Unlocking Private Investment: The Role of World Bank Guarantees in Global Development

An independent evaluation led by the World Bank Group’s Independent Evaluation Group (IEG), with support from research arms across the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Bank for Reconstruction and Development (IBRD), has cast a spotlight on how development finance must evolve to meet the global investment challenge. With the COVID-19 pandemic widening the financing gap for the Sustainable Development Goals (SDGs) to a staggering $4 trillion per year, and traditional public funding sources increasingly strained, the need to mobilize private capital has become paramount. In this high-stakes environment, the World Bank Group has elevated guarantees, financial tools that reduce investment risks, as critical instruments to bridge the financing gap, especially in fragile and lower-income economies.

This ten-year evaluation (FY2015–FY2024) arrives as the Bank seeks to reconfigure its approach to global development through its Evolution Roadmap. The evaluation centers on how guarantees have been used to unlock private sector funding, improve investment conditions, and catalyze lasting development impacts. Anchored in strategic frameworks such as IFC 3.0 and Mobilizing Finance for Development, guarantees are now seen not merely as supportive instruments but as primary mechanisms for scaling up private sector engagement in development finance.

A Powerful Tool, Unevenly Deployed

Over the decade in focus, the World Bank Group issued guarantees worth more than $60 billion. While this figure demonstrates significant growth, driven mainly by MIGA’s political risk insurance, it also reveals an imbalance in distribution. The majority of guarantee volumes flowed into upper-middle and high-income countries, even as lower-income and fragile states accounted for a greater number of projects. MIGA was responsible for 82% of the total guarantee value, with the IFC and World Bank trailing in terms of portfolio weight. The guarantees were mostly channeled into sectors such as financial services, infrastructure, and energy, industries considered essential for broad economic transformation.

The Bank’s recent push to create a centralized guarantee platform under MIGA aims to address fragmentation and scale up deployment. Launched in 2024, this platform offers a consolidated menu of guarantee options designed to streamline client access and enhance impact. However, the platform itself remains too new to be evaluated in this review.

Probing Three Core Questions

The evaluation is structured around three pivotal questions. First, it examines whether guarantees have been relevant and coherent in addressing barriers to private capital flows in different countries and sector contexts. Second, it investigates how effective guarantees have been in mobilizing private investment, exploring what has worked, what has not, and under what conditions. Third, it explores the contribution of guarantees to market and development outcomes, such as improved financial flows, infrastructure delivery, and broader economic resilience.

The evaluation explores several guarantee instruments across the three institutions: MIGA’s political risk and non-honoring guarantees; IFC’s synthetic risk transfers, risk-sharing facilities, and partial credit guarantees; and the World Bank’s project-based and policy-based guarantees. Short-term liquidity and trade finance guarantees were excluded due to their narrower developmental scope.

Deep Dive into Data, Strategies, and Sectors

A wide array of tools and evidence sources have been used to examine these questions. More than 430 guarantee-backed projects were reviewed in a comprehensive portfolio analysis. These were complemented by 30 in-depth case studies across 10 countries, and an additional 20 sector-within-country reviews, supported by artificial intelligence-assisted analysis of Country Partnership Frameworks (CPFs) and outcome documents. Two sectors, energy and financial services, were selected for detailed exploration due to their prominence in the guarantee portfolio and potential for transformative development impact.

Qualitative comparative analysis (QCA) was employed to identify causal conditions linked to successful private capital mobilization. Supplementary databases, including the Private Participation in Infrastructure database and Infrastructure Journal, were used to triangulate financial data and measure impact. Semistructured interviews with Bank Group staff, private financiers, and government stakeholders further enriched the evaluation with firsthand insights.

Barriers, Gaps, and the Road Ahead

Despite the methodological depth, the evaluation revealed significant gaps in data and reporting. Less than 20 percent of IFC and MIGA projects, and only one World Bank guarantee project, had undergone formal evaluations. Metrics for capital mobilization, especially ex post data, were inconsistently applied across institutions, and attribution of development outcomes to guarantees remains complex due to overlapping interventions and external economic variables. The Bank Group’s methodology for measuring mobilized private capital has only been in place since 2018 and continues to evolve.

Nonetheless, the evaluation is expected to yield critical insights into how guarantees can be scaled up and better targeted. It aims to uncover which instruments are most effective under what conditions, how they interact with complementary advisory services and institutional reforms, and what constraints still need to be addressed to expand the Bank Group’s client base and financial reach.

As the World Bank Group positions itself as a more catalytic force in development finance, this evaluation underlines the strategic importance of guarantees, not just as financial backstops but as enablers of transformational development. By de-risking investments and aligning private capital with public goals, guarantees could become central to delivering on the promises of sustainable, inclusive growth in the most challenging markets. The path forward, however, will depend on turning these evaluation insights into actionable reforms, robust data practices, and a renewed commitment to coherence and innovation across all arms of the Bank Group.