Makhtar Diop, head of the IFC, the World Bank’s financial arm: ‘We want to use Madrid to channel more private investment to emerging markets’

Makhtar Diop traveled to Spain this weekend to attend the opening on Monday of the World Bank’s new office in Madrid. The economist, who was born in Dakar in Senegal, turned 66 on Saturday — so when he arrives in Spain, he will have two reasons to celebrate. Diop served as Senegal’s Minister of Economy and Finance at the start of the century. He has since had a stellar career in multilateral institutions: he has worked at the International Monetary Fund (IMF) and the World Bank, where he rose to become managing director of the International Finance Corporation (IFC), the world’s largest development institution focused on the private sector in developing countries. It is known as the World Bank’s financial arm.

Diop, one of the most influential African voices in Washington’s peculiar ecosystem of technocrats, is a jazz and karate enthusiast. He receives EL PAÍS in his office a few blocks from the White House, and explains that the decision to open the new office reflects the growing interest of Spanish companies in investing in developing countries through the institution.

Question. This morning, I asked ChatGPT about the International Finance Corporation, and it replied that it was that it is probably the least well-known part of the World Bank Group, but also one of the most influential. What exactly is the IFC and what role does it play within the World Bank?

Answer. The World Bank Group is made up of several institutions. The World Bank was created right after World War II to finance the reconstruction effort, particularly in Europe. At the time, it was thought the public sector should lead that effort, which is why the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) were established first. Later, it became clear that the private sector was also critical in creating wealth, growth and jobs once reconstruction was underway. That shift in thinking coincided with the creation of the IFC. It was set up to address what could be done to help the private sector invest and develop in emerging countries. Over time, it became clear that attracting private investment was not easy and that investors needed political stability and risk guarantees. That is why MIGA, the World Bank Group’s political risk insurance agency, was created. Today, the IFC is the premier institution in bringing private-sector investment to emerging markets. We help countries change policies to be more business-friendly, improve regulation and encourage competition to attract private investment.

Q. How would you define your work?

A. It consists both of investing directly with our own resources and, increasingly, mobilizing third-party capital. That is one of the major transformations we are undertaking. When I arrived five years ago, for every dollar we invested from our balance sheet, we mobilized roughly another dollar. Today, we mobilize three dollars for every dollar of our own and our target is to increase that capacity even more. But I want to stress something important: we do not promote private investment for its own sake. Our ultimate objective is to create jobs. Sustainable, resilient and lasting jobs.

Q. You say private capital is fundamental. How do you persuade companies to invest in development?

A. Three years ago, we launched the Private Sector Investment Lab, where we brought together some of the world’s leading financial sector figures. The question was simple: you manage trillions of dollars in assets. What would you need to invest more in emerging markets? The answers were very clear. First was the predictability of public policies. These investments are long-term and require political and regulatory stability. Second was guarantees. Many investors see emerging markets as high risk and look for mechanisms to protect themselves. Third is financing in local currency to reduce risks from exchange-rate volatility. Fourth is inequality and lack of domestic capital. Many companies have growth potential but lack the capital to scale. And finally, investors need partners who know those markets well and can help them navigate complex environments.

That is precisely what the IFC provides. In addition, we have an AAA credit rating, which is extremely valuable because it allows us to finance ourselves on very favorable terms and to act as a reference partner for other investors.

Q. And how does Spain fit into this strategy?

A. Spain has become one of our most important partners. It is currently the third-largest European source of investments we channel to emerging markets. I have visited Spain several times and have met with the prime minister and the finance minister. Spain has also shown a strong commitment to international development. In the most recent replenishment of resources for the World Bank’s development funds (the IDA), Spain increased its contribution by roughly 40%. The IFC has a long-term committed portfolio of about $5 billion with Spanish companies, making Spain one of its key partners in Europe.

Q. Why did the World Bank Group decide this was the right moment to open an office in Spain?

A. Because we observed that our project portfolio with Spanish companies, such as banks like Santander, BBVA and Caixabank or energy firms like Iberdrola or Acciona, kept growing. There came a point when it no longer made sense to manage it from Paris or other European capitals. We needed to be closer to companies to maintain a day-to-day conversation. Approximately 72% of the Spanish investments we support go to Latin America.

We also work intensively with Spanish banks: 70% of our investment with Spanish companies is with banks, and another third is with leading companies in sectors such as infrastructure, water, renewable energy and power [like Iberdrola and Acciona]. Spain has become a champion in solar energy. We have also seen growing interest from other international institutions in settling in Madrid and a willingness from Spanish authorities to participate in major debates about global development. Finally, we are seeing more Spanish companies interested in expanding into emerging markets — not only in finance but also in the real economy.

Q. Spain is often described as a bridge to Latin America and one of the European countries closest to Africa. How much did that influence the decision?

A. It was a critical factor. Spain maintains very close historical, economic and cultural ties with both Latin America and Africa. It also plays an increasingly important role in issues related to labor mobility and workforce training. Europe faces a significant demographic challenge. Countries like Spain and Italy have very low birth rates and increasingly aging populations. That means labor will be an essential resource in the coming years. That is why we work with Spain on initiatives related to vocational training and temporary mobility of workers. The idea is that people from developing countries can gain experience and skills in Spain for a set period and then return to their countries of origin. That process can generate benefits for both sides. Workers gain knowledge and experience in advanced markets and, when they return, can create more competitive small and medium-sized enterprises able to generate better quality jobs.

In addition, some of the sectors we have identified as priorities for job creation are areas where Spain has enormous expertise. One is healthcare. Another is agriculture. And a very important one is tourism. Spain receives about 100 million visitors a year. We want to leverage that experience to help other countries develop their own tourism sectors. Spain can also contribute a great deal in other areas, such as solar energy and efficient water management. And, of course, it plays a strategic role as a bridge between Europe and North Africa. Integrating the power grids between the two regions can contribute to the energy transition and improve supply security.

Q. What kinds of projects will the Spanish office specifically promote?

A. A very important part of our work is carried out with the financial sector. One of our goals is to facilitate financing for small and medium-sized enterprises. In many cases, we take on part of the risk so banks can expand credit to this segment. We also work on women’s access to finance, on agriculture, on green finance and on the energy transition. In addition, we develop numerous infrastructure projects and collaborate with Spanish companies in sectors such as water, renewable energy and transport. We also provide guarantees for international trade operations and develop innovative instruments for managing and transferring financial risks.

Q. What goals do you have for the Spanish office over the next five years?

A. We want to increase the volume of investments channeled through Spanish companies to emerging markets. Currently, a large part of our activity is concentrated in infrastructure and financial services. We want to expand that presence into other sectors, especially manufacturing, agriculture and services. We also want to mobilize more resources from Spanish capital markets and secure a more active participation from the country’s financial institutions in our financing operations.

Q. One last question about artificial intelligence. From the perspective of developing countries, what opportunities and risks do you see?

A. It is a very important issue. We cannot expect developing countries to build their own large AI models. That requires enormous amounts of energy, advanced infrastructure and highly skilled personnel. However, there is another, much more promising area: what we call small AI. These are relatively simple applications that require fewer computational resources but can transform the lives of millions. In agriculture, for example, a farmer can photograph a sick plant and immediately receive information about the problem and the appropriate treatment. In healthcare, AI tools can help identify diseases and improve access to diagnostics in rural areas.

In addition, these technologies can significantly increase the productivity of small businesses, helping them with administrative, accounting or commercial tasks. That is why I am relatively optimistic about AI’s impact on developing countries. In the short term, employment risks may be greater in advanced economies, where there are many administrative jobs susceptible to automation. Sectors that will continue to have strong demand for labor are those that require direct human interaction, such as healthcare or elder care.

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