COVID-19: World Bank & IFC’s $14bn – How far does it extend?

In response to the unprecedented funding crisis brought on by the COVID-19 pandemic and subsequent lockdowns, the World Bank Group has approved a $14 billion package aimed at providing rapid support to emerging markets. Within this package, the International Finance Corporation (IFC) has been allocated $8 billion, with the primary goal of assisting existing clients facing significant challenges due to the current crisis. The funds are intended to help these companies maintain their operations, preserve jobs, and have a positive impact on the communities and economies they are part of. Sergio Pimenta, IFC's Vice President for the Middle East and Africa, discussed the urgency of deploying these funds during an interview on CNBC Africa. He highlighted the strong demand for the funds, with over 300 requests already received from companies worldwide, particularly in Africa and the Middle East. The IFC aims to quickly disburse the funds to clients, with the first round expected to reach recipients within days. Pimenta emphasized the importance of using previously tested instruments and drawing on past crisis responses. Drawing from experiences during the Ebola crisis and the financial crisis, the IFC has identified key areas where immediate funding can have the most impact. For example, the $8 billion facility includes $2 billion earmarked for trade finance, recognizing the crucial role of supporting companies' value chains during the current economic environment. Learning from past challenges, such as restricted access to locations in need during the Ebola crisis, the IFC has adapted its approach to engage with clients remotely, using video conferences and phone calls. This shift allows the organization to provide swift assistance to existing clients, enabling a faster response to urgent needs. When considering the cost of this assistance, Pimenta stressed that the IFC focuses on providing sustainable support to companies. While some companies may struggle to afford borrowing at commercial terms due to heightened risks and pricing, the IFC offers financing with support from the World Bank's IDA entity. This financing reduces costs and ensures funds are provided at affordable conditions to help the most impacted and vulnerable companies weather the crisis and eventually recover. The $8 billion rapid response from the IFC represents a critical lifeline for companies in emerging markets, offering much-needed support during these challenging times.