Private Sector Facility

Since its creation in 1976, OFID has provided over US$10.6 billion in development assistance to 121 countries in Africa, Asia and the Pacific, Latin America, the Caribbean and Europe. The Private Sector Facility is an additional assistance window that complements OFID's traditional programs in support of economic and social development and poverty alleviation. The business strategy of the Facility aims at reaching out to as many as possible of OFID's traditional beneficiary countries.

The Facility is a market-oriented financing window that responds to the demand for financing in developing countries in support of their private sector development strategies. OFID does not operate in OPEC countries¹, but encourages South-South cooperation between its member states and other developing countries.

OFID does not exclude any economic sectors² from its consideration. In view of the important developmental features of small- and medium-sized enterprises (SMEs), the Facility does, however, accord high priority to the SME sector. Microfinance is also supported as it plays an important role in development and poverty alleviation.

Weak financial institutions and inadequate capital mobilization in the local markets of many developing countries constrain the growth of the private sector. To contribute towards the expansion and sophistication of domestic capital markets, the Facility extends support to the capitalization and lending capacity of commercial and development banks, as well as to specialized financial institutions such as leasing, venture capital and trade financing institutions.

The Facility also finances larger industrial and agro-industrial projects that provide meaningful economic benefits: such as value added to domestic raw materials and intermediate products, creation of a competitive environment for local sub-suppliers, technology development, export earnings and direct and indirect job creation.

Commercially-managed state-sector enterprises may also receive financing from the Facility in situations where the enterprise acts as a channel for passing financial support to the local private sector, is earmarked for privatization, is a joint-venture with a foreign investor, or acts as a client for local private sub-suppliers.

The Facility seeks to support privatization by making financial resources available, alongside successful bidders, for investing in assets being privatized as well as by extending financing for post-privatization modernization and expansion.

Related documents

 Private Sector Facility Booklet

Related links

Commitments in 2009: Private Sector

Commitments in 2008: Private Sector

 

1 Algeria, Ecuador, Gabon, Indonesia, IR Iran, Iraq, Kuwait, GSP Libyan AJ, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, BR Venezuela.
2 Except sectors involving gambling, armaments and intoxicating substances.