saharan Africa with
ESMID Africa. IFC, the World Bank, the Swedish Development Cooperation
Agency, and OMX of Sweden have signed an agreement for 40 million Swedish
kronor ($5.5 million equivalent) to fund the project.
“Poor infrastructure places unnecessary burdens on Africans and hinders
development. IFC is committed to helping private investors contribute more
to infrastructure projects in Africa by getting at a root of the problem—limited
access to long-term, local currency finance,” said Thierry Tanoh, IFC’s
Director for Sub-Saharan Africa. “This new initiative will allow
us to work more effectively with regulators, market participants, and our
international partners, to identify the shortcomings in securities markets
and develop the best practical solutions.”
Africa as a whole has enjoyed strong economic growth in the past four years,
which has spurred demand for improvements in infrastructure and for affordable,
good quality homes. Securities market products, especially bonds
and securitization, are key ways for local and regional governments and
private sector companies to obtain much-needed long-term financing for
major projects of this type.
“Local currency financing is critical for infrastructure development”
said Roger Garman, Sida’s Senior Advisor for Financial Systems. “But
to channel long-term savings, such as pension funds, to build infrastructure
requires securities markets that are working efficiently, and with the
ESMID-Africa will begin its work by doing a diagnostic of securities markets
in selected African countries. From there, country programs will be designed
and implemented through IFC’s technical facility in the region, PEP-Africa.
ESMID-Africa will initially be funded by a grant from the Swedish International
Development Agency, supplemented by in-kind contributions from IFC and
the World Bank.
The International Finance Corporation is the private sector arm of the
World Bank Group and is headquartered in Washington, D.C. IFC coordinates
its activities with the other institutions of the World Bank Group but
is legally and financially independent. Its 178 member countries
provide its share capital and collectively determine its policies.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing and transition
countries, helping to reduce poverty and improve people’s lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. From its founding in 1956 through FY05, IFC has committed
more than $49 billion of its own funds and arranged $24 billion in syndications
for 3,319 companies in 140 developing countries. IFC’s worldwide committed
portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion
held for participants in loan syndications.