The World Bank expects to secure $500 million in a first round of money raising for a private equity fund to co-invest in companies in sub-Saharan Africa, Latin America and the Caribbean, President Robert Zoellick said.
“All of you, as African leaders, know the perils of this economic crisis,” Zoellick said at the African Union Summit in Ethiopia today, according to a copy of his speech. “But you also know about Africa’s opportunities and its potential to be another source of growth for the world economy.”
The International Finance Corp., the World Bank unit that lends to companies, will manage the fund, as well as a $200 million pool to invest “in systemically important banks” in Africa, Zoellick said. Investors are pension funds and sovereign wealth funds, according to the World Bank.
The Washington-based institution, which has committed $88 billion to poor and middle-income countries since the middle of 2008, estimates that the global economic recession will push 64 million people into extreme poverty, defined as living on less than $1.25 a day.
IFC announced the creation of its asset management subsidiary in May, appointing Gavin Wilson, a former managing director in the investment banking division at Goldman Sachs Group Inc., to head it.
Zoellick also urged African leaders to voice their support for a World Bank capital increase of $5 billion to $7 billion that he is trying to obtain from shareholders.
“I need you to explain in Europe, North America and Japan that the World Bank, like the African Development Bank, justifies their support,” he said. “Together we need to make the case for a capital increase for the World Bank Group.”