Africa Leaders Magazine

MAKHTAR DIOP – Managing Director, International Finance Corporation (IFC)

MAKHTAR DIOP - Managing Director, International Finance Corporation (IFC) - African Leaders Magazine

Makhtar Diop is IFC’s Managing Director. He assumed this position on March 1st, 2021. Prior to this appointment, he was the World Bank’s Vice President for Infrastructure, where he led the Bank’s global efforts to build sustainable infrastructure in developing and emerging economies. In this role, he oversaw the Bank’s critical work in energy, transport, digital infrastructure, and public-private partnerships.

MAKHTAR DIOP - Managing Director, International Finance Corporation (IFC) - African Leaders Magazine

Prior to this, Mr. Diop served for six years as the World Bank’s Vice President for Africa, where he oversaw the delivery of a record-breaking USD$70 billion to Sub-Saharan Africa to help tackle development challenges such as increasing access to energy; boosting women’s and youth’s economic empowerment; and promoting an enabling environment for more innovation and technology adoption. A passionate advocate for Africa’s right to clean and affordable electricity, he also called for greater investment in renewable energy and pushed for stronger regional interconnectivity in the power and transport sectors. He previously served as World Bank Director for Finance, Private Sector & Infrastructure in the Latin America and the Caribbean Region; Country Director for Brazil, where he helped finance major infrastructure work; and Country Director for Kenya, Eritrea, and Somalia.

Mr. Diop brings to the post a deep level of experience and understanding of development challenges and a firm grasp of the public/private sector interface. His main priorities will be to mobilize investments in the poorest and most fragile countries and create the conditions for a resilient, inclusive, and sustainable recovery. In addition to his international organization experience, Mr. Diop, an economist by training who started his career in the banking industry before joining the IMF and later the World Bank, has extensive private sector experience. He has also held government positions, most notably as Minister of Economy and Finance of Senegal, where he played a key role in instituting structural reforms that helped build a strong foundation for Senegal’s growth in the late 1980s.

A recognized opinion leader in the economic and social development field, Makhtar Diop has been named one of the 100 most influential Africans in the world. In 2015, he received the prestigious Regents’ Lectureship Award from the University of California, Berkeley.

Mr. Diop holds degrees in economics from the Universities of Warwick and Nottingham in England.

MAKHTAR DIOP - Managing Director, International Finance Corporation (IFC) - African Leaders Magazine

The International Finance Corporation is commonly known for its infrastructure investments and lending through financial institutions, and while much of that will continue, the organization’s new bass guitar-playing managing director, Makhtar Diop, would like to see it diversify and invest in some areas where it hasn’t historically done as much business. Those include housing, health, and also the creative industries — think music, film, and fashion.

Diop took the helm of IFC about a year ago, stepping in to lead the organization at a time of global crisis, which has presented both challenges and opportunities, he told Devex.

“When you come at the time of a crisis, I think that’s a time where you are learning the most, fastest because you don’t have a choice,” he said, adding that it’s also “the best way to think about how things can be done differently.”

IFC played a “nearly” countercyclical role during the past year, Diop said. He said the institution maintained its commitments at $31.5 billion and committed about $6 billion of the $8 billion in its fast-track financing facility for COVID-19 support, with half of those funds going to the poorest countries.

IFC also launched a $4 billion global health platform, which it is “using very effectively,” and Diop asked the board a few weeks ago for authorization to extend that platform for another 18 months, he said. IFC also delivered about $4 billion in climate financing, he said.

MAKHTAR DIOP - Managing Director, International Finance Corporation (IFC) - African Leaders Magazine

“We have been responding to the [COVID-19] crisis but looking at areas where traditionally IFC was not very present,” he said. For example, it is much more “aggressively” investing in the health sector, including vaccine production in Africa, Diop added.

He said that while he had heard about IFC having a “deal culture” and was warned he would have to fight to push development, he was surprised to discover that wasn’t the case. He hasn’t felt any pushback, he said, and IFC’s so-called upstream work to do more pipeline and investment creation is “very well accepted.”

The IFC chief said he has been focused on responding to the COVID-19 crisis but has also been laying the groundwork for his priorities moving forward, including a significant focus on Africa and more investments in housing. Diop’s love of music is also inspiring another new area of investment: the creative industries.

Diop has “come in with a great deal of energy and dynamism” and been a highly visible spokesperson for IFC, traveling a lot and raising the institution’s profile, said Jonathan Papoulidis, the global director for fragility and resilience at Food for the Hungry. He said that’s been “very good for the corporation itself, as he’s been able to personalize the process overall on the ground.”

While it’s quite early to evaluate Diop, several experts said he’s made some good moves but could use the platform he has at IFC to push more on key issues related to energy and vaccine production in Africa, as well as to ensure an emphasis on accountability.

A focus on Africa

When Diop took the job, he said he wanted to prioritize Africa. And based on the announcements in his first year — and his travel schedule — this holds true.

Diop recently said that IFC would ramp up its investments on the continent from about $6.4 billion to $10 billion annually, adding about $1 billion per year until it hits that target. In terms of the sectors, he wants IFC to focus on in Africa, he’s got a few: Boosting housing investments is a chief priority, but he also aims to expand financing related to trade, health, and the climate, as well as funding for the creative industries.

Diop wants IFC to play a role in increasing dialogue between the public and private sectors and helping strengthen value chains. IFC’s Africa investments will look through the lens of the African Continental Free Trade Area, which will mean more trade finance. IFC announced last year that it would put an additional $1 billion toward trade finance and committed another $1 billion to finance micro, small, and medium-sized enterprises. That funding has not yet been disbursed, but it should officially be signed and move forward in March, Diop said.

While most trade financing in Africa has focused on imports or exports outside the continent, this initiative will aim to strengthen intra-African trade, he said. The goal will be to not only use IFC’s resources but to consolidate others, creating a “one-stop shop” so investors looking for opportunities and those looking for resources have a place to go.

Diop is pushing IFC to focus more on financing housing on the continent, with the intention to “ramp up significantly.” Housing has “huge externalities” on the Sustainable Development Goals and can improve the depth of local capital markets and access to financial services when done correctly, Diop said. He’d like IFC to work to increase the maturity of mortgages and not only work with banks on that side but also help finance housing construction.

“It’s hard for a CEO or any World Bank staff member to contradict major shareholders in public, but I wish he would speak up more.”

While more and better housing is a good thing, “it’s not necessarily the most pro-poor” and may not have “outsized development impact, compared to getting electricity right and getting a port to really work,” said Charles Kenny, a senior fellow at the Center for Global Development.

But others were more optimistic about the focus. In fragile states — which are urbanizing faster than anywhere else — housing is important, said Papoulidis, adding that IFC can play an important role if it can go to those places in structured ways to make housing more affordable, build capital markets to draw in investment, and introduce standards for more resilience.

Health will continue to be a major focus for IFC in Africa in particular, and Diop said he will work to bring more public-private partnerships into the health space. That will require governments to participate but could create a system in which not everything is done by public entities, he said, with services such as X-rays and lab work potentially contracted to the private sector.

Another key issue is climate change, which Diop called “a difficult topic” because most of the financing in Africa is geared toward mitigation rather than adaptation. Adaptation is challenging, he said, adding: “But we don’t have a choice for developing countries. … We need to do more.” Blended finance will be key in the adaptation financing effort, and energy transition will be central to the climate change discussion, he said.

A focus on creative industries — including movies, music, and fashion — can help attract new millennial investors, create jobs, and diversify opportunities, Diop said. IFC can help channel resources to micro, small, and medium-sized enterprises through financial intermediaries, though it will likely need to assist them in understanding how to measure and assess risk to provide more financing in this sector.

In the bigger picture, Diop is focused on mobilization as well, particularly in Africa. He is also examining IFC’s use of equity investments, especially with financial intermediaries and how it can use them to have a voice on the boards of the institutions it invests in to guide funding to the right sectors and help resolve challenges.

Diop is also looking to bring in new co-investors from countries that have a lot of liquidity but haven’t traditionally invested with IFC. He recently traveled to the United Arab Emirates to discuss co-financing and mobilization.

Inner workings

Diop said he is also focused on some less outward-facing issues, hoping to build on his predecessor’s work.

He wants to increase the mobility of staffers across the institution so employees have an opportunity to work with different regions, income levels, and sectors. “That will allow us to get into a new level of efficiency,” Diop said.

He also wants to continue efforts to make IFC more agile and nimble by looking at internal bureaucracy and how it can be improved, he said.

Diop is also thinking about impact measurement and evaluation, and he wants IFC’s Anticipated Impact Measurement and Monitoring system to evolve over time in response to changing best practices on impact assessment. He’d also like to launch a data initiative focused on firm-level data and how it can be used to inform policymaking, he said.

MAKHTAR DIOP - Managing Director, International Finance Corporation (IFC) - African Leaders Magazine

Using his voice

Diop should step up as a vocal leader on internal IFC issues and broader global discussions, making use of his platform to weigh in on key debates, according to several development experts and advocates who spoke to Devex.

“IFC has a strong responsibility because it is a standard-setter in the role of the private sector in development — not just in where IFC lends money, but where it lends its influence and voice,” said Nadia Daar, the head of Oxfam International’s Washington office.

Daar and others said they would like Diop to clearly commit to and be vocal about accountability reforms at IFC.

One of the key pending accountability issues is a remedy framework that would provide compensation to communities harmed by IFC projects. The need for such a mechanism is highlighted by the Tata Mundra Power Plant project investment, which contaminated groundwater and harmed the local community, violating IFC’s own safeguards, said Vijaya Ramachandran, the director for energy and development at the Breakthrough Institute.

That mechanism is something that IFC “needs to confront and Makhtar should take on,” she said.​​

That’s not the only issue that experts would like to see him tackle. While Diop’s support for vaccine and pharmaceutical manufacturing in Africa within the COVID-19 response is a “really positive thing,” he could use his leadership to push big pharmaceutical companies to “share their recipe” or help get a temporary waiver of intellectual property, which would push those efforts further, Daar said.

And Diop could be more vocal on climate, Ramachandran said, adding that he could speak up about Africa’s need to expand energy access and how it can’t do so with renewables alone.

“He knows the issues well. I think it’s hard for a CEO or any World Bank staff member to contradict major shareholders in public, but I wish he would speak up more. Africa needs to expand access to energy and needs greater energy sources than just wind and solar,” she said.

IFC should also work to redefine resilience in its work, according to Papoulidis. It ought to focus not just on strengthening markets, but also on understanding shocks and finding ways to improve coping capacities for markets, workforces, and infrastructure to survive those challenges, he argued. IFC is “well positioned” to lead on the issue of resilience but will require a pivot, he said.

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