Over just three days, global equity markets have lost $10 trillion, and volatility has soared to levels unseen since major financial crises, with the CBOE Volatility Index (VIX) reaching 60 on April 7. This turbulence is a wake-up call for urgent, strategic investment in emerging markets – an objective long supported by the International Finance Corporation (IFC).
On April 8, 2025, Makhtar Diop, Managing Director of the IFC, visited IE University in Madrid. Accompanied by the IFC delegation, Diop engaged in an important conversation with Manuel Muñiz, Provost of IE University, discussing how IFC’s investment has a double bottom line, seeking financial returns to ensure the institution’s financial sustainability, while aiming to have a development and social impact in emerging markets.
The visit to IE University marked the deepening of the partnership between the IFC, the IE School of Politics, Economics & Global Affairs (SPEGA), and IE Business School, with the shared aim of strengthening collaboration through research and offering more academic and professional opportunities for IE University students.
Public-Private Collaboration: The Key to Progress
IFC was officially established as a separate affiliate of the World Bank Group on July 20, 1956 to catalyse private capital investment in developing countries. Its creation was to respond to capital limitations and structural challenges in the post-World War II developing world. Unlike the World Bank’s pursuit of the public sector reconstruction, the IFC is designed to empower the private sector as a key driver of economic development.
While its objectives have not significantly changed over time, the variety of tools and strategies IFC employs has evolved. For instance, in 1959, IFC initiated its first syndication loan as a new way to invest its capital and promote investment by others and was granted authority for equity investments in 1961. In 1985, IFC staff member Antoine van Agtmael coined the term “emerging markets,” fundamentally changing the financial world’s perception of developing countries by reframing these economies as dynamic opportunities rather than high-risk outliers for greater private investment.
Over time, the idea that the private sector needed to play a bigger role gained momentum, but later faced some headwinds, favoring a stronger public sector role in investment and the provision of public goods.
The world is at a crossroads in 2025, as it is more integrated than ever, requiring comprehensive solutions derived from the combined efforts of the public and private sectors. It cannot be one or the other. Today, it is the collaboration between governments, businesses, and international organizations that is required if the world is to address global challenges like climate change and inequality. More importantly, such cooperation is a source of significant economic benefit for all in the future.
IFC’s Vision for 2030
Makhtar Diop went on to explain the IFC’s vision for 2030 — a new strategy aimed at mobilizing private capital at scale to create more and better jobs, developing new approaches to expand equity investments, and increasing support for micro, small and medium enterprises (MSMEs). The strategy focuses investment on high-potential sectors: infrastructure and energy, agribusiness, primary healthcare, tourism and value-added manufacturing.
This long-term vision positions the IFC, under Diop’s leadership, as a leader in sustainable development finance, delivering not only strong returns on investment, but also ensuring high impact. To this end, IFC has been using an innovative ex-ante impact assessment tool that enables the institution to better define, measure, and monitor the development impact of each investment project. This has helped to close the gap in literature and practice between impact anticipation and traditional post-evaluations, allowing the IFC to select the most meaningful projects. “Today, the development needs are so important and there are a lot of resources available in capital markets — trillions. The question is how can we use our balance sheet to de-risk investment and attract this capital into developing countries?”
Now more than ever, it is essential to understand that despite global trends of declining aid, investing in developing economies makes economic sense. These are the questions that guide IFC’s investment decisions, as explained by Diop: “One of the important elements of working in developing countries is: are we creating new markets? Are we making markets more efficient than they were? Are we bringing more competition?”
Leveraging the Private Sector for Global Good
By reframing how development is analyzed — focusing not just on outcomes, but on the very starting point of investment logic — the IFC is helping lead a global transformation. International development is framed as an economically strategic move that fuels growth and profits in both developing and advanced economies.
As we approach 2030, Provost Muñiz noted that SDGs represent “the broadest agreement achieved yet by the international community” or in other words “the closest we have come to a global social contract.” The IFC is committed to this global framework, even in conflict-ridden territories such as Ukraine, where, as the Managing Director Diop explained:
“We took the risk of continuing to invest in companies in Ukraine in spite of the war… We are not just looking at the bottom line — we are not a commercial bank. And what we are doing, is bringing in our balance sheet to guarantee investments where strategically needed to de-risk and build investor confidence. For example, IFC – with the support of the EU and France – helped deliver the largest foreign direct investment in Ukraine since the invasion to strengthen the telecom infrastructure in the country.’”
This shows that IFC is determined to invest where it matters most. This doesn’t mean relying solely on grant money or commercial financing, it means achieving true integration between the two based on the development needs that the projects address. Because it’s not just the right thing to do, it also makes economic sense.
The world faces deep uncertainty. But it is in times like these that real progress takes place in how we think, behave, treat each other, treat the world, and reimagine what’s possible. This is the transformation we need: one that builds a stronger foundation, one that helps the world move forward and persevere, even in turmoil.
Featured images provided by Michelle Vaz.
