World Bank Group prepares major overhaul to guarantee business

• Says new reforms effective 1 July 2024 critical to achieving the goal of tripling annual guarantee issuance to $ 20 b by 2030

The World Bank Group recently announced a major overhaul to its guarantee business that will deliver simplicity, improved access, and faster execution through a new, convenient marketplace. The new reforms are critical to achieving the goal of tripling annual guarantee issuance to $ 20 billion by 2030.

The Private Sector Investment Lab, launched by the World Bank Group in June 2023, was created to identify barriers and potential solutions to renewable energy investment. Political risk insurance emerged as a key area of interest among the group, which also raised issues with accessibility. The recent G20 Independent Expert Group report on Strengthening Multilateral Development Banks also called for an expanded use of guarantees to mitigate risk and catalyse private finance.

Currently, the World Bank Group offers 20 guarantee solutions spread across the institution. Each comes with different processes, rules, and standards. Ultimately, this holds back their potential and impedes client access.

The overhauled approach, the first significant change in 15 years, will consist of six concrete updates:

Condensed structure: Moving all of guarantee experts from across the World Bank Group under one roof, providing a seamless experience for clients and easier access to the full suite of guarantees.

Simplified and comprehensive product menu: Compiling all World Bank Group guarantees in a single menu, allowing clients to easily identify and select the guarantee instrument that best suits their individual needs.

Streamlined process: Launching a common approach for all guarantee reviews and removing redundant processes, giving transparency and certainty to our clients across our guarantee process, delivering an improved client experience.

Greater accessibility: Investing in a more accessible client experience by growing our guarantee teams and training staff worldwide, providing private sector and country clients with easy access to guarantees from anywhere in the world. 

Scale: Applying a risk-weighted approach that focuses resources on high-impact projects and portfolios of projects, reducing duplicative risk analysis and freeing up capacity to tackle more complex challenges.

Innovative new tools: Offering new and innovative guarantee products that will enable the private sector to get more involved in solving the development challenges of today. The overhaul and one-stop-shop will be available to all World Bank Group clients on 1 July 2024.

World Bank President Ajay Banga said, “We need the private sector’s resources and ingenuity to tackle major global challenges. By consolidating our offerings, simplifying processes, and boosting accessibility we are delivering faster, easier access to guarantees for businesses. Our new guarantee marketplace is a crucial step forward toward tripling our guarantees business at the World Bank Group, but more importantly helping investors do more in developing economies and accelerate positive change.”