FIAS-supported work, managed and implemented by IFC, is organized into two strategic pillars. Pillar 1 involves improving the business environment in client countries. Pillar 2 entails expanding market opportunities and increasing firm-level competitiveness. Supporting these pillars are three programmatic themes that serve as guiding priorities across the portfolio: gender and inclusion; green competitiveness; and digitalization. As part of the “one World Bank” theme embodied in the Evolution Roadmap initiative, FIAS prioritizes and tracks IFC projects that involve collaboration with lending and policy initiatives implemented by World Bank colleagues with the International Bank for Reconstruction and Development (IBRD). While some FIAS-supported projects focus on a single pillar, many combine elements of both pillars, and a majority of projects in the FIAS FY22–26 portfolio include components in the gender or climate cross-cutting themes—or both.
The FIAS strategy is integrally tied to achieving the World Bank Group’s goal of reducing poverty and boosting prosperity for a livable planet and supporting the IFC 3.0 Creating Markets Upstream strategy. The FIAS theory of change emphasizes the importance of fostering a robust private sector, which must bear the burden of creating 90 percent of the 600 million new jobs needed by 2030 to achieve those goals.
In the FY22–26 strategy cycle, FIAS-supported programs have undergone a decided shift in emphasis from supporting mainly economy-wide reform efforts to focusing on sector-specific and firm-level reforms that lead client countries and key private sector firms and investors in the direction of investments with job- and income-producing potential. FIAS is setting ambitious targets for advancing the economic prospects of women and the green economic development agenda. The FY22–26 portfolio also includes a set of focused interventions in advancing the digitalization of developing economies. The FIAS strategy sees climate change not only as an environmental threat that harms livelihoods and threatens health but also as a tremendous business opportunity.
FIAS aims to become a key source of support in enabling the development goals of the IFC 3.0 Creating Markets Upstream Agenda and building the private sector’s potential in IFC’s client countries. Upstream activities help stimulate and create conditions that result in the flow of private capital—domestic and foreign—into productive investment in IFC’s countries of operation.
IFC projects supported by FIAS have evolved and expanded beyond a longstanding mission of economy-wide advice on reforms that, in a general way, make it easier for the private sector to do business, get permits, build new factories, connect to the power grid, and trade across borders. This reform work remains part of the FIAS agenda, but the program now places much greater emphasis on sector-specific work in fields such as agribusiness, manufacturing, and services, and on firm-level work, particularly in cases where it can lead to expanded trade with major international markets and to the creation of new private sector investment opportunities. This sector-level focus includes targeted thematic interventions that support advances in the crosscutting thematic areas of climate, gender, and digitalization.
The FIAS Strategic Pillars
An emphasis on the private sector is evident in both FIAS strategic pillars. Although the titles are new in the current strategy cycle, much of the work in each of these areas builds upon the extensive real-world experience of FIAS-supported IFC teams. In many cases, individual programs implemented with FIAS support help achieve multiple objectives under both pillars. Over nearly four decades of activity, FIAS has emphasized economy-wide reform projects aimed at improving the regulatory environment for private sector growth. Increasingly, FIAS-supported teams are working on sector-specific and firm-level projects that can help create a pipeline of projects leading to investments by the private sector and IFC—the essence of the IFC Upstream strategy.
Strategic Pillar 1: Improve the Business Environment
The work under Pillar 1 seeks to improve the enabling legal and regulatory environment of client country economies, reduce the cost of doing business, signal to domestic and foreign investors a welcoming attitude toward business growth, and ease business uncertainty in often volatile political and economic environments. The enabling environment work under Pillar 1 emphasizes IDA and FCS clients to help them clear some of the basic business climate hurdles needed to begin attracting greater investment. (Estimated share of budget: 25 percent.) The hallmark of FIAS work in this area centers on good regulatory practice, encompassing efforts to streamline regulatory processes to reduce compliance costs and discretion. Good practice involves an increased focus on regulatory transparency, the political economy of reforms, and the capacity of implementing agencies. FIAS-supported projects in FY22–26 focus increasingly on sector-specific work. Accordingly, interventions under Pillar 1 will support reforms relevant to the business sectors most important to the client country’s economy as identified through rigorous analysis and diagnostics. FIAS works to ensure that as many of the projects it supports as possible include reform components geared toward leveling the economic playing field for women, helping governments foster economic development while also advancing climate change goals, and closing the digital economic divide. Government regulations play a decisive role in creating a predictable and conducive framework for businesses to form, operate, and grow. They are critical to protecting investor and consumer rights, public health, and general safety. Achieving sustainable growth at both the economy-wide and sector-specific levels requires a balance between the protective and safeguarding goal of regulation and the sometimes-burdensome regulations placed on businesses. Regulatory reform can protect society and stimulate business activity by focusing not just on simplification, but on consistent, transparent, and effective delivery—while also ensuring proper protections for the public.
Strategic Pillar 2: Expand Market Opportunities
The objective under Pillar 2 combines the elements of strategic Pillars 2 and 3 in the FY17–21 strategy, merging sector-specific work with firm-level advisory. Pillar 2 encompasses advisory work in investment policy and promotion, markets and competition policy, and sector-specific work in manufacturing, agribusiness, tourism, infrastructure, financial services, and other sectors. Firm-level work under Pillar 2 seeks to develop more productive and competitive firms that can seize opportunities in local, regional, and global markets, and drive economic growth and job creation. Firm-level work generally supports economy-wide and market-level reforms by helping clients develop approaches and provide input to policies that help businesses invest in improved products, use climate-efficient technologies, modernize production processes, and enhance worker skills (estimated share of budget: 75 percent).
Sector-specific and firm-level work under Pillar 2 continues to prioritize IDA, Sub-Saharan Africa, and FCS countries. The focus on generating significant investment opportunities— including IFC investments under Upstream—means that Pillar 2 work reflects IFC’s strategic vision throughout the developing world, including larger, emerging and middle-income economies.
More productive and competitive firms can seize opportunities in local, regional and global markets and drive economic growth. Economy-wide, market-level reforms work best when complemented with policies that help businesses invest in improved products, use climate-efficient technologies, and modernize production processes. Job opportunities will follow if labor markets can supply the necessary skills and are open to a broader slate of candidates. Effective interventions can enhance private returns, internalize social externalities, and promote firm survival and growth. Therefore, projects will entail significant new areas of work to increase the ability of businesses to improve resource efficiency, value addition, and productivity.