A Focused Assessment of the International Development Association’s Private Sector Window

An Update to the Independent Evaluation Group’s 2021 Early-Stage Assessment

The private sector is essential for creating jobs and prosperity in poor countries, but developing it is challenging, especially in fragile and conflict-affected situations (FCS).

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The IDA Private Sector Window (PSW) is a blended finance facility that enables the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and third-party private sector investors to conduct high-risk transactions in International Development Association (IDA) countries and FCS countries.

This evaluation aims to assess the usage, market development potential, and enabling factors of the PSW. The evaluation assesses how the usage of the PSW has changed from its inception in 2017 to 2023 and explores its potential market development effects and its enabling factors, namely concessionality (for IFC and MIGA) and additionality (for IFC). Concessionality is the level of subsidy needed for IFC and MIGA to offer transactions in PSW-eligible countries at market prices. Additionality is the unique support IFC brings to private investments (on a project basis) that is not offered by commercial sources of finance. It comprises financial and nonfinancial additionality.

This evaluation assesses the PSW across three IDA cycles: IDA18, which covers FY18–20; IDA19, which covers FY21–22; and IDA20, which covers FY23–25. It updates the 2021 IEG early-stage assessment of the PSW (FY18–20) and complements the IDA20 PSW Mid-Term Review, which was prepared jointly by IDA, IFC, and MIGA.