Publication: Impacts of COVID-19 on the Private Sector in Fragile and Conflict-Affected Situations
International Development Association
International Finance Corporation
The Coronavirus (COVID-19) pandemic is having a significant negative impact on the private sector in developing economies, and businesses and individuals in fragile and conflict-affected situations are among the most severely affected. The pandemic has evolved rapidly from a health emergency to a global economic crisis, spreading through the real sector and posing growing risks to financial systems. Notable sector-level impacts include supply and demand-based shocks to infrastructure and private healthcare; disruptions to imports, exports, and global and local value chains; and declining agribusiness activity that threatens food insecurity, all leading to financial sector instability. This note examines these sector-level impacts and provides recommendations for how the development community can address them. It advocates, among other things, for balancing short-term, sector-level relief and restructuring efforts with planning for a medium-term to long-term recovery, leveraging upstream interventions to “Build Back Better,” and collaborating with governments and development partners. As fragile and conflict-affected situations face further pandemic-related setbacks on top of already substantial hardships, it is critical that the global development community prioritize support to these vulnerable populations.
“International Development Association; International Finance Corporation. 2020. Impacts of COVID-19 on the Private Sector in Fragile and Conflict-Affected Situations. EMCompass;Note 93. © International Finance Corporation, Washington, DC. http://hdl.handle.net/10986/34857 License: CC BY-NC-ND 3.0 IGO.”
Other publications in this report series
PublicationBlended Concessional Finance: The Benefits of Transparency and Access(International Finance Corporation, Washington, DC, 2021-07)Blended concessional finance, the combination of commercial finance from the private sector and development finance institutions (DFIs) with concessional finance from public and other sources, is increasingly being used by DFIs to support developmentally important projects where normal DFI or commercial finance is not available because of the high risks involved. This can be especially significant in lower-income and fragile and conflict-affected situations (FCS), where risks are high and innovative and pioneering projects can be critical to economic growth, market creation, and poverty reduction. Blended concessional finance is also being used during the COVID-19 pandemic to help sustain struggling businesses hurt by demand and supply shocks, and to rebuild economies toward green, resilient, and inclusive growth. As blended concessional finance involves the use of concessional public or philanthropic1 funds to enhance the viability of private sector projects, strong processes, particularly in the areas of transparency, access, and governance, are necessary to ensure that these resources are used effectively and without distorting markets.
PublicationHow Technology Creates Markets: Trends and Examples for Private Investors in Emerging Markets(International Finance Corporation, Washington, DC, 2018-04-01)Technological progress is often associated with the creation of novel and useful products through innovation and ingenuity. Yet in several emerging markets, including low-income economies, it is often more common to adopt, adapt, and scale technologies created elsewhere.By doing so, private enterprises in these countries could use technology to create markets and expand their product and service offerings to unserved and underserved residents, a process that produces new customers, buyers, sellers, and employees. This transforms the pursuit of profits into a driver of economic growth, as well as higher productivity and living standards, and gives technology a central role in emerging market development.
PublicationHow to Scale Solar Power Generation in Emerging Markets(International Finance Corporation, Washington, DC, 2016-09)Solar power is an increasingly affordable, quick-to-build solution for countries in need of additional electricity generation. Yet many emerging markets face challenges to developing photovoltaic projects, as small project sizes and lengthy negotiations increase costs and timelines. Scaling Solar, launched by the World Bank Group in 2015, addresses these issues by providing an easy-to-follow process to plan, procure, and launch grid-connected solar projects using private sector financing within two years of engagement. It offers governments the tools to quickly increase energy generation at stable low tariffs and allows developers to bid on well-structured, standardized projects through a competitive, transparent process that reduces risk and costs, making new markets easier to navigate.
PublicationCase Study - Bayport Financial Services: How Can Businesses Tap Local Capital Markets to Expand?(International Finance Corporation, Washington, DC, 2016-04)Bond markets, though still underdeveloped in Africa, are beginning to emerge as a realistic financing option for private companies looking to invest or expand their operations on the continent. Multilateral development banks can play a critical role in that process by issuing bonds in local currencies and providing risk guarantees and anchor investments to companies looking to issue their own bonds.
PublicationBlockchain Governance and Regulation as an Enabler for Market Creation in Emerging Markets(International Finance Corporation, Washington, DC, 2018-09)Developing a proper governance and regulatory framework for blockchain-based applications will be essential to providing market participants the stability they need to fully engage with the technology and allowing innovation to flourish. Given the global, multi-sectoral reach of blockchain, regulators, and industry will have to work in a collaborative manner to ensure they can both experiment and learn, and so shape the future of the technology in a way that benefits all parties and society as a whole.