Columbia International Affairs Online: Policy Briefs

CIAO DATE: 04/2013

A Proposal for IDA-17: Instead of an Income Transfer, Direct the IFC to Invest Its Time, Resources, and Expertise in IDA Countries

Clay Lowery

March 2013

Center for Global Development


When shareholders meet in spring 2013 for preliminary negotiations for a new replenishment of the World Bank’s International Development Association (IDA), they are likely to ask that the International Finance Corporation (IFC) continue to transfer a portion of its “profits” to IDA. This practice—a subsidy from the bank’s private-sector lending arm to its concessional sovereign lending window—served its purpose, but it is not the best way for the IFC to contribute to economic growth in IDA-eligible countries. Instead, IDA’s shareholders should insist that the IFC provide financing and its expertise in a way that fits what it does best—investing in the private sector—while giving the IFC incentives to accelerate what it should do even better—taking greater risks in poorer countries.