Written by Stephanie von Friedeburg (then IFC’s Chief Operating Officer) and originally published by the World Economic Forum, this January 2018 piece argues that private capital must go where it is needed most, but rarely goes: fragile, conflict affected countries. More than two billion people live in places marked by near constant political and economic instability, and while global poverty is declining overall, it is not declining in conflict zones. These are exactly the places most starved of private investment, because investors perceive the risk as outweighing the reward.
The article frames this gap against the UN’s Sustainable Development Goals, which aim to lift hundreds of millions out of extreme poverty by 2030 but carry a price tag exceeding $4 trillion a year, far beyond what governments and official development assistance can cover. Private capital, sitting on trillions in dry powder, is described as the most realistic source to close that gap. The piece cites Sarona Asset Management by name as one firm already doing this work, targeting emerging and frontier markets by investing growth capital into private equity funds and companies that benefit local communities and the environment, alongside Washington DC based CrossBoundary, which pairs advisory services with investment in the same markets.
Von Friedeburg points to IFC’s own track record as proof of concept, including over $24 billion in new roads and highways in Colombia, off grid solar for nearly 500,000 people in east Africa, and mobile banking expansion across sub Saharan Africa, achieved by using blended structures to absorb risk and draw in private pension funds and other investors. She also highlights technology as a high potential sector, citing the East Africa Submarine Cable System as a model for infrastructure that unlocks new markets. The piece closes with a call for more risk mitigating financial instruments, like the World Bank’s IDA Private Sector Window, to channel capital into the world’s poorest and most unstable countries.
Strong choice for a post establishing Sarona’s long standing thesis on frontier and fragile market investing, with third party, pre-2020 validation from a senior IFC voice.
