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This report assesses the role of public interventions in mobilizing commercial financing for grid-connected solar projects in seven developing countries - Chile, India, Maldives, Morocco, the Philippines, Senegal, and South Africa. Desktop research is complemented by interviews with development professionals, academics, and public officials, and the results of an online survey developed to gain insights and perspective from private developers and other commercial capital providers. The focus is on the ability to attract commercial investors and lenders, without analysis of the financing terms. The scope is limited to utility-scale, grid-connected projects because of the risk concentration inherent to large projects and the importance of large-scale investments in clean energy for the transition toward low carbon development pathways. The analysis puts into perspective the linkages between global and country-specific factors, the complexity and multifaceted nature of the choices that decision makers face, and their rationale for pursuing a specific course of action. This report is the first chapter of The Role of the Public Sector in Mobilizing Commercial Finance for Grid-Connected Solar Projects: Lessons Learned and Case Studies, that comprises the case studies that have supported the analysis.

Private Investment

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George D. Woods, President of the World Bank and its affiliates, spoke about Japan as a vibrant example of both reconstruction and development. He briefly reported on developments in the World Bank Group of institutions during the past year, including partnership agreements with the U.N. Food and Agriculture Organization and UNESCO. He indicated some of the principal preoccupations in the period ahead, such as a scarcity of good projects to support, large debt service burdens, and the next IDA replenishment. Finally, he concluded by saying a few words about developments in the world environment in which the Bank group operates and about the possible effect of those developments upon the role of the organizations.

Living Standards --- Private Investment

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George D. Woods, President of the World Bank Group, discussed the following: the willingness of the capital-exporting countries to continue and increase their annual contributions in support of the International Development Association (IDA); the operations of the International Finance Corporation (IFC); and the growing activity of the Bank Group, under the leadership of IFC, in the establishment and support of local private industrial finance companies. He addressed three problems that put a brake on economic progress: the commodity problem, the debt problem, and the policy problem. He sought expansion of Bank support to agriculture, industry, and education.

Debt --- Private Investment --- Trade Policy

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Eugene R. Black, President of the International Bank for Reconstruction and Development, reviewed Bank lending and pleaded for member countries to release their local currency subscriptions to the use of the Bank. He mentioned his practice to visit for some time each year some part of the world, getting to know at first hand the economic and development problems of member countries. He discussed an indispensable element in the financing of long-term development which is the increased flow into the underdeveloped world of private investment capital from abroad. He described how the bulk of Bank's investment operations had been in the field of public utilities, especially of electric power, and Bank is constantly encountering the importance of power, even where Bank are financing projects outside the immediate power field. He concluded by saying that private capital would make a large contribution to Bank's investment, which would benefit recipient countries by helping to speed their development and to raise their productivity and their living standards.

Foreign Direct Investment --- Hydropower --- Private Investment --- Tariffs

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This note discusses the current structure of the financial sector in Sao Tome and Principe (STP) and the main obstacles preventing mobilization and allocation of more resources to private sector investment. Since 2012, credit to the private sector in STP has been declining and is currently below peers. In an economy dominated by informality, banks provide credit to a limited number of borrowers, prioritizing large borrowers. A survey completed in 2017 showed that only 18 percent of micro, small and medium-sized enterprises (MSMEs) reported being registered and having a bank account, of which only 3 percent had access to credit. The same survey showed that only 39 percent of individuals, some of them owners of micro-enterprises registered under their personal name, have access to financial services. The note is divided into four sections. The first provides an overview of STP's financial sector, analyzing and benchmarking its structure, depth, and soundness. The second section analyzes the landscape of access to financial services (focusing on individuals and MSMEs), while the third describes some of the key limitations of the financial infrastructure in STP that create obstacles to financial sector development and access to finance. Finally, the fourth section concludes with policy recommendations that can help increase access to financial services in STP.

Financial Sector --- Financial Services --- Private Investment