The IFC's New Africa, Latin America, and Caribbean Fund: Its Worrisome Start, and How to Fix It

In April 2010 the International Finance Corporation announced the creation of the African, Latin American, and Caribbean fund, a new co-investment vehicle funded largely with commitments from sovereign wealth and pension funds. The fund’s objective was to draw on the IFC and the World Bank’s strengths in emerging markets to identify and support enterprises that might not otherwise have come to the attention of large investors and thereby help strengthen the private sector and alleviate poverty in some of the world’s poorest countries. Unfortunately the fund has, so far, proven a disappointment. It has invested only in large corporations that were already well known to investors. The fund should return to the principles that seemed to motivate its creation: direct engagement with private enterprises, rather than politically-connected financial intermediaries; leveraging the World Bank’s superior knowledge and understanding of emerging markets, rather than investing in corporations listed in London or Frankfurt; and providing capital to smalland medium-sized enterprises that would otherwise not have the support needed to grow and compete nationally or globally. Patrick J. Keenan — Professor of Law, University of Illinois Christiana Ochoa — Professor of Law, Indiana University Bloomington