We should maximize the amount of private financing that comes in
Interview with Alfonso Garcia Mora, IFC’s Vice President for Europe, and Latin America and the Caribbean
What is your plan for Ukraine as IFC’s new Regional Vice President for Europe, Latin America and the Caribbean?
For IFC, Ukraine is a priority country in the region. The economic consequences of the ongoing war in Ukraine are global in nature and go beyond specific countries or even Europe. As the largest global development institution focused on the private sector, we will be strategic to better define and increase the development impact of each project in the region.
Does IFC have any experience of working in a war country?
Absolutely. Global in nature, IFC works in fragile and conflict-affected countries. We’ve worked across regions—Africa, Middle East, South East Asia—during periods of war and post-war.
With the ongoing war in Ukraine, will you be pausing all investments or do you still have other options?
IFC continues to support existing clients with the working capital they need, especially amid the war. We are also exploring options to address both short-term and mid-term recovery efforts across sectors. In this context, the agribusiness sector (for example, grain storages) is critical given the current and potential food security issues in the region as well as globally, for example, North Africa.
Given the war, what are your focus areas in Ukraine?
First, we are trying to think of solutions to support local farmers and grain producers. Second, we want to focus on the country’s energy sector, which is critical given Ukraine’s forthcoming winter and the need for heating, among other things. While we are trying to explore how best we can help, beyond the short-term, our top priorities in Ukraine include energy independence and energy security. Our third area of work will comprise cities. The goal is to support Ukraine both at the national and municipal level, which is what we have been doing before the war. Since 2019, we’ve supported five municipalities, and this is something we would like to resume in Ukraine.
Another priority area is affordable housing as 12 million Ukrainians were forced to displace internally. Through the IFC’s energy efficiency program in coordination with the EU and Germany, which existed before the war, we are now trying to help with the reconstruction of the residential sector.
Please tell us more about IFC’s new project with the Horizon Capital Fund.
The key idea of the Horizon project, which we are we still discussing, is digitalization—that will be critical to Ukraine’s recovery. Digitalization, especially, can have a huge impact on the economy and job creation.
That's why our focus is on IT investments and entrepreneurship, while we find ways to support new entrepreneurs in the IT space with private equity.
IFC has had the experience of managing the Ukrainian Energy Fund. Will you continue to manage this fund?
It is a big trust fund that we support with the European Commission and the German government. As we continue doing that, we are in discussions with donor partners to see if we can repurpose the fund to amplify its development impact and address the urgent needs of those Ukrainians, whose houses were damaged.
Are you investing through the Energy Efficiency Fund?
It was not direct investment because we channeled the donors’ funding to invest in relevant areas. Our role was to coordinate between donors and representatives from the European Union and German authorities to make the multifamily residential sector greener and more sustainable.
Recently, you talked about public-private partnerships (PPPs) and cascade finance. Could you further elaborate on that?
According to government estimates, Ukraine will need $750 billion for the recovery plan. Public resources alone can’t cover this massive cost. Hypothetically, even if we manage to bring in all international donors, it won’t be feasible to meet this huge finance gap. This is where the private sector can play a key role, though we need to find ways to optimize private sector participation. We at IFC believe that—prioritizing private solutions wherever possible and saving scarce public resources—will be a good fit for Ukraine.
To achieve that, we have a methodical approach that we call the Cascade — a decision-making sequence that prioritizes private sector solutions. According to this cascade approach, private financing should be used when commercially feasible, in order to conserve scarce public resources.
Where conditions will not support private investment, the second alternative is to resort to blended finance, concessional finance, or PPPs when needed. This will help divide the financing and reduce the risk for both the public and private sector players. We believe that the PPP agenda will be fundamental to Ukraine’s recovery efforts.
The third alternative is to ensure the public sector implements projects that are not commercially viable for the private sector or are more complex in nature. However, these three approaches are distinctive in their own ways and should be used judiciously depending on the nature of projects.
What do you think about the recovery plan that the Ukrainian government presented yesterday, especially the recovery stage?
My first impression is that conceptually the program is very comprehensive and good. The key will be on implementation. Given the long and extensive list of potential projects, prioritizing and driving the projects efficiently and adequately will be key.
The government of Ukraine said the recovery plan will require $750 billion. What is the potential role of IFC in closing this gap?
It shouldn’t be about specific numbers. Instead, we should maximize the amount of private financing that comes in. Given Ukraine’s limited resources, the private sector will play a key role. In such situations, IFC tries to unite third parties and mobilize private capital. That’s one of IFC’s main objectives globally.
How has the quality of IFC loan portfolio changed since the start of the war?
IFC’s portfolio is standing up well and we are monitoring carefully while making necessary internal changes.