How IFC is mobilizing capital for sustainable urban growth

Urbanization offers tremendous opportunities for job creation and economic growth, which can only be realized if cities invest in the infrastructure needed to support their growing populations. This is particularly important in emerging economies, where every $1 million invested in public infrastructure generates 10–17 jobs, compared to 3–7 jobs in advanced economies.

As we mark World Cities Day, let’s explore how the World Bank Group’s private sector arm, the International Finance Corporation (IFC), is supporting cities to realize the full potential of urbanization. By helping cities mobilize private capital at scale and strengthen public spending, IFC is enabling them to finance, build, and operate the crucial infrastructure that drives job creation and growth.

A One-World Bank Group Approach

No single institution can harness the potential for urbanization alone. That’s why the World Bank Group—comprising IFC, the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID)—is working together to build cities that work for everyone.

By leveraging our collective strengths—public and private sector expertise, innovative financing, and risk mitigation tools—we are helping cities unlock their full potential. Our joint approach to job creation focuses on three key pillars:

1. Supporting cutting-edge, resilient infrastructure,
2. Creating enabling business environments, and
3. Mobilizing private capital into urban investment.

Bringing together our private and public sector expertise allows cities to address infrastructure and resilience challenges, laying the foundation for creating livable, job-rich urban areas where people can thrive.

What Role does IFC Play in Empowering Cities?

For over two decades, IFC has empowered cities by delivering commercial financing to strengthen urban infrastructure and improve service delivery. 

Last year, IFC’s subnational sector investments reached a record $1.7 billion, four times the volume of FY23. Mobilization from other investors has also increased, growing from a small fraction of total commitments between 2010–2020 to more than four times IFC’s own account in FY24–25. In total, IFC has invested $5.6 billion over more than two decades to help cities in more than 20 countries improve water, transport, and other essential infrastructure. 

IFC’s cities strategy centers on two key objectives: catalyzing private financing to diversify funding sources for cities, and strengthening public expenditure to build resilient infrastructure, stimulate growth, and create jobs.

By investing in labor-intensive sectors such as transport, energy, water, and sanitation, IFC not only supports ongoing employment in construction, engineering, and maintenance, but also stimulates related industries like manufacturing, logistics, retail, and services. Improved digital and transport infrastructure further expands access to jobs and training opportunities, especially for underserved populations.

IFC’s Expanding Subnational Impact

IFC’s growing volume and impact have been matched by expanding geographical reach:

• IFC committed its first municipal loan to the city of Vishakhapatnam, India to develop sewage infrastructure in a fast-growing suburb, improving sanitation and wastewater services for 82,900 households. IFC also closed three investments totaling $400 million in private electric bus companies contracted to operate in multiple municipalities, supporting cleaner mobility and resilience.
  
• Ulaanbaatar, Mongolia—the world’s coldest capital city—faces growing energy demands. IFC’s investment in a municipal bond issued by the city government is helping it to expand access to stable power supply, benefitting 25,000 households with an additional four hours of uninterrupted electricity a day.
  
• In Guatemala City, Guatemala, only 56% of residents have access to safe drinking water. IFC’s partnership with the city and Banco Industrial through a risk sharing facility has helped mobilize $36.3 million in private investment to improve access to safe drinking water for 525,000 residents.
  
• Cape Town, South Africa’s second most populous city, is growing rapidly, with the city’s infrastructure straining to serve the needs of its burgeoning population. IFC’s 15-year, $150 million equivalent local currency loan will support upgrade and replacement of infrastructure, including electrical, transport, water and sanitation, with 70% of the spend benefiting low-income areas.

The future of urban development lies in empowering cities to lead, enabling private capital to scale, and ensuring that infrastructure investments deliver lasting benefits for people and the planet. By working across the World Bank Group and leveraging innovative financing, IFC is helping cities build a more sustainable, inclusive urban future.

Source : VOXeu