ANNUAL REPORT 2005 45240 Financial Sector Reform and Strengthening Initiative MISSION STATEMENT FIRST aims to support growth and poverty reduction in developing countries through the promotion of robust and diverse financial sectors. FIRST Initiative ANNUAL REPORT 2005 CONTENTS 2 About FIRST 3 Message from the Governing Council 4 Operations Review 5 Project Commitments and Disbursements 6 Commitments by Sector 8 Commitments by Country or Region 10 Working with Donors and Partners 11 Web Resources: Information Exchange and AskFIRST 11 Consultants 12 Looking Ahead 13 Project Profiles 13 Access to Finance in Peru and Colombia 14 Implementing Zambia’s Financial Sector Development Plan 14 Helping National Standard Setters Apply International Norms 15 Regulation of Nonbank Financial Institutions in Southern Africa 16 Annex I Project Commitments by Region and Country ABOUT FIRST The Financial Sector Reform and Strengthening Initiative (FIRST) is a $65 million, multi-donor program whose overall objective is to strengthen financial systems in developing countries. FIRST is supported by the World Bank, the International Monetary Fund (IMF), and five bilateral donors: the Department for International Development of the United Kingdom, the Canadian International Development Agency, the State Secretariat for Economic Affairs of Switzerland, the Ministry of Foreign Affairs of the Netherlands, and the Swedish International Development Cooperation Agency. FIRST provides technical assistance grants to recipients in developing and transition countries for capacity building and policy development in financial sector regulation, supervision, and development. Project ideas are introduced to FIRST either directly by country authorities or by official agency staff. FIRST responds quickly to requests for technical assistance and offers access to worldwide expertise. Projects can be country specific, regional, or global in scope. FIRST also maintains Information Exchange, an online portal to disseminate information on financial sector development assistance, and AskFIRST, a help desk, to handle inquiries about financial sector development and FIRST activities. One of FIRST’s key objectives is to help countries implement recommendations of the Financial Sector Assessment Programs (FSAP) and Reports on the Observance of Standards and Codes (ROSC), administered by the World Bank and IMF , respectively. Other FIRST priorities include responding to clients’ requests for rapid mobilization of resources supporting highly innovative initiatives to diversify financial sectors or for funding in amounts falling below other donors' minimum thresholds. FIRST often acts as a catalyst for wider donor intervention in a particular area and promotes projects that have a strong potential for replication. FIRST supports regional initiatives as well as those in individual countries, taking advantage of its global reach, cross-sectoral focus, and ability to draw on solutions adopted in one country for application in others. During project design and implementation, FIRST consults other donors active in the area to enhance FIRST’s overall impact, avoid duplication of effort, and encourage long-term support from traditional bilateral and multilateral donors. FIRST is guided by a Governing Council and a Steering Committee, both comprised of senior representatives from participating bilateral donors, the World Bank, and the IMF . The Steering Committee approves larger projects and provides hands-on direction to FIRST’s two executive arms — a Management Unit in London and a Coordination Unit in Washington. The Management Unit develops project ideas, designs projects, approves most FIRST projects, and contracts with individuals and firms to deliver technical assistance to clients. The Coordination Unit works with World Bank and IMF staff to support client countries in developing proposals, conducts due diligence on all proposals, establishes relationships with other donor agencies, and manages FIRST’s web-based resources and help desk. It also organizes the delivery of sensitive or confidential technical assistance provided by multilateral agencies. 2 MESSAGE FROM THE GOVERNING COUNCIL During 2005, FIRST’s performance strengthened considerably, and the program continued to gather momentum. FIRST committed $14.6 million, a 47 percent increase over the previous year. By June 2005, FIRST’s commitments had risen to $29 million. That amount funded 165 technical assistance projects involving 55 developing and transition countries and covering almost all parts of the financial sector. FIRST has not only assisted individual countries, but also has funded many regional initiatives in Africa, Europe and Central Asia, Latin America and the Caribbean, the Middle East and North Africa, and South Asia. The year also saw FIRST become more active in supporting access to financial services for the poor and for small business and in the development of housing finance. FIRST has become especially active in supporting the diversification of financial sectors by facilitating the development of new products and, in several cases, in pioneering new solutions which, if successful, should have wide application in other parts of the world. Examples include livestock insurance in Mongolia, small and medium enterprise (SME) securitization in Peru, and housing microfinance in Colombia, all done in cooperation with the World Bank. Together with the IMF , FIRST has also supported the rollout of projects in Africa for the regulation of nonbank financial institutions and book entry systems for central bank management of government securities issuance and trading. Sub-Saharan Africa continues to receive the largest proportion of FIRST’s technical assistance, with 28 percent of the total number of projects. This reflects our emphasis on clients in low- income countries and the successful working relations that FIRST has developed with regional bodies such as the Southern Africa Development Community and with counterparts in the IMF and the World Bank. FIRST has now been running long enough to show some tangible results and to gather meaningful feedback from clients and partner institutions. We are pleased that the feedback has been very positive and has enabled FIRST to improve its approach in some areas as well as confirming the strength of demand for the responsive, partnership-driven technical assistance that FIRST can support alone or in partnership with other donors. 2006 will see the consolidation of gains made in commitments and focus on improving disbursements. FIRST’s donors will also start focusing on the future of FIRST beyond the commitment of the current available funds. In closing we would like to thank everyone involved with FIRST, especially the organizations and governments that have sought technical assistance from FIRST, the teams operating the Coordination and Management Units of FIRST, and the consultants who have delivered the technical assistance. We also wish to thank the dedicated staff of the institutions that have partnered with FIRST in implementing its projects. Sharon White Chair of the Governing Council, Financial Sector Reform and Strengthening Initiative 3 O P E R A T I O N S R E V I E W 4 PROJECT COMMITMENTS AND DISBURSEMENTS At the end of June 2005, FIRST had approved a cumulative total of 165 technical assistance projects, representing total commitments of $29.1 million. During fiscal 2005 (July 1, 2004–June 30, 2005), 79 projects were approved, with commitments of $14.6 million. This represented an increase from fiscal 2004, the first full year of FIRST’s operations, in which 60 projects totaling $9.9 million were approved. Project commitments through June 30, 2005 are summarized in Annex I. The number and value of projects grew in fiscal 2005 as FIRST became better known and undertook follow-on projects with its early clients. An increasing number of potential recipients have become aware of FIRST as a result of marketing efforts and referrals from existing clients. Feedback from clients and from the staff of development agencies clearly indicates that FIRST fills a gap for technical assistance. FIRST funds projects for low-income and middle-income countries eligible to receive, respectively, credits from the International Development Association (IDA) and loans from the International Bank for Reconstruction and Development (IBRD). Project commitments for low-income countries began slowly but have grown steadily. In fiscal 2003, $3.1 million was committed to low-income country projects. The figure for fiscal 2005 alone had more than doubled to $6.6 million. Commitments to middle-income country projects grew more quickly than those to low-income countries. By the end of fiscal 2005, a cumulative total of $15.8 million had been committed to middle-income country projects, $8.0 million of which was committed in fiscal 2005. In fiscal 2004, project disbursements were $3.7 million. Disbursements increased to $7 .4 million in fiscal 2005. The increase reflects the acceleration of implementation as the portfolio of active projects has grown. Middle-income country projects accounted for almost 60 percent of all disbursements. In fiscal 2005, the overall disbursement-to-commitment ratio for projects was 40 percent. The gap between project commitments and disbursements is primarily due to various steps required between the approval of a project and its completion, such as procurement, exchange of documentation, and implementation. The figure below presents the level of project commitments and disbursements by region as of June 30, 2005. Commitments and Disbursements by Region (Cumulative to June 30, 2005) 9 8 7 SSA Sub-Saharan Africa LAC Latin America and Caribbean 6 ECA Europe and Central Asia EAP East Asia and Pacific 5 MENA Middle East and North Africa SA South Asia 4 3 2 1 0 5 commitments disbursements COMMITMENTS BY SECTOR Most requests for FIRST’s assistance involve projects in the areas of capital markets, insurance and banking systems, and regulation and supervision of nonbank financial institutions (NBFIs). The sectoral distribution of projects is shown in the figure below. The pattern of new commitments in fiscal 2005 changed little from the previous fiscal year. The sectors that showed the largest increase in commitment value were accounting and auditing, financial sector diversification, insurance, and corporate governance. The increases in these sectors reflect the limited availability of grant funding from other donors and FIRST’s growing reputation for providing assistance in these areas. The sectoral breakdown of commitments in fiscal 2004 and fiscal 2005 is shown in the table on the following page. Number of Projects and Share of Total Value of Commitments (Cumulative to June 30, 2005) Payment Systems (3) 2.3% Corporate Governance (4) 2.6% Market Integrity (AML/CFT) Insolvency Regimes (1) and Financial Crime (13) 1.1% 4.5% Accounting and Auditing (8) 4.5% Capital Markets (30) 18.9% Financial System Reform, Policy, and Strategy (9) 5.2% Financial Sector Diversification (9) 7.4% Insurance (24) Pensions and Collective 15.6% Investment Schemes (10) 8.3% Financial Sector Legal, Regulatory, Banking Systems (26) and Supervisory Frameworks (28) 15.7% 13.9% 6 SECTORAL BREAKDOWN OF FIRST COMMITMENTS, FY 2004 AND FY 2005 (AS OF JUNE 30, 2005) FY 2004 FY 2005 Cumulative (including FY 2003) Share of Share of Share of Number Commitments Total Number Commitments Total Number Commitments Total of (in thousands Commitments of (in thousands Commitments of (in thousands Commitments Sector Projects of US dollars) (percent) Projects of US dollars) (percent) Projects of US dollars) (percent) Accounting 2 211 2.1 5 935 6.4 8 1,318 4.5 and Auditing Banking 10 1,693 17.1 15 2,772 19.0 26 4,552 15.7 Systems Capital 12 2,132 21.6 15 2,936 20.1 30 5,504 18.9 Markets Corporate 1 97 1.0 2 550 3.8 4 767 2.6 Governance Financial Sector 3 362 3.7 4 1,089 7.5 9 2,142 7.4 Diversification Financial Sector 11 1,971 19.9 12 1,366 9.4 28 4,040 13.9 Legal, Regulatory, and Supervisory Frameworks Financial System 4 364 3.7 3 594 4.1 9 1,500 5.2 Reform, Policy, and Strategy Insolvency 0 0 0.0 1 333 2.3 1 333 1.1 Regimes Insurance 7 1,125 11.4 11 2,090 14.3 24 4,539 15.6 Market Integrity 5 529 5.3 4 443 3.0 13 1,312 4.5 and Financial Crime Payment Systems 1 220 2.2 1 248 1.7 3 653 2.3 Pensions and 4 1,191 12.0 6 1,229 8.4 10 2,420 8.3 Collective Investment Schemes TOTAL 60 9,895 100.0 79 14,585 100.0 165 29,080 100.0 “FIRST Initiative has been the solution partner of the Capital Markets Board in a project to develop a market-based mortgage finance system in Turkey. FIRST’s involvement contributed greatly to the successful and prompt completion of the project, thanks both to the flexibility of FIRST in providing tailor-made solutions to various demands and to its timeliness in the disbursement of funds.” Bahadir Teker, Deputy Head, Stock Exchange Commission, 7 Turkey COMMITMENTS BY COUNTRY OR REGION As of June 30, 2005, FIRST had made commitments to fund 129 country-specific projects, 36 regional projects, and 3 global projects. Many regional projects were technical workshops, conferences, and "We very much appreciate the studies. The number of such projects almost doubled from fiscal 2004 to fiscal 2005 (from 9 to 16), but there was little change in the value technical assistance granted by of commitments. FIRST for the IFSB Corporate The main change over the two periods was in country-specific projects, Governance Project, which will where both the number and value of commitments increased — by significantly strengthen corpo- 14 and $4.9 million. The regions with the largest country-specific commitments were Sub-Saharan Africa and Latin America and the rate governance in the Islamic Caribbean. In Africa, the increase stems from FIRST’s efforts to raise awareness in the region and from follow-on work in key countries. financial services industry. In Latin America, the close working relationship with World Bank staff We admire the professionalism in support of country clients is the chief reason behind the increase, with Chile, Colombia, and Peru, in particular, benefiting from FIRST shown by the consultants at resources. The East Asia and Pacific region registered a decrease in FIRST, and we certainly look its share of FIRST commitments in fiscal 2005, because of a large number of projects in China in fiscal 2004. forward to working with them again on future projects." FIRST provided grant funding in excess of $1 million per country to eight countries: Chile, China, Colombia, Kenya, Mauritius, Moldova, Mongolia, and Peru. Together, they accounted for $10.6 million, or 42 Sadna Saifuddin, percent of total country commitments. FIRST monitors its commitments Assistant Project Manager, in individual countries carefully to manage its risk exposure; no individual Islamic Financial Services Board country can receive technical assistance in an amount greater than (IFSB), Malaysia $5 million. The table on the following page shows the geographic breakdown of FIRST’s project commitments for fiscal 2004 and 2005. The accompanying figure presents a cumulative breakdown by region. 8 GEOGRAPHIC BREAKDOWN OF FIRST COMMITMENTS, FY 2004 AND FY 2005 (AS OF JUNE 30, 2005) FY 2004 FY 2005 Cumulative (including FY 2003) Share of Share of Share of Number Commitments Total Number Commitments Total Number Commitments Total of (in thousands Commitments of (in thousands Commitments of (in thousands Commitments Region Projects of US dollars) (percent) Projects of US dollars) (percent) Projects of US dollars) (percent) East Asia and 7 2,021 20.4 5 1,443 9.9 15 4,196 14.4 Pacific (EAP) Europe and 11 1,577 15.9 14 3,425 23.5 33 6,280 21.6 Central Asia (ECA) Latin America and 7 1,574 16.0 18 4,221 28.9 30 6,378 21.9 Caribbean (LAC) Middle East and 6 809 8.2 4 796 5.5 11 1,830 6.3 North Africa (MENA) South Asia (SA) 10 1,110 11.2 3 296 2.0 15 1,829 6.3 Sub-Saharan 19 2,804 28.3 32 4,061 27.8 58 8,244 28.4 Africa (SSA) Worldwide 0 0 3 343 2.4 3 323 1.1 TOTAL 60 9,895 100.0 79 14,585 100.0 165 29,080 100.0 Number of Projects and Share of Total Value of Commitments (Cumulative to June 30, 2005) Global (3) South Asia (15) 1.2% 6.3% Sub-Saharan Africa (58) 28.3% Middle East and North Africa (11) 6.3% East Asia and Pacific (15) 14.4% Europe and Central Asia (33) 21.6% Latin America and Caribbean (30) 21.9% 39 different countries 17 with more than 1 project 21 regional projects 9 WORKING WITH DONORS AND PARTNERS FIRST promotes coordination, communication, and partnership among donors. Since its inception in April 2002, it has developed informal and formal frameworks for cooperation with the major “FIRST Initiative works very closely multilateral development banks and other key aid institutions. with recipient institutions, not just Although FIRST projects often complement assistance provided in the application process, but also by others, FIRST ensures that its activities do not substitute for or displace funds available from other donors. FIRST is able to during the execution of the proj- provide funding for relatively small projects that other donors’ ects. FIRST consultants’ attention programs may not be able to support. Moreover, FIRST can respond quickly to technical assistance needs, while coordinating project to recipients’ needs is first class design closely with other donors’ plans. FIRST projects can seed projects to be undertaken by other donors by establishing terms in terms of timeliness, quality, of reference for experts, or by funding workshops that crystallize and flexibility. technical assistance needs. The World Bank and IMF often provide policy advice in parallel to the technical assistance provided by FIRST consultants. FIRST also considers projects that are introduced FIRST Initiative consultants and by, or carry the endorsement of, experts working for other multi- lateral development banks and standard setters. the Central Bank work as a team to strengthen the financial system Due diligence has been essential to successful donor coordination. FIRST staff conduct due diligence for each project to avoid duplica- through projects recommended by tion and learn from experience. They share project details with the staff of official agencies, development banks, and donor organiza- the FSAP. Thanks FIRST!” tions. FIRST’s effectiveness is greatly enhanced by the feedback it receives from the experts, whose guidance has been beneficial Luz Maria de Portillo, for refining project designs and in uncovering redundancies. President, Central Bank, Due diligence and other forms of coordination have facilitated El Salvador information sharing among donors and built relationships that have helped generate new projects. Last year, 60 percent of FIRST projects were generated through referrals, many from the World Bank and the IMF . 10 WEB RESOURCES Information Exchange http://www.firstinitiative.org/InformationExchange/index.cfm The Information Exchange, an online portal designed for developing countries and donor agencies but accessible by anyone, disseminates information on assistance for financial sector development. With more than 1,800 projects in 144 countries involving 44 partner organizations, the Information Exchange is the world’s most comprehensive global database of financial sector development projects. Since June 30, 2004, more than 1,000 new projects have been added to the database. The database can be searched by country, region, sector, funding agency, and start/completion dates to answer questions such as the following: • What is FIRST doing in the insurance sector in Latin America? • What examples of financial sector assistance have been funded in Kenya? • What types of financial sector development work have been done in South Asia? • What forms of assistance has my country received so far? • What can my agency learn from the work of others? In the past year, FIRST visited donor agencies, such as the Asian Development Bank and Deutsche Gesellschaft für Technische Zusammenarbeit, to introduce the Information Exchange and expand the knowledge it contains. AskFIRST AskFIRST@firstinitiative.org To expand on the Information Exchange, FIRST has established AskFIRST, a help-desk service. AskFIRST fields inquiries on financial sector development and FIRST activities. Staffed by the Coordination Unit, it is used by donors and recipients of financial sector development assistance. CONSULTANTS FIRST’s technical assistance projects are carried out by qualified consulting firms and individual consultants engaged under standards and procedures modeled on those used by the World Bank. In 2002, FIRST carried out a worldwide procurement process to select a panel of firms and individu- als to provide technical assistance. In late 2004, a follow-up was done to refresh the membership of the panel and improve its ability to meet FIRST’s strategic objectives. With the exception of five firms that have in-house expertise in all areas of financial sector development, specialist firms and individuals make up the panel. The 2004 procurement cycle added panel members in the areas of housing finance and access to finance and expanded the scope and diversity of the consultants in several other areas. During fiscal 2005, FIRST awarded contracts valued at $10.7 million, compared with $6.6 million in fiscal 2004. 11 LOOKING AHEAD Building on the results of a recent mid-term review and guidance from its donors, FIRST has begun to restructure its operational processes. In parallel with the restructuring, FIRST is developing a road map to guide its work with low-income countries and to increase disbursements in targeted regions through partnerships and new initiatives. FIRST will make efficient use of its remaining resources by identifying priorities –– such as improving access of the poor to finance; following up on specific technical assistance needs emerging from joint Bank-Fund FSAP diagnostics; carrying out innovative and replicable projects dealing with housing, livestock and crop insurance, and nonbank financial institutions; and pursuing projects in support of regional harmonization. 12 PROJECT PROFILES ACCESS TO FINANCE IN PERU AND COLOMBIA FIRST is working to widen access to financial give institutional investors a new investment services by low-income groups and small and vehicle. medium enterprises (SMEs). An innovative SME project in Peru and a housing micro- FIRST has provided $630,000 in technical finance project in Colombia, described below, assistance and is working alongside the illustrate this theme. Both are expected to World Bank, CONASEV, and other regulators generate results that may be replicated to develop the regulatory framework, design elsewhere in the world. investment products, build information and management systems, and strengthen the Access to Capital Markets capacity of lenders and investment funds. by SMEs in Peru Microfinance for Housing in The World Bank, on behalf of Peru’s securities Colombia regulator, the Comisión Nacional de Empresas y Valores (CONASEV), asked FIRST to help To enable families to acquire modest but increase the amount of SME financing available sound accommodations equipped with through the capital market. The supply of essential utilities, FIRST is working with investment products has not kept pace with Colombia’s Ministry of Housing and the growing demand from Peru’s institutional United Nations Human Settlement Programme investors. Enabling SMEs to access the capital (UN-HABITAT) on a program that blends markets will have the double effect of meeting public subsidies with owner equity, while demand from institutional investors for adding a guarantee and funding support to investment opportunities and strengthening mitigate lenders’ risk. The project requires SMEs as engines of economic growth. careful coordination among the ministry, the Territorial Development Finance Company Most lending to SMEs is channeled through (the public agency involved in lender funding), small lenders such as cajas municipales and the guarantee agency of the Ministry of a few microfinance organizations. At the Finance, and lenders engaged in housing same time, SMEs hold substantial accounts microfinance. receivable from large enterprises in the private and public sectors. By developing a program Through a technical assistance grant of to securitize the loan portfolios of lenders, $385,000, FIRST and its partners expect to CONASEV and FIRST hope to free up liquidity streamline risk management, application for additional lending. And the new securiti- processes, regulatory frameworks, and zation funds based on SMEs’ receivables will guarantee structures. 13 IMPLEMENTING ZAMBIA’S FINANCIAL HELPING NATIONAL STANDARD SETTERS SECTOR DEVELOPMENT PLAN APPLY INTERNATIONAL NORMS FIRST is helping Zambia reform its financial sector through The internationalization of financial activities and markets a series of projects. Following an FSAP assessment carried is forcing the convergence of regulatory standards and out in 2002, Zambia’s authorities resolved to draft a plan practices and placing a premium on transparency, to address the weaknesses identified in the assessment. disclosure, and exchange of information among national Led by the Bank of Zambia, and with assistance from financial market regulators. Adherence to international FIRST, financial regulators and industry participants standards not only enhances the enforcement capacity completed the Financial Sector Development Plan in of regulators, but also encourages the inflow of foreign November 2003. capital and the development of the domestic financial sector. Several FIRST projects, with a total value of more than $300,000, have been undertaken to help implement the Compliance with International plan. They include: (i) advice on policies for establishing Securities Standards in Costa Rica and licensing a credit bureau; (ii) an assessment of the standards of private pension and insurance schemes and In 2002, the International Organization of Securities an evaluation of the policy and regulatory options; (iii) a Commissions (IOSCO) endorsed a multilateral memoran- capital market development project; and (iv) capacity dum of understanding on consultation, cooperation, building in the banking industry. and exchange of information among member regulators. The memorandum helps members combat cross-border fraud and other securities violations and encourages them to raise their national standards for securities market regulation. Before signing the memorandum, regulators must demonstrate that they have the legal and regulatory capacity to fulfill its terms and conditions. Under a $97,000 project approved in November 2004, FIRST is helping Costa Rica’s securities supervisor, the Superintendencia General de Valores, to assess the legal, regulatory, and other barriers to its adherence to the memorandum. Key outputs of the project will be a set of recommendations to enable compliance by Costa Rica, as well as a model assessment methodology for use in other IOSCO member countries. 14 REGULATION OF NONBANK FINANCIAL INSTITUTIONS IN SOUTHERN AFRICA FIRST has been working with the Committee for Insurance, Securities, and Nonbanking Financial Authorities of the Southern Africa Development Community to strengthen member regulators by implementing a strategy of replicability. “The technical assistance extended In Botswana, Malawi, Namibia, and Swaziland, NBFIs by FIRST to the National Bank of play a significant role in insurance, provident funds, building Moldova has been thoroughly societies, and savings and credit cooperatives. The state of development of the regulatory and supervisory frame- conceived from the very beginning, works for NBFIs in the region varies from country to ensuring highly efficient and effective country, but supervisory capacity needs considerable strengthening everywhere. cooperation based on fair partner- ship relations. The cooperation, In all four countries the strategies developed with FIRST’s support have included detailed business and implementa- consideration, and understanding tion plans and detailed recommendations on legislative and of actual needs displayed by FIRST regulatory changes. FIRST is now developing a coordinated staff and consultants resulted in technical assistance and training strategy to build on these projects and related initiatives. the achievement of our objectives for the development of domestic money market instruments.” Nina Savin, Director of the Market Operations Department, National Bank of Moldova 15 ANNEX 1. PROJECT COMMITMENTS BY REGION AND COUNTRY (AS OF JUNE 30, 2005) Country Commitments Projects Project Title Sector (in US dollars) SUB-SAHARAN AFRICA Angola Project Formulation for Proposed Financial Sector Legal, Regulatory, 15,000 NBFI Sector Technical Assistance and Supervisory Frameworks Botswana Nonbank Financial Institutions: Financial Sector Legal, Regulatory, 175,000 Supervision and Strategy and Supervisory Frameworks Scoping Mission for Supervision Financial Sector Legal, Regulatory, 20,000 of Nonbank Financial Institutions and Supervisory Frameworks Cameroon Capacity Building of the Financial Capital Markets 175,000 Markets Commission Gambia, The Implementation and Development Capital Markets 73,000 of Central Bank Book Entry System Ghana Rural Banking Restructuring Banking Systems 87,000 Kenya Strategy for Development Finance and Banking Systems 250,000 Increasing Access to Financial Services Reform of the Legal and Institutional Insolvency Regimes 333,000 Framework for Asset Financing Development of Audit Quality Accounting and Auditing 99,000 Review Program Central Bank of Kenya: Banking Systems 470,000 Strengthening Business Processes Development of Mortality Insurance 178,000 and Morbidity Tables Lesotho Insurance Sector Strengthening Insurance 212,400 Malawi NBFI Capacity Building Strategy Financial Sector Legal, Regulatory, 112,000 and Supervisory Frameworks Mauritania Strengthening Microfinance Supervision Financial Sector Diversification* 30,000 Mauritius Preparation of a Code Corporate Governance 120,000 of Corporate Governance Implementing Effective Market Integrity and Financial Crime 121,000 AML/CFT Measures (Anti-Money Laundering) Strengthening Securities Capital Markets 197,000 and Listing Regulations Establishing Second-Tier Securities Capital Markets 170,000 Market and Restructuring the Over-the-Counter Market Establishing a Financial Accounting and Auditing 300,000 Reporting Council Assistance with Drafting Capital Markets 65,000 Securities Legislation Development of Selected Financial Sector Legal, Regulatory, 360,000 Nonbank Financial Regulations and Supervisory Frameworks Namibia NAMFISA: Development of Financial Sector Legal, Regulatory, 120,000 Capacity Building Strategy and Supervisory Frameworks Viability of Second-Tier Banking Banking Systems 100,000 16 Country Commitments Projects Project Title Sector (in US dollars) SUB-SAHARAN AFRICA Rwanda Linking Payment Systems Payment Systems 248,000 for Banks and Service Providers Developing a Microfinance Financial Sector Diversification 245,000 Credit Information Bureau Sierra Leone Advice on Developing Markets and Capital Markets 75,000 Institutions for Long-Term Capital Implementation of Central Capital Markets 69,000 Bank Book Entry System Supervision of NBFIs: Assessment Financial Sector Legal, Regulatory, 272,000 and Capacity Building and Supervisory Frameworks Implementation of Capital Capital Markets 345,000 Market Development Plan South Africa Accounting and Auditing Legislation Accounting and Auditing 145,000 Review of the Proposed Strategy for Financial Sector Legal, Regulatory, 21,000 Integration of Financial Regulations and Supervisory Frameworks Swaziland Supervision of NBFI: an Initial Financial Sector Legal, Regulatory, 127,168 Assessment and Proposed Strategy and Supervisory Frameworks Improving Access to the Financial System Reform, Policy, 160,000 Financial Sector and Strategy Implementation of Central Accounting and Auditing 66,000 Bank Book Entry System Review Draft Bill for the Financial Sector Legal, Regulatory, 7,500 Establishment of the FSRA and Supervisory Frameworks Tanzania Development of an FSAP Financial System Reform, Policy, 28,000 Follow-up Strategy Plan and Strategy Uganda Support for the Implementation Financial Sector Legal, Regulatory, 124,500 of Collective Investment and Supervisory Frameworks Schemes Legislation Advice on Establishing a Financial Sector Legal, Regulatory, 90,000 Consolidated Supervisor for NBFIs and Supervisory Frameworks Zambia Advice on Proposed Financial Financial System Reform, Policy, 34,150 Sector Development Plan and Strategy Pensions and Insurance Pensions and Collective Investment 128,000 Supervisory Strengthening Schemes Regulatory Implications Banking Systems 60,000 of a Credit Rating Agency Institute of Bankers: Training Banking Systems 49,000 and Education Strategy Development of Capacity Capital Markets 90,000 Building Action Plan 17 Country Commitments Projects Project Title Sector (in US dollars) SUB-SAHARAN AFRICA Regional West African Monetary Institute Financial Sector Legal, Regulatory, 123,747 (WAMI): Banking Supervision Study and Supervisory Frameworks Eastern and Southern Africa: Financial Sector Legal, Regulatory, 192,000 Regional Bank Supervisors and Supervisory Frameworks Leadership Program (Toronto Centre) CEMAC Region: Development Financial Sector Diversification 520,000 of Long-Term Finance (Debt Market) SADC Development Finance Banking Systems 80,000 Resource Centre : Needs Analysis and Skills Audit of DFIs Training Evaluators in AML/CFT Market Integrity and Financial 118,000 Assessment Crime (Anti-Money Laundering) Strengthening Payment Systems Payment Systems 220,000 in Botswana, Swaziland, and Sierra Leone ESAAMLG: AML/CFT Strategy Market Integrity and Financial 154,400 Development for Member Countries Crime (Anti-Money Laundering) WAMI: Externally Assisted Self- Financial Sector Legal, Regulatory, 155,000 Assessment of Basel Core Principles and Supervisory Frameworks Prudential Standards for Development Banking Systems 105,000 Finance Institutions in Africa Capacity Building for East African Pensions and Collective 8,000 CIS Regulators Investment Schemes Regional Training Seminar for Insurance Insurance 86,000 Supervision Regional Workshop on Tiered Banking Systems 13,000 Banking Regulations Strengthening AML/CFT Regimes Financial Market Integrity 93,000 in Portuguese-Speaking Countries Capacity Building in Banking Supervision Banking Systems 70,000 African Trade Insurance Agency: Financial Sector Diversification 139,000 Technical Assistance on Proposed Development of Credit Risk Insurance Services Regional Total 8,243,865 EAST ASIA AND PACIFIC China Regulation and Supervision of Pensions and Collective 625,000 Corporate Pensions Investment Schemes Strengthening Regulation and Financial Sector Legal, Regulatory, 375,000 Supervision of Securities Firms and Supervisory Frameworks Amendments to Securities Law Capital Markets 367,000 Regulation of the Distribution of Pensions and Collective 269,000 Securities Investment Funds Investment Schemes 18 Country Commitments Projects Project Title Sector (in US dollars) EAST ASIA AND PACIFIC Indonesia Secondary Markets Capacity Capital Markets 123,300 Building Strategic Advice on Pension Pensions and Collective 170,000 Reform Investment Schemes Lao People’s Development of a Rural and Financial System Reform, 167,200 Democratic Microfinance Strategy and Legal Policy, and Strategy Republic and Regulatory Framework Financial System Reform 130,000 Survey of Rural and MicroFinance Policy and Strategy Mongolia Technical Assistance for Developing Insurance 419,700 Insurance Supervisory Framework and Legal Framework for Livestock Insurance Technical Assistance for Developing Insurance 592,000 Index-Based Livestock Insurance Philippines Development and Implementation of Insurance 145,000 a Non-Life Insurance Supervisory Information System Building Training Capacity in Banking Banking Systems 411,000 Supervisions Thailand Assisted Self-Assessment of Selected Financial Sector Legal, Regulatory, 150,000 Financial Sector Core Principles and Supervisory Frameworks Regional Training Evaluators in AML/CFT Market Integrity and Financial 132,000 Assessment Crime (Anti-Money Laundering) Workshop on Self-Assessment of Insurance 120,000 Selected IAIS Insurance Core Principles Regional Total 4,196,200 EUROPE AND CENTRAL ASIA Armenia Insurance Supervisory Restructuring Insurance 76,896 and Strengthening Insurance Regulation Drafting and Insurance 212,000 Capacity Building Azerbaijan Capacity Building for Establishing Capital Markets 490,000 Nonbank Corporate Bonds Market Bulgaria Strengthening of Supervisory Capacity Financial Sector Legal, Regulatory, 280,000 of the Financial Services Commission and Supervisory Frameworks Feasibility Study for a Financial Banking Systems 41,000 Derivatives Market Georgia Debt Securities Market Strategy Capital Markets 59,500 Insurance Supervisory Strengthening Financial Sector Legal, Regulatory, 193,852 and Supervisory Frameworks 19 Country Commitments Projects Project Title Sector (in US dollars) EUROPE AND CENTRAL ASIA Kazakhstan Insurance Sector Strategic Advice and Insurance 165,000 Regulatory Assistance Kosovo Kosovo Strengthening Insurance Insurance 175,000 Supervision Strengthening Third-Party Liability Motor Insurance 45,000 Insurance System: Phase 1 Kyrgyzstan Assistance on the Privatization of Financial System Reform, Policy, 375,000 Kairat Bank and Strategy Drafting Deposit Insurance Legislation Banking Systems 39,000 Capacity Building at the Savings and Banking Systems 357,000 Settlement Company (SSC Bank) Medium-Term Strategy for Microfinance Financial System Reform, Policy, 166,000 Development and Strategy Lithuania Insurance Supervision Strengthening Insurance 200,000 Accounting and Audit Reform Accounting and Auditing 172,000 Effective Application of Audit Standards Accounting and Auditing 99,000 Macedonia Reform of Compulsory Motor Vehicle Insurance 323,000 Insurance System Moldova Development of Money Market Financial Sector Legal, Regulatory, 86,000 Instruments and Supervisory Frameworks Strengthening Insurance Supervision Insurance 249,000 Strengthening the Accounting, Auditing, Accounting and Auditing 218,000 and Financial Reporting Framework Corporate Governance Reform Corporate Governance 375,000 Development of Money Market Banking Systems 246,000 Instruments: Implementation Poland Access to Long-Term Finance for Rural Capital Markets 254,300 Communes Romania Strengthening the AML Regulations for Market Integrity and Financial 61,000 the Securities Market Crime (Anti-Money Laundering) Russian Federation Building Capacity of a Self Regulatory Pensions and Collective 400,000 Organization to Support the Federal Investment Schemes Regulator of Pension Funds Slovak Republic Strengthening Corporate Governance of Corporate Governance 97,000 Listed Companies Technical Assistance to the Financial Capital Markets 98,500 Market Authority Strengthening Bank Corporate Governance Banking Systems 66,000 20 Country Commitments Projects Project Title Sector (in US dollars) EUROPE AND CENTRAL ASIA Turkey Secondary Mortgage Market Development Financial System Reform, Policy, 400,000 and Strategy Ukraine Assistance to Nonbank Financial Institution Financial Sector Legal, Regulatory, 137,000 Regulator and Supervisory Frameworks Regional AML/CFT workshop Market Integrity and Financial 100,067 Crime (Anti-Money Laundering) CIS-7 : Seminar on Financial Sector Issues Financial Sector Legal, Regulatory, 22,674 and Supervisory Frameworks Regional Total 6,279,789 LATIN AMERICA AND CARIBBEAN Belize Central Bank of Belize: Organizational Banking Systems 201,000 Review Chile Roadmap for Strengthening Solvency Insurance 186,000 Control in the Insurance Industry Strengthening Regulation of Pension Funds Pensions and Collective Investment 280,000 Schemes Implementing Risk-Based Supervision in Capital Markets 530,000 the Securities Industry Adoption of International Financial Accounting and Auditing 219,000 Reporting Standards for Listed Companies Colombia Developing the Supervisory and Regulatory Financial Sector Legal, Regulatory, 230,000 Framework for Collective Investment and Supervisory Frameworks Schemes Mortgage Finance Capacity Building Financial Sector Diversification 171,000 Terrorism Loss Insurance Fund Insurance 245,200 Money Market Development Capital Markets 340,000 Development of Housing Microfinance Financial Sector Diversification 390,000 Enhancement of the Capital Market Financial Sector Legal, Regulatory, 165,000 Self-Regulatory System and Supervisory Frameworks Costa Rica Advice on Achieving Compliance Capital Markets 97,000 with IOSCO MMoU Dominican Feasibility Study for Role of the Stock Capital Markets 23,000 Republic Market in Broadening the Capital Market El Salvador Strengthening Public Financial Institutions Banking Systems 147,000 Strengthening Framework for Consolidated Financial Sector Legal, Regulatory, 175,000 Supervision of Financial Conglomerates and Supervisory Frameworks IOSCO Self-Assessment Capital Markets 54,000 21 Country Commitments Projects Project Title Sector (in US dollars) LATIN AMERICA AND CARIBBEAN Peru Improving Risk-Based Management in the Pensions and Collective Investment 243,000 CIS Industry Schemes Improving SME Access to the Capital Capital Markets 630,000 Markets Housing Finance Development Financial Sector Diversification 530,000 Regional Eastern Caribbean Securities Exchange: Capital Markets 108,000 Technical Assistance to Select and Recruit Custodian to Support Cross-Listings Eastern Caribbean Central Bank (ECCB): Payment Systems 185,000 Improving Payment Systems Strengthening the Regulatory and Financial Sector Diversification 87,000 Supervisory Environment for OECS Credit Unions AML/CFT Evaluator Training Workshop Market Integrity and Financial Crime 64,000 for Spanish-Speaking Countries (Anti-Money Laundering) AML/CFT Workshop for Caribbean Market Integrity and Financial Crime 96,500 Regulators of Company and Trust (Anti-Money Laundering) Services Providers Eastern Caribbean Securities Exchange: Capital Markets 74,000 Development of a Unified Rulebook Strengthening Financial Security Integrity Market Integrity and Financial Crime 85,000 (AML/CFT Workshop) (Anti-Money Laundering) Strengthening Credit Reporting Systems Banking Systems 487,000 GAFISUD: AML/CFT Assessment Market Integrity and Financial Crime 180,000 Evaluators Training (Anti-Money Laundering) Regional Insurance Supervisors Leadership Insurance 121,000 Program GAFISUD: AML/CFT Workshop Market Integrity and Financial Crime 34,265 (Anti-Money Laundering) Regional Total 6,377,965 MIDDLE EAST AND NORTH AFRICA Egypt, Arab Rep. of Strengthening Egypt's Credit Reporting Banking Systems 179,000 System Project Formulation for Proposed Banking Banking Systems 20,400 Sector Technical Assistance (Project Refinement and Term-of-Reference Development) Strengthening Management and Banking Systems 334,000 Supervision of Payment Systems Credit-Reporting System Strengthening Banking Systems 168,000 22 Country Commitments Projects Project Title Sector (in US dollars) MIDDLE EAST AND NORTH AFRICA Egypt, cont. Strengthening Data Analysis, Supervision Banking Systems 120,000 of Market Risks, Connected Lending, and Large Exposures Jordan Actuarial Supervision Capacity Building at Financial Sector Legal, Regulatory, 225,100 the Insurance Commission and Supervisory Frameworks Development of a Supervisory Ladder and Insurance 125,000 Supervisory Strengthening Lebanon Review and Drafting of a New Insurance Insurance 108,000 Law Capital Markets Supervisory and Capital Markets 211,000 Regulatory Authority Strengthening Morocco Technical Assistance Support for Pension Pensions and Collective Investment 170,000 Reform Schemes Regional Regional Training Seminar for Insurance Insurance 169,000 Supervision Regional Total 1,829,500 SOUTH ASIA Bangladesh Insurance Law Reform Insurance 59,000 Reducing Interest Rate Spreads Financial System Reform, Policy, 40,000 and Strategy Capacity Building for Capital Market Capital Markets 27,000 Intermediaries India Insurance Tariff Advisory Committee (TAC): Insurance 270,000 Capacity Building for Transition from Uniform Tariff System to Risk-Based Approach Pakistan Bank Supervision Risk Assessment Model Banking Systems 212,000 Development of Banking Sector Uniform Banking Systems 240,000 Chart of Accounts Project Design for Assistance to the State Financial Sector Legal, Regulatory, 9,200 Bank of Pakistan and Supervisory Frameworks Sri Lanka Training for the Forex Industry Financial Sector Diversification 29,898 Regulating Securities Market Capital Markets 90,000 Intermediaries Strengthening Actuarial Supervision Insurance 57,000 Capacity Securities and Exchange Commission of Capital Markets 246,000 Sri Lanka: Supervision Capacity Strengthening Assistance in Drafting Securitization Act Capital Markets 180,000 23 Country Commitments Projects Project Title Sector (in US dollars) SOUTH ASIA Sri Lanka, cont. Strengthening the Regulatory Framework Pensions and Collective Investment 127,000 for Private Pension Funds Schemes Regional South Asian Federation of Exchanges Capital Markets 153,300 (SAFE): Strengthening Stock Exchange Listing Regulations in Member Countries Developing Model Listings Regulations Capital Markets 89,000 Regional Total 1,829,398 GLOBAL Islamic Financial Services Board: Corporate Governance 175,000 Strengthening Corporate Governance Standards in Islamic Financial Services Institutions Development of Guidelines to Market Integrity and Financial Crime 73,000 Assist Developing Countries in (Anti-Money Laundering) the Implementation of FATF Recommendations Workshop for International and Offshore Financial Sector Legal, Regulatory, 75,000 Financial Centre Supervisors and Supervisory Frameworks Global Total 323,000 GRAND TOTAL 29,079,717 * Financial sector diversification is a broad sector category that includes microfinance, housing finance, and access to financial services 24 DONORS Canadian International Development Agency www.acdi-cida.gc.ca Department for International Development of the United Kingdom www.dfid.gov.uk International Monetary Fund www.imf.org Ministry of Foreign Affairs of The Netherlands www.minbuza.nl State Secretariat for Economic Affairs of Switzerland www.seco.admin.ch Swedish International Development Cooperation Agency www.sida.org The World Bank www.worldbank.org Management Unit London Coordination Unit Washington, D.C. Subhrendu Chatterji Sofia Martinez Dafna Tapiero Managing Director Project Officer Head Robert Woodbridge Veda Poon Richard Hoffman Director Project Officer Senior Project Officer Robert Smith Nikki Cochrane Julie Knowles Technical Officer Programme Manager Chief Administrative Officer Cristina Bortes Lucie Hennelly Dilek Goncalves Assistant Director Project Administrator Senior Project Analyst Kerry Hamilton Xijia (Lily) Li Project Officer Secretariat Program Assistant Robert Stone Secretary to the Governing Council printed on recycled paper with soy inks FINANCIAL SECTOR REFORM AND STRENGTHENING INITIATIVE www.firstinitiative.org FIRST INITIATIVE MANAGEMENT UNIT No. 8 Dorset Square London NW1 6PU United Kingdom Tel: +44 (0)20 7563 6400 Fax: +44 (0)20 7724 6049 FIRST INITIATIVE COORDINATION UNIT 1818 H Street, N.W. MS MC7-719 Washington, D.C. 20433 United States Telephone: 1 (202) 473 2765 Fax: 1 (202) 522 0277