79754 Advisory Impact and Return - these two topics are center stage in our engagement with clients, donor partners, other development finance institutions, and within IFC and the World Bank Group as a whole. We seek to answer two questions in this report: What returns is our advisory work generating? What impact are we making through the work we do 7 Africa presents huge developmental challenges - and opportunities This information will increase our accountability and transparency -to an organization like IFC, which believes that a vibrant private to stakeholders . It will also help us improve our strategic planning, sector is central to tackling the continent's daunting challenges. and the design of future advisory projects for greater impact on the ground. Africa is home to 44 of the world's poorest countries, and 16 fragile or conflict-affected states. One in two people in Africa lives below The impact we achieve in Africa- whether supporting the growth the poverty line. A quarter of the continent is undernourished. An of small businesses or helping facilitate the construction of a African born today can expect to live only 54 years and attend school for less than five years. For these reasons, and many more, hospital, road, or port, for example - is critical to IFC's global IFC's work in Africa is clearly needed . mission of eradicating poverty and increasing prosperity through private sector development. This inaugural Advisory Services Development Impact Report for Sub-Saharan Africa will provide a better understanding of the We hope this report helps clarify how our advisory services in developmental impact and returns we are generating. It is also an Africa contribute to that mission, and how we can improve our opportunity to set ourselves new benchmarks and to strengthen results in the future. our partnerships. Perhaps most importantly, it shows that our promises of development impact are matched by actual results. In the process of gathering data, we have learned lessons and identified information gaps that we plan to fill in our next report, which will be even more comprehensive . We will improve our knowledge management systems and compile lessons learned from completed projects and the numerous evaluations that we Jan Schwier undertake annually. Head, IFC Advisory Services in Sub-Saharan Africa OUR IMPACT* OUR PORTFOLIO** IFCADVISORY SERVICES IN SUB-SAHARAN AFRICA: IFC ADVISORY SERVICES IN SUB-SAHARAN AFRICA MANAGED A PORTFOLIO OF 120 PROJECTS WITH A TOTAL VALUE OF $188 MILLION. THE VALUE OF PROGRAMS AND ACTIVITIES AMOUNTED TO: t tt t u tt t tt t 12.6 MILLION t ttt tttt t Helped 12.6 million people receive access t t tt t tt to improved services in the real sector t ttt tt u: t t 189,000 Trained 189,000 people in areas such as t t t t business management skills, business regulation, credit provision, and crop certification tt 82,300 Supported the creation of 82,300 jobs 18,500 Advised 18,500 companies, government agencies and other entities 150 Helped African governments to enact 150 laws, regulations or amendments to $49.25 MILLION improve the investment climate 96% in world's poorest developing countries $$$$$$$ $ $ $ $ $ $ $$$$$$ $$ $$ $ $14.36 MILLION $ $$ $ $$ $$ $$ $$ 28% in fragile and conflict-affected states $ $$$$$ $5.13 MILLION $ $ $$ 10% on climate-change related projects $$ $$ S$ Advisory Services projects completed in calen dar year 2011 had $ $$ development effectiveness rat ings of 67 % $$ s * * For the calendar year ending 31 December 2011 Facilitated loans of over a total value of $1.04 billion to small and medium enterprises through financial institutions *Based on selected indicators and evaluations • . ~· 0 .. • COUNTRIES WITH ACTIVE ADVISORY PROJECTS • FRAGILE AND CONFLICT-AFFECTED STATES • WORLD'S POOREST COUNTRIES (IDA) • MIDDLE-INCOME COUNTRIES * IFC HUB OFFICE • IFC LOCAL OFFICE All islands, excluding Madagascar, have been scaled to 200% for easier legibility. Forty-four of the world's 81 poorest countries (54%) that are or conflict-affected states'. In calendar year 2011, IFC Advisory eligible to receive loans from the World Bank Group's International Services had active projects in 33 out of 49 countries in Sub- Development Association (IDA) are in Sub-Saharan Africa. The Saharan Africa . Of these, 30 were among the world's poorest World Bank Group classifies 16 of those countries as 'fragile countries, and 12 were fragile and conflict-affected states. ~laH'vATE SECTOR IN AFRICA CRITICAl ROlE IN ECONOMIC DEVElOPMENT. Private companies provide jobs, goods, and services, as well as IFC works with governments, businesses, multilateral organizations, much-needed tax revenue, while ensuring the efficient flow of and fo undations t o foster in novative donor partnerships to reduce ca pital. Al ong with IFC invest ment services, we enable access poverty and improve people's lives. Our collaboration emphasizes to finance, promote business-enabling markets, support public- the power of lon g-term partnerships, maintains a focus on results private partnerships for infrastructure development, and offer measurement and efficiency, and provides appropriate visibility advisory services to help governments and businesses find for donor partners. commercially viable solutions. Donors are vital in helping us deliver greater development impact. The financial support they provide not only leverages IFC's own IFC Advisory Services provides advice, problem solving, training, contributions to Advisory Services, but also enhances the impact and support to help Africa build a positive investment climate . This of our investment operations through strengthened collaboration is achieved by simplifying regulations and increasing transparency, and shared mutual priorities . IFC's work with donors often goes developing large infrastructure projects, addressing climate change, beyond funding to include active collaboration and knowledge and growing the private sector. IFC is also helping African countries sharing. We foster this by convening donors around thematic develop domestic financial markets, promote environmental issues such as climate change and food security. In so doing, we sustainability, and expand health and education services. strive to be thought leaders and to stimulate coordinated action. Our teams are bringing global experience to countries across Sub- In the calendar year 2011, IFC Advisory Services programs in Sub- Saharan Africa, with an increasing focus on the poorest countries Saharan Africa were supported by the following development and those affected by conflict. Many African governments are partners: Austria, the Austrian Development Bank, the Belgian calling for inclusive, market-based solutions to bring social and regions of Flanders and Wallonia, Denmark, the European economic benefits to growing populations. IFC Investment and Commission, Ireland, Japan, Netherlands, Norway, Portugal, Advisory Services are responding to those calls, helping to pave South Africa, Sweden, Switzerland, the United Kingdom, and the the way for sustainable private sector development across Africa . United States. WHY ARE ADVISORY SERVICES EFFECTIVE? • Global expertise and local presence • Innovative approaches • Proactive and demand-driven project development • Measurable development impact • Long-term partnerships • Emphasis on collaboration • Transparency to stakeholders • Honest broker role IFC IS A LEADER IN MEASURING DEVELOPMENT IMPACT. WE WERE THE FIRST DEVELOPMENT FINANCE INSTITUTION TO REPORT ON AUDITED AND UNBIASED DEVELOPMENT IMPACT ACROSS OUR ENTIRE PORTFOLIO. This is the first development impact report specifically on Advisory Saharan Africa, our results measurement specialists help project Services in Sub-Saharan Africa . The information you will find teams collect and validate results throughout the project lifecycle, in this report is based on data collected through IFC's results and make selected site visits at project completion. measurement system, which incorporates three elements: target- setting at project and strategic level, a systematic monitoring To address some of the longer-term questions on issues such system and rigorous evaluation processes. as firm creation, jobs, and economic growth, IFC has employed external evaluations across advisory and investment services. For this reason, the reported number on supported job creation includes the findings from external evaluations in addition to the results from our standard indicators. We have formally evaluated our operations since 2005, and these efforts are increasing . Evaluation methods include process, participatory, real-time, ex- post, and randomized control trials. The combination of internal and external evaluations allows IFC to understand how well our strategy is working, and whether we are reaching the people and sectors that most need our help. MONITORING We have made good progress in measuring the results of our projects, but acknowledge more can be done. Some results, particularly longer-term changes for our clients and beneficiaries, After setting project-level targets, we continuously monitor the may not be apparent within the time frame of our projects, and may progress of our projects through a specialized Development not be counted or recorded . Also, some methods used to measure Outcome Tracking System (DOTS), allowing us to understand our results, such as how many jobs were created, can be complex and program impact and provide accountability to our stakeholders. are still under discussion in the broader development community. DOTS tracks the progress of projects using measurable standard Finally, there are particular challenges to monitoring and evaluation indicators. Advisory Services uses a logical framework for its efforts in Sub-Saharan Africa. In some contexts, our clients have projects, based on the Organization for Economic Co-operation limited capacity to collect information; in other cases, political or and Development (O ECD) guidelines. Results for Advisory Services social disruptions make data collection difficult. We are refining our are divided into outputs (direct deliverables provided by IFC to our target setting, benchmarking, and data quantifying and collection clients), outcomes (institutional, legal, and behavioral changes methods as we better understand the inherent challenges of by our clients resulting from IFC Advisory Services), and impacts working in each country. In future, we will expand this report to (longer-term changes and results for beneficiaries). cover a wider range of projects and indicators. This report provides data on selected output and outcome The IFC Development Goals (IDGs) are corporate-level development indicators in key strategic areas, including investment climate, goals that IFC began testing in 2010 . They were inspired by the fragile and conflict-affected states, infrastructure, agribusiness, Millennium Development Goals as a way to better integrate IFC's and SMEs. While the summary results at the beginning of the results measurement with strategy. IFC has identified six IDGs: report represent aggregated results on selected indicators for IDG 1: Increase or improve sustainable farming opportunities our whole project portfolio in 2011, the results reported in the IDG 2: Improve health and education services following sections are for projects in strategic areas and may overlap (for example, investment climate projects in a fragile or IDG 3a : Increase access to financial services for microfinance and conflict -affected state) . individual clients IDG 3b : Increase access to financial services for SME clients IFC tracks development impact for its active portfolio of Advisory IDG 4: Increase or improve infrastructure services Services projects every six months. At project completion, the nro offorti11onocc ::.nrl offirionrv nf <;PrvirP<; rlrP IDG 5: Contribute to economic growth RAPIDLY INCREASING URBANIZATION, FAST FACTS AN EXPANDING MIDDLE CLASS, AND GREATER POLITICAL STABILITY SUB-SAHARAN AFRICA ARE DRIVING AFRICA'S ROBUST ECONOMIC GROWTH. • t t tt t t ttttttt tt t t u:: t t 875.1 million in 2011 The continent is home to six of the world's fastest-growing $$$$$$$ $ ~ ~ $ $ economies, several of the world's fastest-growing cities, and $ $ $$ $ $$ $1,109 BILLION is more peaceful and democratic than it has been in decades. $$ $$ $ $ $ $$ $ $$ $1,109 billion- 4.1% growth in 2011 Africa's share in direct global foreign investment rose from less $$ $$ $$ than 1% in 2000 to 5.5 % in 2011. $ $ $ $ s$ These positive trends are offset by the reality of enormous $ ss $$ $35 BILLION economic and social challenges, including widespread poverty $$ and poor infrastructure. S$ Foreign direct investment: In excess of $35 S$ billion in 2011 $ $$ Our work with the private sector responds to Africa's needs by directly contributing to infrastructure development, expanding access to good education and health care, enhancing food security, $ $ $$ $1,966 expanding financi and commoe#ty markets, and building climate $ $$ $$ Average gross national income per capita : ...,... change resilience. $ $ $1,966 in 2011 (using 2005 purchasing power parity) HOW WE ARE RESPONDING TO AFRICA'S CHALLENGES The continent is home to about a t hi rd of the world 's poorest people; more than half live below the $2-a-day poverty line. We support efforts to provide inclusive, market-based solutions that boost economic growth and job creation. For example, in Guinea, we Case Study contributed to inclusive growth and job creation by AFRICA SCHOOLS PROGRAM IN GHANA increasing the capacity of local SMEs to win contracts from international mining companies which resulted in THE CHALLENGE new procurement contracts worth $5 million. In Ghana, follow1ng the government's policy of un1versal free pnmary educat1on, demand for educat1on at all levels Infrastructure: The lack of basic infrastructure in many outpaced the capacity of the public school system. The countries impedes economic growth and efforts to reduce government recognized that the private sector could play a poverty. In 2011, only about a quarter of Africans had role, but the majority of private schools faced challenges in access to electricity. There is an urgent need for reliable relation to management capacity, business planning, delivery and quality power, water, health, telecommunication, and of h1gh-quality education, and access to finance. Many were education services. By the end of 2011, our Lighting Africa also hamstrung by weak business and management skills, and project had provided modern, off-grid lighting to more 1 poor teacher retent1on rates. than 2.5 million people . OUR RESPONSE Health and education. These are priorities for many IFC launched the Africa Schools program in Ghana in African governments. In Ghana, for example, we have 2005 . It consisted of a two-pronged approach involving provided innovative solutions for increased access to both IFC Advisory and Investment Services to improve the private schools, and helped schools to access finance and quality and availability of private education. The project upgrade their offerings. Our schools program is also being aligned with the Millennium Development Goal of universal primary education by 2015. The project provided training, implemented in Kenya, Liberia, Rwanda, and Uganda. business planning, and management systems to private Investment climate: Removing barriers to trade and investment schools, helping them access funds and improve their can lead to more rapid private sector growth. In 2011, we management systems. Our work with financial institutions helped African governments to enact 150 laws, regulations or centered on capacity building for sourcing, assessing , and amendments to improve the investment climate. monitoring loans, and providing a risk-participation scheme to encourage lending to the education sector. Access to finance. Fewer than 20% of Africans have access By the end of the program in 2011, we had trained nearly to financial services, including many SME owners who can 1,400 people, facilitated financing of $9 .4 million for make significant contribution to Africa's economic growth beneficiary schools from partnering financial institutions, and job creation. In 2011, we helped financial institutions and generated sales revenue of $10 .8 million . Over 300 in Sub-Saharan Africa provide more than $1 billion in loans schools benefited from capacity building support; 68 had to SMEs and African businesses. We also actively support prepared business plans; and 27 had accessed financing, the promotion of mobile financial services in Africa, the with enrolment figures increasing by 9,755 to 23,375 fastest-growing market for this technology in the world . between 2006 and 2011 . Overall, the program has benefited more than 100,000 students with access to Agribusiness: There is an urgent need for increased food better education services . production and reliable distribution networks. Our work in this sector focuses on facilitating access to finance, building An independent evaluation of the program concluded institutional capacity, and developing agricultural supply that it was consistent with priorities of private schools and chains alongside training and capacity building. We are national policies, and that it responded to the financial and imnlementina oroarams that orovide farmers with insurance capacity needs of private schools which had previously not Doing business in Af ri ca is slowed by ma y impediments. These tima-con ing regu lation s and restrictive legislation, to ineffectual institutional bodies. Such obstacles deter invest ment, with negative consequences for economic growth and job creation . We help African govern me nts implement legislative and administrative reforms to bring about more vibrant, investor-friendly and competitive economies. By helping to remove barriers to greater pr ~te investment, we enable increased job creation and earning ower, hel ping to reduce poverty. To facilitate trade and improve reg ional integration, for example, one of our proj ects provided policy advice to t he governments of Burkina Faso and Togo to support the integration of processing and inspections at the border crossing of the main trade route, including the introduction of a single transit document and improved collaboration between border control agencies. Following the introduction of a single border post, the private Case Study sector confirmed reduced transit times for goods between the two BURUNDI INVESTMENT CLIMATE countries and IFC was requested to provide advice on additional efficiency improvements. THE CHALLENGE Since the end of its civil war in 2009, Burundi has had one of Africa 's fastest-growing economies. However, progress OUR IMPACT ON IMPROVING is hampered by a lack of infrastructure, limited access to THE INVESTMENT CLIMATE financial institutions, and a small private sector constrained by a complicated and burdensome regulatory environment. IN 2011 The government of Burundi asked IFC to provide assistance in improving the business climate, helping the country to improve its 2010 Doing Business ranking of 176th out of 183 worldwide. Advised 770 government entities on OUR RESPONSE improving investment climate IFC's work in Burundi includes simplifying business registration and reducing the cost of compliance with business regulations and laws. We are supporting the government's reform agenda by focusing on clarifying Helped Africa governments to enact business laws and regulations, reforming the judicial system 150 laws, regulations or amendments to to reduce delays in the commercial court, strengthening improve the investment climate the public-private dialogue forum, and facilitating business registration. Positive outcomes for the project include $ $$ $$ $$ $$ $$ $297 MilliON the launch of a one-stop-shop for business registration, a reduction in the procedures and time taken for issuing S$ $ $5 Saved the private sector $297 million of construction permits, and simplified and less expensive $$ $ s through recommended changes to the property registration. The time it takes to register a business investment climate has fallen from 14 to two days, and the cost has been reduced from $39 to $32 . Exporting and importing has become more viable, with reduced time and costs, and tax systems have been simplified . As of the end of 2011, one of our recommendations was enacted and th ree reforms, as Case Study BURKINA FASO INVESTMENT CLIMATE REFORM THE CHALLENGE In 2009, Burkina Faso was recognized as one of the r ds Case Study top ten business climate reformers by Doimg Busines Yet RWANDA INVESTMENT CLIMATE REFORM aespite the government's rong commitment to refor the judiciary's reluctance to accept alternative dispute resolution THE CHALLENGE mechanisms constrained bus1ness, particularly SMEs. The Rwanda's long-term strategy, enshrined 1n 1ts government Arbitration and Mediation Centre of Ouagadougou asked development program: Vis1on 2020, largely relies on pnvate IFC to help expand the use of alternative dispute resolution sector development to achieve ambitious GDP growth with the goal of improving access to commercial justice. targets. In 2007, the government of Rwanda approached IFC to help improve the country's investment climate. OUR RESPONSE In 2008, IFC assessed existing alternative dispute resolution OUR RESPONSE mechanisms and demand for such services. We helped IFC's work resulted in the passing or amending of more than develop and implement a well-structured training system a dozen major pieces of legislation in less than three years. to provide facilitators with alternative dispute resolution Many of our recommended administrative reforms were skills and, through an intensive communication campaign made, including the creation of two one-stop-shops for targeting potential users in the business community, we registration and construction permits in Kigali . helped create a sustainable mediation culture. We hosted 10 Consequently, Rwanda 's Doing Business ranking improved workshops in Burkina Faso promoting the use of alternative from 143th in 2008 to 58th in 2011 . In 2010 and 2011, dispute resolution mechanisms, reaching 235 participants. Rwanda was named the top reformer and second top We worked with the government to ensure that disputes reformer in t he world respectively. Between 2008 and 201 0, resolved through the alternative dispute resolution process an independent evaluation found that private sector cost were legally enforceable, and helped reform the code of savings amount to about $5.1 million . In addition, the project ethics for mediators and arbitrators. The time taken to is estimated to have contributed between $44 million and resolve disputes through arbitration has decreased from 75 $51 million to incremental investments. The pace of business days to 31 days. The number of cases registered and resolved registration in Rwanda is considerably faster now and the through the arbitration center increased, and approximately creation or formalization of an estimated 4.400 to 5.200 new $27.3 million in funds frozen in commercial disputes were ENCOURAGING ENTREPRENEURSHIP SMEs have the potential to energize African economies. SMEs account for 67% of jobs in emerging markets and 86% of new OUR IMPACT ON ENCOURAGING jobs created. Yet a lack of access to finance and credit, low- ENTREPRENEURSHIP IN 2011 quality economic infrastructure, complicated and prohibitive regulatory environments, and lack of management capacity and relevant training constrain the growth of the sector. Eliminating or 12.6 MILLION minimizing these barriers will promote more dynamic economies, leading to higher employment and decreased poverty. Helped 12.6 million people receive access to improved services in the real sector Our multifaceted approach to encouraging entrepreneurship takes into account the local context. IFC Advisory Services works closely with IFC Investment Services to strengthen the entire value chain. 189,000 Our work centers on creating a conducive business environment, Trained 189,000 people in areas such providing SMEs with affordable access to business management as business management skills, business regulation, credit provision, and crop information and training, improving access to finance, linking smaller certification firms to large businesses, and building up vital basic infrastructure. Our partners in this field include financial institutions, corporations, t t tt t tt t training organizations, research groups, consultants, donors, and tt tt t t 82,300 non-governmental organizations. H tth tttt Supported the creation of 82,300 jobs IFC helps provide SMEs with affordable access to localized and customized business management information, interactive tools, and training to address limited management and operational capacity. In 18,500 partnership with development agencies and the private sector, IFC is Advised 18,500 companies, government rolling out its world-class capacity building products, Business Edge agencies and other entities and SME Toolkit, which enhance SME competitiveness. Business Edge and SME Toolkit provide SMEs with the tools and skills they need to become better suppliers, distributors, service providers, etc. 12.5 MILLION Enabled access to improved services for IFC has found that development results are improved when 12.5 million people capacity building is linked to SME access to markets and access to finance. We have developed several programs that create linkages $ $$ $$ between SMEs and large businesses. These linkages create $$ $$ $$ $$$$ $138 MILLION powerful incentives for SMEs to build managerial and operational S$ $ $ s $$ Helped to generate SME sales revenue of capacity within their own operations. By helping SMEs to access $138 million markets more efficiently, we create opportunities for long-term sustainability and increase job creation. $ $$ $$ $$ $$ $$ $ $ $ $1.04 BILLION Access to finance, a serious challenge for many SMEs, is another $$ $ building block of IFC's approach. IFC has developed several single $ $$ $$ Facilitated loans of over a total value of $1.04 billion to small and medium enterprises and multi-country programs in collaboration with local financial through financial institutions intermediaries that enable SMEs to grow their businesses with affordable and tailored credit and investment. For example, by enabling banks to provide products and services to the untapped SME segment, the Africa MSME Program has provided thousands of SMEs in 14 countries with opportunities to fund and grow their businesses. Other active projects to encourage entrepreneurship include support for microfinance, collateral registries, SME banking, leasing, insurance, and sustainable energy financing across Sub- Case Study RWANDA LEASING PROGRAM THE CHALLENGE By 2005, access to finance became a significant challenge for SMEs in Rwanda. With the limited financing options available to SMEs, the creation of leasing became an important factor in bridging this funding gap for financial service delivery. The government of Rwanda requested IFC's assistance in Case Study developing a sustainable leasing industry in the country. ADVANS CAMEROUN OUR RESPONSE THE CHALLENGE We provided expertise and advisory services to help Cameroon has a dynamic informal sector, but in 2008 only the government reform the legislative and regulatory 15% of the population had an account with a financial environment, and encourage the practice of leasing (which institution. SMEs struggled to gain access to finance due to requires no collateral), while stimulating financial service the informal nature of their businesses, lack of collateral, and delivery. We helped develop a viable leasing program through absence of bookkeeping practices. At the same time, very regulatory reform, provision of training to stakeholders, and few of the 440 microfinance institutions that were licensed creating public awareness around this financial medium. The in Cameroon operated on a commercially sustainable basis. government also contributed financially to the program, Products were concentrated principally on savings and which was a clear indication of its commitment to this transfer services, with credit products limited to consumer strategy. Critical outcomes include an improved leasing lending or higher-end formal SMEs. legal and regulatory environment, a favorable leasing tax amendment and a new leasing law. The six workshops held OUR RESPONSE during the project period trained 198 people and we advised Together with La Fayette lnvestissement, a venture capital nine entities in total. investment company, IFC aimed to create a commercially sustainable greenfield microfinance institution . We assisted IFC assisted in drafting a new leasing law and making in providing management expertise for the first years of changes to existing regulations, training staff of microfinance operations, a well-designed management information institutions, lawyers, commercial court judges, and system, and ongoing advice and short-term expertise. government officials from the revenue authority, central bank and ministry of finance . Due to the joint efforts from As a result of the successful implementation of the IFC, government, and the market players, the volume of recommendations provided by IFC and its partners, Advans leasing operations in Rwanda increased from $5 million to Cameroun created eight branches in five cities, had 20,000 $35 million between 2006 and 2010, while the number of savings accounts and 9,000 outstanding loans worth $21 FRAGILE AND CONFLICT-AFFECTED STATES Conflict-affected states and those that cannot provide for citizens ' Liberia: Liberia is benefiting from stability and growth following basic needs (fragile states) require special assistance to rebuild their years of civi l war. IFC has helped Liberia develop a Commercial economies . Damaged or destroyed infrastructure, compounded by Code and Court that are supporting increased business activity. IFC institutional collapse and lack of economic opportunities, make it is also supporting the growth of SMEs in the country. difficult for governments to boost economic growth. Sierra Leone: Sierra Leone is working to recover from a long civil war. Private investment in fragile and conflict-affected states can make IFC is helping improve the country's investment climate, including tax a dramatic difference to the lives of millions. Despite ongoing simplification, and reducing trading fees . IFC is also helping improve challenges, IFC is expanding its work in these countries . We invest access to finance through microfinance and leasing programs. in and advise on projects that: South Sudan: South Sudan gained independence in July 2011 and is • Encourage business-friendly investment climates. For example, looking to build a strong and diverse economy. A major focus of IFC's in Liberia, we helped reduce the business start-up process work in the country is supporting efforts to craft legislation that will and cost to only 6 days and 68.4% of the average income increase business activity and attract investment. IFC is also supporting (compared to an average of 37 days and 81 .2% across Sub- SME growth. Saharan Africa). • Support SME growth. In the Democratic Republic of Congo, we trained over 4,000 farmers and entrepreneurs on how to OUR IMPACT IN FRAGILE AND improve productivity and access financing, and facilitated $2 .6 million of SME financing. CONFLICT-AFFECTED STATES • Enable financial access. Our support for Access Bank Liberia resulted IN 2011 in the disbursement of more than 28,000 loans and deposits of $6.7 million, supporting SME growth and financial security. 1,900 CONFLICT-AFFECTED STATES IN AFRICA INITIATIVE Advised more than 1,900 entities, providing IFC launched its pioneering Conflict-Affected States in Africa some with tailored support programs (CASA) Initiative in 2008. It operates in seven fragile and conflict- affected focus countries, providing program support, knowledge management, and funding to catalyze business development. 18,500 Trained more than 18,500 people in areas ACTIVE CASA COUNTRIES such as business management skills, business regulation, credit provision, and Burundi: Heavily dependent on tea and coffee production, Burundi crop certification is working to attract investment and diversify its economy following a lengthy civil war that ended in 2009. IFC is helping Burundi improve its investment climate, and is supporting the growth of smaller businesses in the country. We helped implement 40 reforms as Central African Republic (CAR): CAR has suffered a long history of measured by Doing Business coups and revolts, but is seeking to strengthen its small private sector. $ $$ $$ IFC is working primarily in the capital, Bangui, supporting investment climate reforms and infrastructure and SME development. $$ $ $ 18,000 S$ Cote d'lvoire: IFC is helping Cote d'lvoire strengthen its private sector $ $s Facilitated more than 18,000 loans over a and attract investment following its disputed 2010 presidential total value of more than $210 million elections . IFC is focusing on supporting the agriculture sector- the $ $ $$ main driver of Cote d'lvoire's economy - and infrastructure, SME development and financial markets. $ $$ $3.1 MILLION $$ Democratic Republic of Congo (DRC): DRC's economy is slow ly $ ::> $ Generated SME sales revenue of more than $3.1 million recovering after decades of decline caused by conflict and instability. IFC is working to improve DRC's investment climate, unlock the Case Study Case Study SIERRA LEONE liBERIA POWER PUBliC-PRIVATE REMOVING ADMINISTRATIVE BARRIERS PARTNERSHIP THE CHALLENGE THE CHALLENGE In 2002, Sierra Leone began to ernerge from a long civil war. Liberia is one of the poorest post-conflict African countries The informal sector was struggling to grow and formalize and suffers from a severe lack of infrastructure. The due to the high costs and ack of clanty surrounding business country's electricity systeru. was completely destroyed dunng regulation . Dysfunctional ublic institutions compounded the a 14-year civil war tha Bed 1n 2003 . In 2007, when the problem. The gover ment identified streamlined business government asked IFC to help rebuild the national electricity registration as a priority. infrastructure, orny 3 MW was bemg generated for 500 OUR RESPONSE customers tHrough a donor-funded emergency program . We began working with Sierra Leone's government in OUR RESPONSE 2005 to help remove administrative barriers to doing IFC led the structuring of a five-year management contract business. This included identifying and removing barriers and, following a competitive international bidding process, to investment, promoting investment by informal and the selection of Manitoba Hydro International of Canada formal businesses, profiling investment opportunities, and (MHI) to help rebuild Liberia 's electricity infrastructure. The attracting new investment. The project aimed to simplify contract, which began in July 2010, is performance-based, the business registration system, including eliminating with the private operator taking partial operational risk. advance tax payments, which has already widened the tax Investments of about $50 million will be fully financed by base and attracted significant foreign investor interest to the country. We provided assistance in the fields of investment development partners during the duration of the contract. promotion, tax policy, and administration . We also ran an The management contract establishes specific procedures for awareness campaign on the required business registration cooperation between the ministry, development partners, the procedures. We advised seven entities, and trained more utility, and the private operator, which fosters accountability than 6,300 people. Seven of the regulatory and legislative and good governance. changes that we recommended were enacted, resulting in The contract's success led to the decision by development aggregate private sector savings of more than $900,000 partners to support the rehabilitation of the 66 MW Mount from the reduced costs of doing business. Coffee Hydro Plant, which was also destroyed during Liberia's The number of newly registered enterprises increased from civil war. Development partners are investing about $200 about 1,800 in 2005 to 3,800 in 2009 . An independent million. The plant, which is scheduled to start operations at evaluation also found that the number of jobs created as a the end of 2015, will contribute to substantially lower tariffs result of the reforms can be estimated at between 13,500 (currently 54 cents/kwh) and will provide reliable power to an IMPROVING INFRASTRUCTURE SERVICES African governments face an estimated infrastructure funding gap in excess of $460 billion per year. Basic infrastructure for delivering OUR IMPACT ON IMPROVING clean water and reliable electricity, transporting food and goods, and enabling effective education and health care is vital for development. INFRASTRUCTURE SERVICES We help governments build strong infrastructural systems that IN 2011 support long-term economic growth and better living standards. $ $$ $$ One vehicle for infrastructure investment is public-private $$ $$ partnerships (PPPs). Such partnerships can dramatically improve and S$ expand access to power, water, sanitation, transport, health, and $ $ s Three bidding processes conducted following education. We specialize in structuring and implementing successful international best practice PPPs through advisory mandates and competitive bidding. $ $$ $$ PPPs at various stages of operation during 2011 included the $$ $$ $70 MILLION Mauritius and Niger ports, Cape Sierra Hotel, Kigali Bulk Water $$ $ $S We facilitated financing of $70 million Project, Benin Health, Nigeria Cross River State Hospital, and the Nouakchott container terminal concession in Mauritania. 350,000 EXAMPLES OF SUCCESSFUL PPPs We improved access to services for Lesotho: A first for the health sector in Africa, the PPP agreement 350,000 people we structured with the government allowed the Tsepong consortium to design, build, partially finance, and operate a new hospital with a network of urban clinics in Lesotho . The hospital now provides high-quality and publicly funded health care services to more than 300 people daily. Uganda : Most Ugandans do not have access to safe water. IFC assisted in implementing the Uganda Small Scale Infrastructure Provider Water Program in 2007 and in 2010 awarded the first five-year management contract to a private operator for the town of Busembatia. This PPP helped the government improve access to safe water through 400 new connections. Case Study Case Study liGHTING KENYA CAPE SIERRA HOTEl THE CHAllENGE THE CHAllENGE About 30 million people in Kenya do not have access to Post-war Sierra Leone faces enormous challenges in elect ricity. Many resort to kerosene use for heatmg and rebui lding its economy and attracting foreign investment. cooking, which is expensive, dangerous and polluting. The growing need fo r quality hotels to meet international OUR RESPONSE t raveler needs offered an investment opportunity and f it IFC and the World Bank partnered in the Lighting Africa well wit h ou r focus on improving the investment climate program to help 250 million people in Sub-Saharan Africa and buildi ng the tourism industry. The government of Sierra gain access to non-fossil fuel-based, low-cost, high-quality, Leone approached IFC for assistance in finding an investor to safe, and reliable lighting by 2030. While the program has a upgrade and operate the hotel. regional focus, it was first launched in Kenya. OUR RESPONSE A comprehensive set of initiatives, aimed at manufacturers, We signed a mandate with the National Social Security and distributors, and consumers, was used to mobilize the private Insurance Trust of Sierra Leone and undertook the due diligence, sector and develop a sustainable market. In 2011 more than prepared a transaction structure report, and implemented 136,000 solar lanterns were sold, ensuring that an additional a tender process. One winning bidder would be chosen to 680,000 people and more than 2.5 million people in total renovate, redevelop, operate, and maintain the Cape Sierra have quality, safe lighting and better energy access. This Hotel in Freetown . Challenges arose in the first round of the also results in an annual reduction of an estimated 50,000 tender process and expectations had to be aligned with the tons of carbon dioxide. Consumer education campaigns realities of the market and investment potential in a post-war have reached 11 million people in rural Kenya, increasing country. In the second round in 2010, following further analysis awareness and demand for the technology. of the situation and IFC contact with investors, IDEA of the Lighting Africa produced a best practice consumer awareness United Kingdom was selected as the winner. IDEA, with Hilton report to help local distributors increase their outreach, and Hotels Worldwide as hotel operator, is now redeveloping the linked them with manufacturers and importers of products Cape Sierra into a 200-room, world-class hotel. The operator that passed Lighting Africa's quality tests. This report has been will raise over $41 million for redevelopment. Construction is made available for replication in other country programs. expected to be completed in 2014. The project was the first PPP transaction in Sierra Leone and it is expected to lead to While this project did not structure a bidding process for a $53 million in taxes and concession fees over the life of the public-private partnership, it addressed infrastructure needs Africa faces increasingly complex and interlinked agribusiness challenges. These include forecasted water scarcity, rapidly OUR IMPACT IN AGRIBUSINESS degrading soils, shifting weather patterns, and rapid depletion IN 2011 of forests and natural resources. Factors such as the small size of farms, lack of access to finance, limited mechanization and capacity, as well as poor infrastructure, fragmented markets, and low-profit products that are not competitive globally compound these challenges. The combination threatens to reduce agricultural Helped 11 companies attain biotrade certification of their natural products productivity at a time of rising demand for food. The development of the agricultural sector in Africa is a strategic 54,000 priority for IFC. Our approach is tailored to the needs of each Trained more than 54,000 people, including country, location and business. We focus on improving food 6,000 small-scale coffee producers in Kenya, security, protecting ecosystems and increasing rural incomes. Our together with our anchor client ECOM, one work in agribusiness is inextricably linked to the environment and of the largest players in the international coffee market climate change. We promote the sustainable use of land, adoption of climate-smart agricultural practices and the deployment of new M M M M technologies and information systems to further boost food security ~M M 6,000 and strengthen the continent's resilience to climate change. M M M M Provided advisory services to 6,000 people SUSTAINABLE AGRIBUSINESS: OUR APPROACH $ $$ $$ • Strengthening and building inclusive supply chains $$ $$ $$ $ $ $750,000 $$ $$ • Increasing farmers' access to markets $ $s $$ Assisted 48 farmers with loans with the total value of $750,000 • Prepare and link farmer to formal sources of finance • Improve and promote the adoption of sustainable land use practices t tt t tt tt t t tt t t 1,170 t u, tttt/ : Supported the creation of 1,170 jobs $ $$ $$ $ $ $$ $$ $ $ $3.8 MILLION $$ $$ $ $S $s Helped to generate sales revenue of ct~ Q ~;n;f"\n Case Study ETHIOPIA WAREHOUSE RECEIPTS THE CHALLENGE Agriculture forms the base of the Ethiopian economy, accounting for 80% of employment and 50% of the country's GDP in 2011. Although the government is committed to supporting agribusiness, structural blockages exist around sector access to finance, due to the risks associated with traditional rain-fed agriculture, lack of collateral, and the complexities of loan appraisal and analysis. As a result, bank lending to agribusiness made up just 10% of the total lending portfolio. OUR RESPONSE In 2009, the Ethiopia Commodity Exchange signed an agreement with IFC to develop the concept of warehouse receipt financing, which would allow banks to use verified warehouse receipts as collateral. The Ethiopia Commodity Exchange certifies secure warehouses that issue receipts to the supplier confirming the deposit and the grade of the produce. This receipt serves as collateral for a loan . We assisted in developing a range of best practice manuals for affiliated warehouses; promoted the concept to government, industry, and the general population; and advised local banks on this financing method. Direct outcomes of this project include a 92% increase in warehousing capacity and a dramatic increase in warehou se receipt financing loans, which grew from $50,000 to $600,000 in the 2010-11 period . Four local banks, following our seminars and workshop, committed to warehou se receipt financing with the Ethiopia Commodity Exchange . In the chal lengi ng environment that Sub-Saharan Africa provides, IFC IN SUB-SAHARAN AFRICA- OUR CONTRIBUTION TO IFC'S our strategy remains focus on realizing key opportunities in DEVELOPMENT GOALS strategic sectors, while adapting to changing circumstances . We The IFC Development Goals (lOGs) are goals for reach, access or will continue to leverage our partnership with the World Bank and other tangible development outcomes that projects signed or to work closely with our development partners for greater impact. committed by IFC are expected to deliver during their lifetime. Each In the coming years, IFC will deepen its commitment to poverty goal has an annual numerical target. They are designed to measure reduction in Africa, placing particular emphasis on infrastructure our clients' increased contributions in priority areas as a result of development, agribusiness, and the food supply chain, as well as IFC support. They provide a coherent corporate framework for SME growth, particularly in fragile and conflict-affected states. Top Investment and Advisory Services to work towards shared goals, priorities will also include greater inclusion of women and mitigating complementing IFC's existing results measurement framework, and the effects of climate change . Program targets will reflect this. helping drive strategy implementation and operational decision- Infrastructure: Quality roads, railways and other transport links; making . We are presenting the joint Advisory and Investment goals functioning telecommunication, and reliable electricity and water for Sub-Saharan Africa in the financial year 2013 below. supply are pivotal for private sector growth . We will continue to encourage PPPs to enable infrastructure financing and management. IDG 1: Increase or improve sustainable farming 1 160,000 farmers Agribusiness: We will work to increase rural incomes, help farmers opportunities ·- access finance, increase production, strengthen inclusive supply IDG 2 : Improve health and education services 1.3 million people chains and find new markets for Africa's farmers. - lOG 3a : Increase access to financial services for 8 .7 million clients Encouraging entrepreneurship: The growth of small and medium micro-finance and individual clients businesses through improved access to finance in a business- friendly economy has the potential to accelerate economic IDG 3b : Increase access to financial services for 100,000 clients SME clients growth and contribute to job creation . We will enhance efforts to help create the right conditions for SMEs to grow. IDG 4: Increase or improve infrastructure services 2.8 million people - - IDG 5: Contribute to economic growth To be determined - ---------j OUR IMPACT WILL BE EXPANDED THROUGH: IDG 6: Reduce greenhouse gas emissions 240,000 tons of CO, • Sharpening our focus on our product and geographic spread, equ ivalent/year as well as on priority themes. • Strengthening the alignment with IFC Investment Services to IDG 5 has recently been revised from MSME revenues to economic better leverage our services and integrate our regional strategies. growth, which is a major component of IFC strategy. While the • Deepening the engagement with major partners, including goal will measure the gross value added by IFC's clients to their by building long-term strategic relationships and building economies, the methodology for setting targets and tracking new partnerships with targeted foundations and corporates. progress towards targets is still being developed . • Building a commercial agriculture base for food security, export diversification, increased rural incomes, and the creation of sustainable farming opportunities. • Increasing focus on projects that have the potential to mitigate the effects of climate change and build communities resilient to climate change. IFC conducts an annual global survey of its Advisory Services clients to better understand how we are performing and how we can better serve our clients' needs. An independent survey firm contacts clients who have received at least US$25,000 of advisory services for projects which have been active for at least 1.5 years . The survey is sent to both private firms and to government agencies, though the questionnaire is slightly modified for each type of client. The survey firm inquires about the quality of our services, the timeliness of our services, and clients' overall experience working with IFC Advisory Services. We also want to hear from clients about our strengths and weaknesses, especially as compared to other providers of technical assistance. We also seek to understand where clients' future needs may lie, and how they believe IFC Advisory Services can support them . This is what they had to say on our work in Sub-Saharan Africa : EVAlUATION OF IFC PERFORMANCE ON SPECIFIC ASPECTS OF SERVICE (PERCENTAGE OF CliENT RESPONSES) Global expenence and knowledge 95 3 2 Technocal competence 91 3 6 Understandong the Industry/sector 86 12 2 Communocat1ng clearly and convinctngly 83 11 5 Workong effectively w1th all players onvolved 1n the proJect 82 15 3 ldent1fyong key 1ssues, proJect des1gn/plann1ng 78 17 5 Deltvenng the servoce according to an agreed schedule 69 15 13 Responsiveness to your needs and concerns 69 17 14 Understandmg local cond1t1ons 64 23 13 Effect1ve follow up act1v1t1es after the proJect 63 74 13 Flex1b1ltty to adapt products, processes, and reqUirements to you organization's needs 63 22 16 Del1venng the proJect when 1t was most needed 61 29 10 Bu1ldong the expert1se of your organ1zat1on's staff 54 32 14 Pos1t1ve Negative Neutral SATISFACTION RATE BREAKDOWN (PERCENTAGE OF POSITIVE RESPONSES) 86% 88% 88% 4 100% 1 75% ~100% 21 86% 48% 86% 67 90% 67% 85% SUMMARY OF OUR AGGREGATE PORTFOLIO RESULTS AGAINST SELECTED IFC INDICATORS Summary IFC Indicator Result Helped 12.6 million people receive access to Number of people receiving access to improved services (real/ 12, 670,653 improved services in the real sector non-financial sectors) Trained 189,000 people in areas such Number of participants in workshops, tra ining events, seminars, 188,662 as business management skills, business conferences, etc. regulation, credit provision, and crop Number of workshops, training events, seminars, conferences, certification 3, 503 etc. Advised 18,500 companies, government Number of entities receiving advisory services 10,530 I--- agencies and other entities Number of entities receiving in-depth advisory services 7,995 Supported the creation of 82 ,300 jobs Number of jobs supported 82,312 Recommended more than 150 laws, Number of recommended laws/regulations/amendments/codes regulations, amendments that were enacted to enacted 155 improve the investment climate Saved the private sector $297 million through Value of agg regate private sector savings from recommended recommended changes to the investment changes (US$) 297,609,162 climate Helped to generate sales revenue of $138 Sales Revenue (US$) 138,431 ,933 million Facilitated loans over a total va lue of $1 .04 Number of loa ns outstanding 110,454 billion through our clients Value of outstanding loans (US$) 1,043 ,889,502 IMPACT BY COUNTRY IN 2011 , OUR PORTFOLIO INCLUDED 120 PROJECTS IN AFRICA VALUED AT $188.2 MILLION. THE BIGGEST PORTFOLIO COUNTRIES WERE: 32 16 0 FULL DEFINITION OF INDICATORS USED Number of entities receiving advisory services A broad measure of the total number of entities that received assistance, including training and in-depth assistance . Number of entities receiving in-depth advisory This subset of the indicator above measures the number of entities that services received a tailored program of support, including one-on-one consulting and mentoring services . Number of participants in workshops, training We track, through head counts and sign-in sheets, the number of individuals events, seminars, conferences, etc. (including trainers) that participate in these event categories. The indicator includes repeat participants and those participating in events run by our clients and project partners, but excludes those run by project-trained entities. Number of workshops, training events, seminars, The number of events that have resulted from our projects, including those run conferences, etc. by clients and project partners. Number of loans outstanding Used only for entities that have implemented at least one of our recommendations. Value of outstanding loans (US$) Used only for entities that have implemented at least one of our recommendations. Number of recommended laws/regulations/ Count the number of recommended laws/regulations/amendments/codes amendments/codes enacted enacted by the relevant legislative or administrative body. Number of reforms as measured by Doing Business Tracks the number of Doing Business reforms in project jurisdictions . - Number of jobs supported Tracks the estimated number of individuals who have economically benefited as a direct result of our projects, which could accrue from new employment, higher wages, and access to new markets. Number of people receiving access to improved The number of people served by a private operator, including those benefiting services (real/non-financial sectors) from access or from improvement to the service. Measurements are made during the full operational phase. The count includes annual enrollment for the education sector, annual number of patients for the health sector, and number of connections multiplied by average household size for utility distribution projects. For utilities without distribution networks, it counts the amount in consideration divided by the average consumption level. Sales revenue (US$) Sales revenue is calculated using the incremental difference in sales revenue (US$) for project-relevant entities and revenue streams. These include Business Edge train ing and SME revenues generated through our linkages projects . ;----- - Value of aggregate private sector savings from Measures the aggregated cost savings for businesses resulting from recommended changes (US$) administrative procedures, policies, and practices that were improved or eliminated , and resulting from legislative regulation and amendments . Results are calculated during the project period. Value of financing facilitated (US$) The value of the investment or financing that the client was able to receive as a result of our services. Fiscal impacts (US$) The value of the project's net fiscal effects to the government, including fees, royalties, taxes, and avoided subsidies and other payments from the company to the government. The value is cumulative over the lifespan of the project and is expressed as net present value using a 10% discount rate. Africa Leasing Facility Africa life Insurance and Pensions Conflict-Affected States in Africa (CASA) Initiative Doing Business Reform Sub-Saharan Africa Lighting Africa Lighting Africa Web Portal OHADA: Building the Capacity to Improve the Quality of the Legislation SME Management Solutions Africa Sub-Saharan Africa Health Knowledge Management Advans Banque Africa MSME Technical Assistance Rawbank Developing a Framework for Special Economic Zones SME Development Program IllFC ~ ~ \ International Finance Corporation World Bank Group 14 Fricker Road, lllovo 2196 PO Box 4128?!, Craighall 2024 Johannesburg, South Africa Tel : +27 11 731 -3000 Rue Aime Cesaire x Impasse FN 18 PO Box 3296 Dakar, Senegal Tel : +221 33 859-7100 CBA Building, Mara/Ragati Road, Upper Hill PO Box 30577, 00100 Nairobi, Kenya Tel : +254 20 275-9000 gpfeifer@ifc.org www.ifc.org/africa STAY CONNECTED www.facebook.com/IFCAfrica www.twitter.com/IFCAfrica