Western Europe

IFC at European Parliament As EU Rethinks Development Policy

Lars Thunell appeared before the European Parliament’s Committee on Development on April 24, 2012 to discuss his tenure in charge of the organization and IFC’s work around the world. 

Development banks like IFC are boosting emerging economies with billions in private sector investment as a means of creating jobs in spite of the financial crisis, Lars Thunell, Executive Vice President and CEO of IFC, said before the European Parliament’s Development Committee. "It’s very much, especially after the crisis now, during the crisis, a question of jobs. And we all know that jobs are created by the private sector, especially by SMEs,’" Mr. Thunell told the committee, in a discussion entitled "Rethinking Development Assistance."

Development banks focused on the private sector “have actually increased their commitments substantially” to $40 billion a year, a four-fold increase in a decade, Thunell said, quoting the study entitled International Finance Institutions and Development Through the Private Sector.

The EU is considering a European Commission-proposed Agenda for Change, which would refocus aid to the neediest countries and boost the private sector’s role, which IFIs can help finance with a multiplier effect on private investment.

"I hope that this will also be useful to you as you consider your Agenda for Change," Mr. Thunell said, in a discussion entitled "Rethinking Development Assistance."

Swedish MEP Alf Svensson noted "a wall in terms of the aid that the state sector can provide and the aid that is given by the private sector," but that the crisis is forcing a development aid rethink by the world’s largest aid donor.  The EU spends about $50 billion on development aid annually.

"We’re even now hearing about an economic crisis which means that a large number of states are actually reducing their development aid budgets," Mr. Svensson told the committee. "There are countries that are feeling the pressure now, but even so, they could make their development aid much more effective if they were able to build these bridges between the public sector help and the private sector help."

"I just want to thank Mr. Thunell for his presentation. I think that he emphasized a common concern on the role of the private sector in the development agenda," said Jose Baiges Planas, of the Commission’s DG Development.  "He certainly mentioned the Agenda for Change adopted by the Commission, by the EU. I just want to emphasize that we are ready to work together with the IFC in this area."