What is the International Finance Corporation?
The International Finance Corporation is a United Nations agency that directly invests in companies and guarantees loans to private investors in the global marketplace. The International Finance Corporation is affiliated with the World Bank and was created to promote a sustainable private sector through the investment in developing economies as a means to reduce poverty and improve the lives of those residing in struggling nations.
The funds delivered to such nations are typically used to benefit the nation as a whole. Through the delivery of funds, these developing economies can invest and subsequently supply their people with improved public services such as paved roads, public transportation, the establishment of business centers, and an overall improvement of the nation’s infrastructure.
The International Finance Corporation is headquartered in Washington D.C. and shares the primary responsibilities and objectives of all World Bank Group Institutions—to improve the overall quality of the lives of people in developing countries.
To help those in struggling nations, the International Finance Corporation provides micro loans as well as other forms of financing to developing countries. The International Finance Corporation was established in 1956, and stands alone as the world’s largest multilateral source of equity financing for private sector projects in developing economies worldwide.
Role of the International Finance Corporation
The International Finance Corporation aims to promote sustainable development of the private sector in developing nations through the various means:
o The International Finance Corporation will finance private sector projects and an assortment of business ventures in the developing world.
o The International Finance Corporation will help private companies in developing nations in regards to mobilizing and gaining access to financing streams in the international financial markets.
o The International Finance Corporation will provide technical assistance and professional advice to various businesses and government agencies throughout the world.
Ownership and Management Structure of the International Finance Corporation:
The International Finance Corporation is comprised of 182 member countries who band together to collectively distribute the company’s unique policies. To gain membership, a country must first acquire membership to the International Bank for Reconstruction and Development. The International Finance Corporation shares capital, which is delivered by its member countries. The voting privileges of the member countries are proportional to the number of shares held—tied-into the amount invested.
The International Finance Corporation is comprised of a Board of Governors who delegates the majority of their powers to the IFC’s board of Directors. The IFC is also managed by the company’s CEO, President and Executive Vice President.
International Finance Corporation’s funding:
The International Finance Corporation’s equity and investment policy is funded out of the capital paid-into the corporation. Additionally, funds are obtained through the retained earnings, which is primarily comprised of the corporation’s net worth. The IFC possesses a strong shareholder support, triple-A bond ratings, as well as a substantial capital base, which allows the company to raise funds in all international markets.