Scaling Development Finance: IFC’s Platforms Approach and Future Prospects

The IFC Platforms Approach has successfully improved crisis response, financial inclusion, and investment efficiency while expanding into high-risk markets and new sectors. However, challenges remain in reporting, risk management, and governance, requiring refinements for future scalability and impact.

The Independent Evaluation Group (IEG), in collaboration with researchers from the World Bank Group and the International Finance Corporation (IFC), has conducted an early-stage assessment of IFC’s Platforms Approach, a strategic initiative designed to address development challenges at scale. The approach is aimed at increasing efficiency, risk mitigation, and process standardization while expanding IFC’s reach in fragile markets, underserved sectors, and crisis-affected regions. The study also drew lessons from the European Bank for Reconstruction and Development (EBRD), which has pioneered similar investment frameworks.

IFC formally defined platforms in December 2022 as thematic interventions at a regional, global, or sectoral level, designed to tackle specific development challenges. These platforms allow IFC to group similar projects, enabling more efficient approvals, risk pooling, and targeted interventions. IFC introduced this approach to scale investments, improve financial inclusion, and increase engagement in high-risk markets, particularly in microfinance, venture capital, and healthcare. The evaluation focused on seven key platforms launched between 2017 and 2022, including the Base of the Pyramid (BOP), IFC Startup Catalyst (ISC), Global Health Platform (GHP), Fast-Track COVID-19 Facility (FTCF), Private Equity Co-Investment, Small Loan Guarantee Program (SLGP), and Côte d’Ivoire Housing Program. The study sought to determine whether these platforms met their objectives, aligned with Board and client expectations, and provided insights for future platform expansion.

Scaling Up Responses to Crises and Market Gaps

One of the strongest successes of IFC’s platforms was their ability to respond at scale to crises, particularly during the COVID-19 pandemic, when 75% of IFC’s pandemic response funding was disbursed through platforms. The Fast-Track COVID-19 Facility (FTCF) played a critical role in providing emergency liquidity to firms and financial intermediaries, with IFC leveraging delegated authority and expedited approvals to speed up disbursement. However, the Global Health Platform (GHP) and Base of the Pyramid Platform (BOP) experienced delays, limiting their immediate impact. Despite this, GHP played an important role in expanding medical manufacturing and vaccine production in emerging markets, including funding a pharmaceutical company in Africa to expand its vaccine production capacity to over 400 million doses annually.

Platforms also allowed IFC to engage with small and new clients who might not have otherwise been eligible for financing. BOP, ISC, and Private Equity Co-Investment successfully reached smaller and riskier businesses, supported by blended finance instruments such as the IDA Private Sector Window (PSW). The BOP platform’s average investment size was $12 million—significantly lower than its benchmark of $29 million—demonstrating its effectiveness in financing microfinance institutions and small businesses. ISC’s investments were even smaller, averaging $3 million per project, but had longer processing times due to the complexity of working with first-time fund managers.

Bringing Investment to High-Risk Markets

Platforms significantly expanded IFC’s reach in IDA (International Development Association) and fragile/conflict-affected situations (FCS) markets. The SLGP and BOP platforms had the highest exposure, with 72% of BOP’s projects and 92% of SLGP’s projects located in IDA and FCS countries. These platforms relied on risk-sharing mechanisms such as pooled first-loss guarantees, credit enhancements, and local currency financing.

However, not all platforms succeeded. The Côte d’Ivoire Housing Program was terminated before disbursement, largely due to government delays, a lack of banking sector interest, and an incorrect market assessment. One participating bank withdrew due to market volatility, while another failed to meet environmental and social (E&S) compliance standards. Furthermore, the government failed to provide the promised infrastructure improvements, further discouraging banks from participating in the platform.

Efficiency Gains and Risk Reduction

One of the most notable achievements of the platforms was their ability to increase efficiency in project approvals and disbursement times. Delegated authority and streamlined processes allowed IFC to approve projects faster than non-platform counterparts. BOP projects were processed two months faster than non-platform projects, while GHP projects saw a three-month improvement. ISC, despite having delegated authority, took longer to process due to the complexity of working with inexperienced fund managers.

Platforms also helped IFC manage risks effectively. Platform projects generally had lower expected losses compared to IFC’s broader portfolio, even after factoring in blended finance support. However, risk levels varied across platforms. BOP, which targeted microfinance institutions and small businesses in high-risk environments, had a higher expected loss than its benchmark. ISC was also riskier than comparable projects due to its focus on early-stage start-ups. Meanwhile, platforms like Private Equity Co-Investment had lower risk ratings due to the experience of private equity fund managers.

Future Recommendations and Expanding the Platforms Model

While platforms have proven effective in crisis response, financial inclusion, and efficiency improvements, IFC still faces challenges in reporting, risk management, and strategy refinement. Reporting remains a major gap, as IFC does not fully meet Board expectations in areas such as additionality, risk-adjusted returns, and sectoral performance. While IFC has recently introduced Anticipated Impact Measurement and Monitoring (AIMM) reporting for individual platforms, there is limited data on financial performance and long-term development impact. Comparisons with EBRD suggest that investing in automated reporting systems could improve IFC’s transparency and oversight.

Looking ahead, both IFC management and the Board agree that platforms should be scaled up, but there is disagreement on the extent of delegation of authority. The Board favors expanding delegation under strict parameters with more detailed reporting, while IFC management sees delegation as a key tool for enabling quick, small-scale, and high-risk investments. Both sides recognize the need to design future platforms to support both immediate crisis response and long-term development strategies.

IFC’s experience with platforms offers valuable insights for other development finance institutions, particularly in balancing efficiency, risk management, and financial inclusion. By refining and expanding the platforms model, IFC has the potential to scale investments in critical sectors, strengthen fragile economies, and promote global financial inclusion while maintaining strong governance and risk management practices.