The unmet long-term financing needs in developing countries in areas such as infrastructure, housing, as well as micro, small, and medium-size enterprises (MSMEs) are very large and have been rising rapidly fuelled by economic growth, increases in global trade, and a rapid pace of urbanization. Much greater domestic private sector participation will be needed to provide the necessary funding as public sector funding is becoming increasingly constrained and also banks, the traditional providers of capital for infrastructure, will likely not be able to provide the required financing going forward.

As its overall goal, the facility aims to develop stable and resilient capital markets.

It is innovative in that it addresses the challenges to capital market development in a comprehensive manner encompassing the regulatory framework, market infrastructure, capacity of market participants and regulators and provides transactions support. The proposed facility will follow a new ‘deep-dive’ approach, with reform efforts taking into consideration the interplay between the development of government and corporate bond markets, equity financing and corporate governance. Accordingly, under this facility all relevant WBG units participate in the implementation of the comprehensive reform agenda.

Building deep, broad, and stable securities markets, including: (i) government bond markets, (ii) local currency non-government bond markets, (iii) equity markets.

Strengthening corporate governance frameworks for listed companies, SOEs, and financial institutions.

Developing sound non-bank financial institutions (NBFIs), focusing on: (i) the insurance sector- (ii) private pensions- and (iii) investment funds, reforming the legal, regulatory, and institutional framework, with the aim of mobilizing domestic and international savings for the financing of infrastructure, housing, and MSMEs.

Offering inclusive capital market and non-bank finance solutions, specifically to: (i) Households, including in the areas of housing finance and microinsurance- (ii) MSMEs, including through programs to expand the private equity and venture capital offering.

Expected results:  

Providing advisory services.

Proposing and assisting the drafting of laws, regulations and rules.

Recommending procedures, policies, practices, standards.

Building the capacity of relevant government and non-government actors through workshops, training events, seminars, conferences.

Executing analytical work including diagnostics studies, assessments.

Developing knowledge management products such as publications, toolkits, databases.

Phase 1 01.01.2015 - 30.06.2021   (Completed)