Issue Brief: Private Sector Lending and the World Bank Group - June 2006

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The International Finance Corporation (IFC) was created in 1954, in the wake of the World Bank Group's (WBG's) 'successes' in financing post-World War II reconstruction and development projects, and a perception that more private sector investment in developing countries was needed. IFC lent money to companies by buying equity in their projects and providing technical expertise on private investment proposals - "a private sector" arm to what the World Bank had been doing in the public sector.

The Multilateral Investment Guarantee Agency (MIGA) was established in 1988, and commonly referred to as the "insurance arm" of the WBG. MIGA insulates foreign corporations and banks from many of the risks that investing in developing countries can entail, such as breach of contract, government expropriation of property, currency inconvertibility or the emergence of local conflict.