# International Finance Corporation (IFC): Definition and Example

> **Definition**
>
> The International Finance Corporation (IFC), a member of the World Bank Group, provides financing and advisory services to private enterprises located in developing countries.

## What Is the International Finance Corporation (IFC)?

The International Finance Corporation (IFC) provides financing of private-enterprise investment in developing countries around the world, through both loans and direct investments. Affiliated with the [World Bank](https://www.investopedia.com/terms/w/worldbank.asp), the IFC also provides advisory services to encourage the development of private enterprises in nations that might lack the necessary infrastructure or [liquidity](https://www.investopedia.com/terms/l/liquidity.asp) for businesses to secure financing.

### Key Takeaways

*   The International Finance Corporation is a member of the World Bank Group.
*   The IFC provides financing for private enterprise investments in developing countries.
*   The organization says its focus is eliminating poverty through economic development.
*   Critics claim the IFC focuses more on profits than people.

## How the International Finance Corporation (IFC) Works

The International Finance Corporation was established in 1956 as a member of the World Bank Group, focused on investing in economic development. It claims to be the largest global development institution focused on the [private sector](https://www.investopedia.com/terms/p/private-sector.asp) in developing countries. The IFC says it also seeks to ensure that private enterprises in developing nations have access to markets and financing.

The IFC is headquartered in Washington, D.C., and works in more than 100 countries. These regions include:

*   Africa
*   The Middle East
*   Central Asia and Turkey
*   Afghanistan and Pakistan
*   Europe
*   Latin America and the Caribbean
*   South Asia

The IFC's stated goals include the development of sustainable agriculture, expanding small businesses' access to [microfinance](https://www.investopedia.com/terms/m/microfinance.asp), supporting infrastructure improvements, as well as promoting climate, health, and education policies.

To raise money, the IFC issues bonds in markets around the world. The IFC issued $12.5 billion across 198 bonds in 22 currencies as of 2023. In [fiscal year](https://www.investopedia.com/terms/f/fiscalyear.asp) 2023, the IFC committed a record $43.7 billion to private companies and financial institutions in developing countries,

> **Important**
>
> The total amount of fast-track financing to support private companies and developing countries impacted by the economic downturn caused by the spread of COVID-19.

## Impact of the IFC

The goal of the IFC is to help people in developing countries create opportunities through its experience, financial resources, innovation, and technical knowledge. According to the organization, its key accomplishments include:

*   Reaching 2.7 million farmers
*   Serving 329.5 million patients
*   Supporting 3.4 million jobs
*   Providing 63.3 million people with an internet connection

The IFC also says it reduced 11.5 million tonnes of greenhouse gases from projects in 2023. It also provided 69.7 million people with electricity.

## Criticism of the IFC

Despite being part of the World Bank Group (acting as its lending arm for the private sector), the IFC faces a great deal of criticism because of its size and influence. Although one of its primary goals is to reduce [poverty](https://www.investopedia.com/terms/p/poverty.asp) through economic development, critics say it acts more like a private investment bank with a focus on corporate profit, sometimes with disregard for the environmental and social impacts of its projects.

Another key criticism of the group is how it treats investments when it is ready to hand over the reins to locals. The Compliance Advisory Ombudsman says it has handled complaints between 2013 and 2022 that go against the IFC's commitments to its sustainability policy. It also found weaknesses in how the group exits its investments—notably, exiting early in the cases of [debt financing](https://www.investopedia.com/terms/d/debtfinancing.asp).

## Examples of IFC Investments

### Africa

The IFC announced a partnership with Proparco, a finance development institution from France, and Helios Sports and Entertainment Group in July 2024 to expand sports and entertainment in Africa.

According to the IFC, the global sports [market](https://www.investopedia.com/terms/m/market.asp) was worth $480.12 billion in 2023 and is poised to rise to $629.81 billion in 2028. The entertainment sector, on the other hand, is expected to jump from $2.1 trillion to $2.9 trillion between 2023 and 2027. Africa's role in these industries is small and poised for growth, given the rise in the region's [e-commerce](https://www.investopedia.com/terms/e/ecommerce.asp), fashion, and audio-visual content markets.

Together, these groups stand to help grow economies throughout Africa by supporting jobs—notably in employing youth. The partnership also stands to give a boost to several industries in Africa, including tourism, [real estate](https://www.investopedia.com/terms/r/realestate.asp), creative economies, and media.  

### Pakistan

The IFC provided $145 million in financing to help one of the world’s largest dairy producers, FrieslandCampina, acquire a controlling stake of 51% of Engro Foods, Pakistan’s leading dairy processor. Although Pakistan is the fourth-largest milk-producing country in the world, demand consistently outpaces supply due to poor [infrastructure](https://www.investopedia.com/terms/i/infrastructure.asp) and an outdated [supply chain](https://www.investopedia.com/supply-chain-5268057). Small subsistence farms account for nearly 80% of the industry’s output. 

FrieslandCampina has promised to share its experience and best practices with the smaller farmers who supply Engro Foods, along with the majority of the dairy processors in Pakistan. The stated goal is to help these small farmers increase [productivity](https://www.investopedia.com/terms/p/productivity.asp) and reduce waste.

The IFC expected 200,000 farmers and 270,000 distributors to benefit from FrieslandCampina's [acquisition](https://www.investopedia.com/terms/a/acquisition.asp) of Engro Foods. In addition, the investment is projected to create 1,000 new jobs in the dairy supply chain.  

## What Does the International Finance Corporation Do?

The International Finance Corporation is the private sector lending arm of the World Bank Group. Its goal is to provide development and growth opportunities for people in developing countries through the private sector.

## Who Governs the International Finance Corporation?

The International Finance Corporation is owned jointly by 186 member countries. These countries work together to come up with the IFC's policies. The board of governors, which is made up of an appointed governor and alternate, delegates the group's powers to its 25-member board of directors.

## How Does the International Finance Corporation Make Money?

The IFC generates revenue by issuing bonds. These bonds are sold in international capital markets and, according to the organization, is the first group to offer bonds in emerging market currencies. The money raised from the sale of these securities is used to fund the IFC's lending programs.

## The Bottom Line

The International Finance Corporation is an organization that falls under the umbrella of the World Bank Group. It is only one of the global institutions that work in developing countries. It creates markets and opportunities by providing individuals with private-sector loans funded by bonds offered in local currencies.

> **Article Sources**
>
> 1.  IFC. "[Who We Are](https://www.ifc.org/en/about)."
>     
> 2.  IFC. "[Where We Work](https://www.ifc.org/en/where-we-work)."
>     
> 3.  IFC. "[Delivering Impact, Scaling Solutions](https://www.ifc.org/en/home)."
>     
> 4.  ICF. "[Green Bonds](https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/investor+relations/ir-products/grnbond-overvw)."
>     
> 5.  IFC. "[IFC Financial Report 2024](https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/annual+report/financials)."
>     
> 6.  IFC. "[IFC Increases COVID-19 Support to $8 Billion to Sustain Private Sector Companies and Livelihoods in Developing Countries](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=24905)."
>     
> 7.  IFC. "[Our Impact](https://www.ifc.org/en/our-impact)."
>     
> 8.  CAO. "[Responsible Exit](https://www.cao-ombudsman.org/sites/default/files/2023-12/Responsible%20Exit%20Insight%20from%20CAO%20Cases%201.pdf)," Pages iii-iv.
>     
> 9.  IFC. "[IFC, Proparco and Helios plan partnership to support Africa’s sports and entertainment sectors](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=28310)."
>     
> 10.  IFC. "[IFC Financing Package To Support Development of Pakistan's Dairy Industry](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=24830)."
>      
> 11.  IFC. "[WHAT WE DO: IFC'S OPERATIONS AND RESULTS](https://www.ifc.org/content/dam/ifc/doc/mgrt/ar2008-chapter2.pdf)," Page 40.