59501 Dear Colleague: Today there is wider consensus than ever before about the centrality of the private sector's role in development. Nearly everywhere I go, I hear it described as the 'key engine of growth'-an essential force in reducing poverty and improving people's lives. These stories show the difference IFC makes through its unique, private sector-based contributions to development-in a word, IFC's "additionality. " IFC is in the business of creating opportunity and improving lives. Much of this centers around creating jobs, but there are other aspects as well: improving the investment climate, increasing access to finance, upgrading infrastructure through efficient public-private partnerships, incorporating sustainability principles in business and finance, and much more. We use a broad range of financial products and advisoty services to do so, some of which you will read about here. We hope you enjoy these stories, and would look forward to hearing from you in the future. Lars H. Thunell Exceutive Vice President and CEO Developing local Financial Markets Building the well-fonctioning financial markets that are essential to successful and sustainable economic growth: · Access to Finance for Small Businesses: Working through Local Financial Institutions · Banca Comerciala Romana: Bank Privatization in Romania · Colombia's Financial Sector: IFC's Ongoing Impact · Global Trade Finance Program: Moving the Frontiers · Housing Finance: Access to Affordable Housing · IFC and Microfinance: Banking on the Smallest Businesses · Local Currency Financing: Meeting Client Demand · Madagascar: Increasing Access to Finance · Russia and Central Asia: Building a Mortgage Market · Women-Owned Business in Mrica: Increasing Access to Finance Frontier Markets Projects in countries or regions with low per capita income, severe economic challenges, or political instability: · Agribusiness: A Powerful Force for Development · Alternative Dispute Resolution: Effective Tool for SMEs · Attracting New Investors: IFC's Role · Business Edge: IFC's Management Training Brand · Conflict-Affected Countries: A Growing Role for IFC · Online Solutions in Belarus: Overcoming Obstacles · Red Tape Reduction: SimplifYing Business Registration · Rural Poverty Reduction: Private Secror Solutions in India · Worldhotel-Link.com: New Markets for Small-Scale Tourism long-Term Partnerships with Emerging Players Results ofongoing provision ofinnovative financial and value-added services to clients: · Long-Lasting Client Relationships: A Key to Increased Development Impact · South-South Investment: A Rising Force in Development · Agrokasa: Success in Sustainable Agriculture · Apollo Tyres: Fighting HIV/AIDS in India · CelTel International: IFC Client Leadership Award Winner · Odebrecht: Corporate Social Responsbility in Brazil · Sandora: Supply Chain Development in Ukraine · · · · Private Infrastructure, Health, and Education The difference that private sector involvement can make in infrastructure, health, and education: · · · Financing Private Education: A New Model from Africa · Investing in Telecom: Frontier Market Focus · · · Public Private Partnerships: Effective New Models · SocketWorks: Online Solutions for African Universities · · · The Power Sector: A Foundation of Development · Water and Sanitation: Expanding the Private Sector's Role · · Sustainability · · fFC initiatives with large environmental, social and governance impacts: · Brazil's Sustainable Stock Index: Ambitious Goals, Rapid Results · · · The Equator Principles: Environmental and Social Leadership · Carbon Finance: Reducing Greenhouse Gas Emissions · · · Clean Energy: An Increasing Commitment · Sustainable Banking Awards: Honoring Industry Leaders · · · Sustainable Banking in China: Industrial Bank · Sustainable Energy Finance: Renewable Energy and Energy Efficiency · · · Linkages Program: Connecting Small Businesses to IFC Clients · Magadi Soda: Community-Level Impact in Kenya · · · · · · · · · · · · · · · · · · Developing Local Financial Markets Building the well-functioning financial markets that are essential to successful and sustainable economic growth Limited access to finance is one of the biggest obstacles to private sedor growth, especially for the micro, small, and medium enterprises that are so critical to job creation. IFe is applying one of its core strengths-developing financial markets through a combination of investments and technical assistance-to help local financial institutions get better at lending to these smaller businesses. IFe's investments in local financial institutions that lend to these firms have more than tripled in the past five years, currently standing at $1.6 billion a year. The Approach · Financing small businesses through financial intermediaries, including investment funds and locally active financial institutions such as commercial banks, micro finance institutions, leasing companies, and nonbank financial institutions · Working with financial institutions to overcome regulatory, institutional, and market barriers that hinder a mutually beneficial relationship between providers and users of small business finance · Helping local financial institutions address common constraints to lending, including: · Limited ability to assess risk, including asset-based rather than cash flow-based credit analysis · Lack of information on potential borrowers · Expensive, time-consuming loan decision-making processes, short pay-back periods, and excessive collateral requirements Job Creation: One result ofincreased lending by local banks. Track Record · IFC's portfolio of investments in financial institutions with significant commitments to micro, small, and medium enterprises was $2.2 billion as of June 30, 2006. · These clients' loans to local micro, small, and medium enteprises grew by 40 percent between fiscal 2004 and 2005. · In 2005 these clients disbursed an estimated 7.6 million loans to smaller firms totaling $52 billion. · The clients' average loan size and tenor was $1,071 and six months for a microenterprise, $27,171 and 12 months for a small enterprise, and $335,523 and 16 months for a medium enterprise. Development Impact · IFC and donor-partner sponsorship of technical assistance in financial markets has supported vital access to finance by small businesses in more than 60 countries-mostly in high-riskllow-income economies, particu- larly in Attica and the Middle East. · IFC investment enabled client financial institutions to achieve an estimated total portfulio of 3.9 million new small business loans, totaling $48.4 billion, as of December 31, 2005-1.4 million of which, totaling $8.3 billion, were in frontier countries. Two Countries, Two Approaches · · IFe has several ways to help local financial institutions increase their lending to smaller businesses. The approach can vary · · dramatically, but always has the same goal-fueling local entrepreneurship and job creation by helping partner institutions build profitable, long-lasting lines of business in this area. · · · · Bangladesh: Building a Bank Bangladesh's BRAC is one of the world's most-respected non- · · governmental organizations, known for a holistic approach to poverty alleviation and empowerment that reaches more than 100 million people. IFC is BRAGs partner in BRAe Bank, · · Bangladesh's fastest-growing commercial bank and one pri- marily focused on small business finance. · · In the past three years BRAC Bank has built a $135 million small and medium enterprise loan portfOlio. With 350 branches and offices nationwide, it now serves more than · · 56,000 SME dients-offering loans larger than those offered by local microcredit providers, but smaller than those of most · · Bangladesh: $135 million in new 5ME knding. large local banks that target the business elite. BRAC Bank has also met the challenge of maintaining good credit quality while growing its portfolio rapidly. · · IFC was a founding shareholder alongside Shorecap Intemational of the US and others at the bank's creation in 2001 and has provided extensive technical assistance since. In November 2006, IFC and BRAC Bank also part- · · nered on a new institution in Afghanistan based on this same model: BRAC Afghanistan Bank. · · · · · · · · · · · · · · · · For further information visit wwwifcorg, Last updated January 2007 · · IFC's help in the $4.4 billion privatization of the Romanian bank BCR in 2005 shows just how important improving corporate governance and social and environmental risk management capacity can be in building the value of local financial institutions. IFe's technical assistance in these areas proved critical in the turnaround of Romania's leading bank. BCR: A Winning Strategy · In 2002, state-controlled BCR was Romania's largest bank, holding a third of the country's total banking assets. · After two earlier attempts, in January 2003 the government vowed to privatize BCR fully by the end of 2006 and began focusing on ways to improve the bank's operational efficiency and corporate governance. · The bank's major stakeholders, including IFC, drafted a revised charter that established new board committees for audit, compliance, and compensation; separated the roles of CEO and chairman; introduced a two-tiered board structure; and allowed nomination of independent board members. · IFC's technical assistance helped strengthen these governance functions and improve BCR's risk management framework. · The benefits of this approach became evident in December 2005, when Erste Bank of Austria paid $4.4 billion to acquire BCR: Central and Eastern Europe's biggest 61.88 percent of the bank's shares-the largest banking bank privatization privatization to date in Central and Eastern Europe. Partnership with IFC Donor Partners · With EBRD, IFC helped formulate an improved corporate governance framework and institution- · Italy · Netherlands building plan for BCR · Norway · 2002: a $75 million seven-year loan · Switzerland · 2004: a $111 million equity investment for 12.5 percent, plus one share in BCR (pari passu with EBRD) · Training support to BCR's environment, health, and safety unit · 2005: a 75 million loan Development Impact · The successful preprivatization program positioned Romania's largest commercial bank as an efficient, competitive private sector financial institution. · Major corporate governance and environmental, social, and health and safety improvements position BCR as a leader and agent of change as Romania prepares to join the European Union. ., · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · BCR· Financing entrepreneurship in Romania · · For further information, visit wwwifcorg. Last updated October 2006 · · · Colombia's economy has recovered dramatically since 200 1. The share of its population living in extreme poverty has dropped from 20 percent to 3 percent in that time, a period of sustained increases in GDP growth and foreign direct investment. Along the way IFC has worked steadily to build the country's financial sector-helping it reach not just the rich, but the middle class and poor as well. By investing more than $95 million in specialized institutions that provide housing and micro/small business finance, IFC is helping a much broader section of the country's population obtain the financial services needed to raise incomes and improve living standards. Background · From 1999 until 2002, Colombia experienced a sharp economic downturn, which was also reflected in the performance of the financial sector. Skyrocketing short- term interest rates caused widespread defaults, eroding the capital of many local banks. The lost access to cred- it caused a severe business slowdown, keeping unem- ployment near 20 percent. · Macroeconomic stability eventually returned, but the financial sector's reach into society remained quite thin, targeting mainly large companies and the small upper- class population. · IFC vowed to help broaden and deepen the financial sector, investing in key local institutions that on their own had little access to new capital. Extending the Reach: fPC investments increase the financial Track Record sector's impact in Colombia. · Housing Finance: Shortly after the crisis, IFC helped launch the country's first secondary mortgage compa- ny, Titularizadora Colombiana, with a $5.2 million equity investment and additional local currency credit enhancements. This new institution's behind-the-scenes work helps many more Colombians purchase their own homes at a time when real housing finance interest rates have dropped from 14 percent to 8 percent. · Micro/Small Business Finance: To widen access to retail banking, IFC also targeted two key institutions: the Women's World Banking-Colombia network that mainly serves low-income underserved micro and small enterprises, and the much larger Banco BCSC, which lends to 2.3 million borrowers and is focused in low-income individuals, small and medium enterprises, microenterprises, and mortgage lending. IFC's $15 million investment is helping two Women's World Banking units reach more women that live at or near the poverty level. IFC has also invested $13 million in Banco BCSC and lent $50 million to its nonprofit par- ent, Fundacion Social, long one of Colombias corporate social responsibility leaders. Dev~l()pRlent Impact III.~creasing private home ownership in a rebounding economy 'H~lping more low-income entrepreneurs gain access to finance-a critical factor in job c;:r~tiQ~ at.the .. "bottom of the pyramid" . . Colombia: Client Profiles · · Housing Finance: Building a Securitization Market · · Well aware of Fannie Mae's record of increasing mortgage availability and private home ownership in the United States, · · five leading local private business groups sought IFC's help to create a similar entity in Colombia. The resulting institution, Titularizadora Colombiana, opened for business in 2002 · · with IFC as a founding shareholder. The mission: introduc- ing the mortgage-backed securities that had done so much to increase the availability of housing finance in other countries. · · Since then Titularizadora has securitized $2.3 blllion in mortgages, thanks in part to IFC partial guarantees that gen- · · many more middle-cklss Colombian families can now erate a prized local currency AAA rating. By freeing up more Trading Up: With the housingfinance market improving, of the originating banks' resources for new mortgages. the company helps make private homes more affurdable, con- · · buy better homes, like these in Bogord. tributing to a 22 percent increase in the number of homes financed through mortgages. Today middle-class families can get IS-year fixed real interest rate mortgages for about 8 percent-something unimaginable in Colombia five yeatS ago. Named "Best Non-Banking Financial · · Entity in Latin America" by Latin Finance magazine, Titularizadora is now the biggest issuer in Colombia's bond market and teaming with IFC to create a sister institution in Peru as well. · · · · · · · · · · · · · · · · · · · · · · ~ For further information, visit www.ifc.org, __________,,__ ___________________________________________________ ~ Last updated March 2007 · · '_U_U_'_H_t4----------------~I~~r~ Increasing cross-border trade is a vital to private sector development, a key driver that helps local companies build markets, create jobs, and raise incomes. IFe's Global Trade Finance Program facilitates trade by providing guarantees to support both import and pre-export finance that cover payment risks in trade transactions with local banks in emerging markets. Key Features · Revolving $1 billion program that supports imports and exports in the emerging markets · Dedicated team of trade professionals · Simple master agreements executed by participating banks · Links participating banks into a global network of trade partnerships · 24-48 hour turnaround for guarantee issuance · Technical assistance and training fOr issuing banks Our Guarantees · Provided for amounts up to 100 percent of transac- tion value · Cover both country and commercial risk Smaller Businesses: Key beneficiary of[Fe's · Issued for tenors that can extend out to three years trade finance program · Apply to a variety of underlying instruments, including letters of credit, bills of exchange, guarantees, promissory notes and bid and performance bonds Track Record · More than 1000 guarantees issued, for $1.3 billion in 2 years since the September 2005 launch. · Transactions guaranteed have averaged $900,000; median amount, $300,000; range, $7,000 to $15 million; average tenor, 6.5 months · 200 banks are participating in the program's network of issuing and confirming banks · IFC highly commended as "Best Development Bank in Trade" by Euromoney magazine in June 2007 Development Impact · 55.percent of guarantees issued for banks in Sub~Saharan Africa ·· 10trade training courses in Africa and 2 in Latin American offered since June 2006 · 3:3 percent of guarantees support trade between emerging market countries · 75 percent of guarantees cover less than $1 million, thus serving small business importers · Program has facilitated exports from 73 countries · ProgCarn expected to cover issuing banks in 60 countries in 2008 Our Deals · · As. more banks participate, the program will allow IFC to support international trade between more and more devel- oping countries, and for an even greater variety of manufactured goods and commodities. · · Examples of trades the program has supported to date: · · · <;ol1lPLIter and Electronic Products from Thailand to Cambodia .'tciter of credit issued' by a Cambodian bank md confirmed by a~man bank ·.let~ of paymeJlt: at sight liValtte: $118,911 · · lj'IFCcc>ve.rs 100 percent · · Steel Casing from the Czech Republic to Lebanon · Letter of credit issued by a Lebanese bank and confirmed by a Czech bank · Terms of payment: 730 days from shipment · · · Value: $428,298 · IFC covers 85 percent · · pre-f!~p~~ Fin~mcing to an ArgentinE! pallkforExP9rtof an .:fi~~SS9ry note isslledby Argentine~ank way.S. bank Milk to Senegal · · ....~ Ter,ms&f repayment: 5 mombs · ,Vahle: $1 ;057,000 .. .. · · .'1F(: covers 100 perce.Q.t · · Country Coverage Existing and Expected in 2007 - 2008 Sub-Saharan Africa: Angola, Benin, Burkino Faso, Burundi, · · Cape Verde, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea Bissau, · · Kenya, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, Tanzania, Uganda, and Zambia · · East Asia and the Pacific: Cambodia, China, Indonesia, Philippines, and Vietnam · · South Asia: Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka · · · Europe and Central Asia: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kazakhstan, Kosovo, Moldova, Mongolia, Russia, Serbia, Tajikistan, Turkey, and Ukraine Latin America and the Caribbean: Argentina, Bolivia, Brazil, · · · Access to Finance: Builds deveLoping countries' share Dominican Republic, Ecuador, Guatemala, Haiti, Jamaica, Mexico, of internationaL trade Nicaragua, St. Lucia, and Uruguay Middle East and North Africa: Afghanistan, Egypt, Iraq, Jordan, Lebanon, Morocco, Syria, Tunisia, and Yemen · · For further information, visit wwwifcorg. Last updated October 2007 · · · Housing finance is one of IFe's fastest growing areas of investment. Innovations in this area make a major contribution to development-first and foremost by increasing private home ownership, and also by helping build the strong local financial markets that are so critical to entrepreneurship and economic growth. Scope of work · Investments · Technical assistance linked with investments, funded by IFC and donors · Advisory services to governments, alongside the World Bank and others Products · Lines of credit for mortgage on-lending · Warehouse lines of credit · Collateralized mortgage lines of credit · Structured finance · Credit enhancement for mortgage-backed securities · Equity and quasi-equity investments or similar instruments · Construction finance Track Record Housing Finance: Growth in IFe's Committments · IFC has invested $1.8 billion in 35 countries since entering the housing finance market in 1975; our first such investment helped establish India's HDFe, now one of the developing world's top mortgage lenders. · IFC has mobilized more than $2.2 billion 200 +--- . . . .~~. through credit enhancement in 17 mortgage- JulwJuo backed security transactions worldwide. FY02 FY03 FY04 FY05 FY06 · IFC received Latin Finance magazine's Award for Innovation for a transaction with Titularizadora Colombiana that was Latin America's first securitization of nonperforming loans. ~~~~X9Prpent Impact ,- , '" ,',>, ~' ",. \'.'iFC's direct investments and funding mobilization havesupportedicce'ss toaffordab1e1ig~ing finance for 'al)out 180,000 rniddle- and low-income households. . .. Olll involvement has played a significant role in developing local capital markets and making them more efficient, increasing competition, lowering interest rates, and. ifuprovingstandiirdiiation. "IF.C's investments have helped set standards. demons crating ·,in.t~rnational best practices in mortgage origination, underwriting, and servicing. IIIFC's credit enhancement fur mortgage-backed securitization has helped give mortgage originators sustainable sources of local currency funding, and has helped bring high-quality investment instruments to local institutional investors. · · · · · · · · · · · · Africa's First Mortgage-Backed Securitization · · South African Home Loans is the first specialized residential mortgage company in Sub-Saharan Africa to originate affordable home loans at competitive pricing through securitization-driven funding. IFe has invested · · in the company repeatedly and helped it launch this region's first local currency residential mortgage-backed securitization issue in 2001. · SAHL is a pioneer: since its landmark 2001 issue, securitizations in South Africa have raised more than · · $4.3 billion, introducing a new asset class to domestic institutional investors. · Over the last four years, SAHL has successfully originated residential mortgages in excess of $1.7 billion · · · equivalent, of which $1.4 billion equivalent have been securitized and sold to institutional investors through five issues. The pool includes lower-income loans, below $23,000 equivalent. · The local market now has lower-cost mortgages and the potential to reach lower-income and less credit- worthy communities. · · · · · · · · · · Some IFe Firsts · · · First mortgage-backed securitization in Colombia, Korea, Mexico, and South Africa · · · · First securitization of nonperforming loans in Latin America · First cross-border; mortgage-backed securi- tization in the Baltics · · For further information, visit www.ifcorg. Last updated March 2007 · · -44 ? t 1J .! · Although a critical source of employment for the poor, microenterprises often lack access to essential financial services. IFe helps fill this gap by building strong commercial microfinance institutions--either by reaching them directly with individual transactions or by pooling its resources with those of other partners to create new vehicles for microfinance invest- ment and advisory services. We have directly financed more than 50 microfinance institutions worldwide. Last year they made more than $8 billion in loans that help people create jobs, raise their incomes, and afford better housing, health care, and education for their families. Strategy · Create commercially viable microfinance institu- tions that will, in time, attract private capital · Ensure these institutions' long-term, profitable growth by developing links with capital markets, launching innovative products, and promoting corporate governance and regulatory reforms Execution · Establish new commercial micro finance institutions · Transform nongovernmental organizations into regulated microfinance institutions · Encourage commercial banks to engage in microfinance Small-Scale Enterprise: Microfinance sparks job creation · Attract new capital for microfinance through collective investment vehicles · Promote micro finance as an attractive asset class to investors in capital markets · Provide advisory services to strengthen microfinance institutions Track Record · IFC has been active in micro finance since 1995; we helped create the Microfinance Bank of Bosnia and Herzegovina in 1997 (now ProCredit Bank), one of the world's first commercial microfinance institutions. · To date, IFC's total committed investment portfolio in microfinance exceeds $600 million. · IFC invested $196 million in the financial year ending June 30,2007. · IFC partners with the World Bank on policy issues and with the Consultative Group to Assist the Poor on industry architecture. D~VE;!I~pment .Impact · Demonstrating the business case for commercial rnicrofinance and helping it attract the private capital need- ed to scale up and respond to unmet demand. .. . · · · · · · · · · · · · · · · · · · · · Southern Europe: A Large-Scale Initiative One of the world's largest microfinance investment vehicles is the European Fund fOr Southeast Europe (EFSE), an innovative · · venture that IFC and German development bank KfW jointly launched in 2005, using sophisticated structured finance tech- niques to attract the participation of top private institutional investors such as Deutsche Bank Bringing together more than · · · $400 million from multiple public and private sources and privately managed by a specialized investment partner of Prudential Financial Inc., it provides the long-term financing that local microfinance institutions in the Balkan countries need to grow. The fund has recently partially guaranteed Raifeissen Bank's loan to Opportunity Internatiooal's parmer institution in Albania and extended FINCA Kosaw a package of housing finance, rural enterprise, and micro- and small business loans. · · · · · · · · · · · · For further information visit www.ifc.org. Last updated October 2001 · · · · ! 'f' Private sector lending in developing countries often comes in foreign currency such as dollars or euros. But some of the most crucial sectors, including infrastructure, housing, and smaller businesses, can be hard-pressed to repay those kinds of loans. Since they often need loans in their own currency, IFC has mobilized long-term local currency financing through various derivative and structured finance products in 23 currencies. This also helps larger firms better match their assets and liabilities, enabling them to concentrate on core business rather than on exchange rate volatility. Making good use of its core strengths-financial expertise, an international AAA rating, and sustainability-IFC is providing demand-driven solutions that help clients produce development results. IFC's Approach · IFC has used derivatives or hedges to provide over $2.7 billion in local currency loans. · The development of a long-term swap market between the local currency and dollars lets IFC hedge its loans in the local currency and provide risk management products tied to the loan currency. _ IFC's structured finance transactions (partial credit guarantees, securitizations, and risk-sharing facilities) have mobilized approximately $4 billion in local currency funding for IFC dients in the past six years. _ The partial credit guarantees can help dients issue local currency bonds in countries with a capital market or, alternatively, obtain long-term local currency loans from local lenders. Mexico: IFC-backed local currency bonds spurred rapid growth at a leading microfinance institution, Compartamos (see p. 2.) Track Record _ IFC has sizable portfolios of local currency loans based on derivative products in Indian rupees, Mexican pesos, Russian rubles and South African rand. Local cur- rency financing has also recently been introduced in Brazil and Peru, is increasingly being used in Indonesia and the Philippines, and is under consideration in Ghana, Kenya, Nigeria, and Zambia. · Structured finance products have been used in 49 domestic transactions in 20 countries, including Guatemala, Morocco, and Pakistan. Development Impact -.financing for high-impact sectors with mru;ket-based looil currency products--Often a key to· rapid growth (seep. 2). · Strengthening local capital markets by extending maturities, improving the credit quality of guaranteed instruments, and developing new swap and structured finance products. . · Developing lower-cost, match-funded alternative sources of financing for emc:rging market clients who have .high-quality asset portfolios (via securitization). _ .Increasing local investor appetite fo( the credit risk of local companies. LOCAL CURRENCY FINANCING: IMPACT ON DEVELOPMENT · · South Africa: Opening the Door to Higher Education · · Education is often called the number-one issue for South Africa. With few government-sponsored student loan programs available, only about 8 percent of the black population currently attends universities. The higher-level · · instruction needed to build marketable skills and earn a good income is out of reach for most people in Africa's strongest econo- my-where high unemployment, crime, and gaps between tich · · and poor continue more than a decade after the end of apartheid. In 2002 IFC extended a seven-year, 22 million rand ($3 million) · · loan to Edu-Loan, a new low-income student loan company that local hanks did not understand and did not want to finance. Its product: payroll deduction loans for working adults seeking to bet- · · ter themselves through part-time classes at local universities, and needed average loans of $1,000. With IFC hacking its innovative business model, Edu-Loan has since doubled its annual lending · · and attracted one of South Africa's financial institutions, Standard Bank. as a shareholder. Edu-Loan has now financed 400,000 low- · · · income students. These are family bread-winners once cut off from higher education but who now have new skills, and higher incomes, in teaching, nursing, computer science, and other key fields. Mexico: Scaling Up Microfinance · · Compartamos is one of Mexico's leading microfinance institu- tions, providing loans at an average size of $300 to low-income Edu-lAan: Sending older students back to school · · clients, almost all of them women in rural areas. With IFC's help, it now has the financial backing of sophisticat- ed institutional investors in Mexico City, whose belief in its business model allows it to scale up at a record pace. · · In 2003 Compartamos wanted to initiate a 500 million peso bond issuance program as part of its goal of expanding to 1 million clients by 2008. As an existing shareholder that understood its enormous potential, IFC offered to support this program with a partial credit guarantee. The first bond was launched in July 2004-the · · first structured bond issue from a microfinance institution anywhere in the world. IFC's credit enhancement allowed it to earn a AA local rating from both Standard and Poor's and Fitch Ratings, a vital step in attracting · · · top-quality investors. The bond issuance program was completed with a second tranche 14 months later, and Compartamos has more than tripled its outreach since receiving IFC's first guarantee. Edu-Loan Compartamos · · ~ CD 70,000 ~ CD · · · 60,000 3: 3: ... f ... 0 - 0 a:II ... 0 50,000 - a:II ... 0 0 · · · CD 40,000 CD .0 .0 E E :::J Z 30,000 :::J Z · · 2002 2005 2002 2005 · · 1/ .11 For further information, visit www.ifc.org. .. HI '" Last updated November 2006 · With a per capita income of just $290, Madagascar is one of Africa's poorest countries-in part because its banks lend mainly to just a few large, successful local companies, fearing the risks of the smaller ones that are natural centers of entrepreneurship and job creation. Today only 7 percent of its population uses the banking system, creating a vicious circle that traps people in poverty. In response, IFe's has undertaken a multifaceted approach that has generated more than $27 million in new local currency financing for Madagascar's smaller businesses in 2007 by transferring effective models of small business finance from other countries. The Approach · Improving the overall investment climate by addressing key constraints on private sector growth cited in the annual IFC/World Bank Doing Business reportS. · Launching new microfinance institutions with leading international partners · Increasing access to finance and business services for small and medinm enterprises by developing the local leasing industry, launching a new risk capital investment fund, and oIkring a risk- sharing facility to help two local banks enter the small and medi- um enterprise market. · Creating a new Small and Medinm Enterprise Solutions Center as a focal point for small companies, offering training, market information, referrals on financing, and other services. Madagascar: App/yingfor a loan at a new lPC-backed microfinance institutions, Track Record AccessBanque. · Partner institutions have increased their financing of local micro, small, and medinm enterprises by more than $27 million since January 1, 2007. · IFC investment and advisory services helped launch two new commercial microfinance institutions. A new local affiliate of France's MicroCrcd opened in December 2006 and has since built a $2.4 million loan portrolio. AccessBanque, owned by Germany's Access Microfinance Holding, opened two months later. It has now lent out $1.3 million. · Three new small and medium enterprise initiatives are underway: · Developing the local leasing industry by drafting a new national leasing law and investing in start-up company BNI Leasing in April 2007. · Attracting South Africa's leading small and medium enterprise finance specialist, Business Partners, to Madagascar and mobilizing $10 million for it to invest along with related funds from the World Bank's International Development Association for advisory services. · Working with IDA to provide large local banks with partial risk coverage on new local currency small business loans and related advisory services to both participating banks and firms. BNI-Credit Agricole Madagascar and BFV-Societe Generale have made approximately $18 million in new loans as a result, reaching more than 700 smaller businesses. Development Impact · Launching sustainable new commercial sources of finance fOr local mi(.l"Q, small and medium enterprises ·. Introducingrespected foreign micro, smaIl, and medium enterpri$e fJnancespecialists into a country they 'Would otherwise likely overlook . .. . . .. .............·.·....·.·...·.·.·...... .;~; .t~cingthe private enterprise growth needed to create jobs,· raiseineonles. :ilid lru:£ease thelo@tax base · · · Introducing Proven Partners IFC adds value in Madagascar and other challenging frontier markets by introducing experienced partner organizations able to deliver rapid results-providing them with not only investment capital but additional funding to support advisory services. · · Microfinance · · Until recently, Madagascar had only a few noncommercial, donor-dependent microfinance institutions. They could finance just a tiny portion of the country's large number of very small, informal sector compa- · · nies, leaving most without any access to financial services. In response, IFC has brought in two leading European partners whose management systems and global experience help them quickly build effective new commercial micro finance institutions. · · · MicroCred Holding is an investment company launched by PlaNet Finance of France along with IFC, · · · Societe Generale, Axa Belgium, and others. · Access Microflnance Holding uses a similar structure, created by Germany's LFS Financial Systems, IFC, and others. · · Both MicroCred and Access invest in micro finance institutions and develop them through a combination of equity finance, holding services, and management services. · · · · Small and Medium Enterprise Finance Business Partners is South Africa's leading small and · · · medium enterprise finance specialist, providing cus- tomized, integrated investment, mentoring, and prop- erty management services to smaller companies for more than 20 years. Known fur making credit deci- · · · sions based on a client's cash flow, without the high collateral requirements that often keep banks out of this market, its largest shareholders are South African corporations and banks. The IFC-suppotted invest- ment fund in Madagascar is Business Partners' first · · outside of its home country. A locally recruited invest- ment team in Antananarivo develops project proposals · · · under the supervision of Business Partners' experienced New financing options for Madagascar's smaller companies managers in South Africa, using its proven approach to · means more jobs for its peopk. providing risk capital for growth companies that banks overlook. IFC has also provided the two banks participating in its small and medium enterprise risk-sharing facility, · · BNI-Credit Agricole Madagascar and BFV-Societe Generate, with resident advisors from two respected banking consulting groups, Shorebank International of the United States and Eurogroup of France. As a result, nearly 250 local loan officers have been trained in the last year and the two banks have begun ftlHng · · the financing gap--making local currency loans at an average equivalent size of $25,000, many with maturi- ties of three to five years. · · For further information, visit wwwifc.org. Last updated September 2007 · · · Well-functioning local mortgage markets are critical to one of the key building blocks of development: increased private home ownership. But in Russia and the countries of Eastern Europe and Central Asia, these markets are vastly underdeveloped. With a population of more than 140 million, Russia by itself has the largest potential mortgage market in Europe. But its market is far below this potential today, standing at less than 1 percent of GDP. Despite strong housing demand and skyrocketing prices, the growth of mortgage lending is hindered by imperfect legislation, lack of unified market standards, and limited public aware- ness of the benefits of mortgages-issues IFC is addressing as both the largest investor in the sector and an important source of technical assistance. The Approach · Identify common barriers to the mortgage market by creating working groups of imponant market players · Standardize lending practices · Develop the capacity of partner banks to improve the mongage climate throughout the industry · Increase outreach to potential borrowers and educate media to cover the issue professionally Housing Finance in Russia: Bringing key players together. Track Record · IFC's work in Russia and Central Asia has improved the legal and regulatory environment to reduce the risks associated with conducting mortgage transactions · The government of Uzbekistan has passed a specialized mortgage law · IFC's technical assistance has led to the creation of a standard mortgage note in Russia (zakladnaya) for use by partner banks Donors · Switzerland · The Netherlands D~Y'~2PiW~ot Impact j:/ f:)"~::'''~''" '""" ~ <'fir .? ; 'on costs in uzbekistan have fallen from I 5 percent of transaction valUe to 2 to 3perc:ent of . : ..!;: value .Th~~~ mortgage interestr-tte in Russia has decreased by 2 ~t, and substanti;illy more at IFC's parttu~r banks, making loans moreaHOtdable to potential borrowers . Russia's Emerging Housing Finance Industry · · · · Widespread Social Benefits IFe is Russia's largest financier of housing finance, with investments of more than $250 million. To spur the · · · development of Russia's mortgage market, IFC launched the Russia Primary Mortgage Market Development Project in October 2005, a three-year advisory project to address the key issues hindering development of the mortgage lending industry. IFC established a working group of all relevant market players in the mortgage lending in Russia-77 organiza- · · tions including major mortgage lenders, international rating agencies, insurance companies, tax and accounting firms, and other industry stakeholders. The group's collaborative efforts have led to the creation of the standard mortgage note (zakladnaya), a single document that summarizes the main terms and conditions of a mortgage · · loan. Until recendy, each lender had its own fOrm of the zakladnaya, making subsequent transactions unnecessarily complicated. The standard version can be used as a tradable asset itself, allowing banks to sell, pledge or entrust it · · · to other entities, facilitating market liquidity. · IFC is also working with eight partner banks to assist in enhancing their mortgage lending procedures and intro- ducing industry best practices-among them URALSIB, Russia's fOurth-largest bank, and two investment clients. The project is also drafting a mortgage lender's code of ethics, the first step toward formalizing mortgage-related information disclosure to the borrower. And, to ensure that the topic is professionally covered in the media, the · · project holds regular press events for journalists and conducts a special academic course on mortgage finance for students at Moscow State University. · · A landmark Securitization A July 2006 IFC transaction played a key role in building the Russian mortgage market, increasing the supply of · · capital available to finance local residents' home purchases. IFC's credit enhancements helped the country's second-largest bank, Vneshtorgbank (VTB), bring Russia's first securitization of residential mortgage loans to market. With IFC's support, the $88.3 million transaction's senior · · notes received a credit rating (AlIBBB+ from Moody'slFitch) one notch higher than that ofVTB and the agencies' respective country ceiling. This made them highly attractive to investors. · · "The main purpose of issuing mortgage backed securities is to raise long-term financing from the capital markets fOr providing mortgages to Russian consumers,» said Andrey Suchkov, senior vice president ofVTB. "Development of the market fOr mortgage backed securities will make mortgages more accessible and affordable to Russian home-buyers." · · · · "The fact that IFC has been able to unite all key market participants is extremely important. " · · Oksana Likhacheva Head of Retail Department, Moscow Credit Bank · · · · · · · · For further information, visit www.ifcorg. fA Last updated January 2007 · · Women entrepreneurs are a great untapped market for African banks. Financing them is good for business-and good for development, since increasing women's economic power leads to greater spending on family welfare, nutrition, and girls' educa- tion. But most African banks will not do so, unaware of women-owned businesses' specific issues and how they can be overcome. IFC's integrated program of policy reform, investment, and advisory services addresses this problem, providing three path-breaking local financial institutions with a combined $41 million in financing and hands~on support from industry leaders in this critical area. IFe's Approach · At governments' request, key obstacles to women's entrepreneurship in the local investment climate are identified and changes are recommended. · IFC provides local banks with specialized lines of credit for women- owned businesses as well as state-of-the-art industry knowledge from members of the Global Banking Alliance for Women, help- ing the African banks set a strategy to grow profitable portfolios in the women's market. · The alliance, whose secretariat is hosted by IFC, is a group of global banks recognized as leaders in delivering financial services to the women's market in their respective countries founded by Bank of America, Bank of Ireland, Royal Bank of Canada, and Westpac (Australia), Its advisory services cover marketing strategies, new prod- uct development, staff training, and client relationship manage- ment-ail with the aim of improving their service delivery to women. · Understanding that women entrepreneurs need more than bank products, IFC then helps the partner financial institution team with local business service providers to give client women entrepreneurs the increased skills and confidence needed to market their WOmen Entrepreneurs: A key force in African development-and good clients businesses to other potential investors. for African banks. Track Record · In the past year IFC has provided three African financial institutions with dedicated lines of credit for women entrepreneurs for a combined $41 million: Access Bank (Nigeria), DFCU (Uganda), and Exim Bank (Tanzania). · IFC disbursed Access Bank's $30 million line of credit in October 2007; of this, $3.3 million has now been channeled to Nigerian women entrepreneurs through 72 total loans with an average size of $50,000. · 175 women entrepreneurs have been trained in basic management skills. Development Impact · Developing a commercially sustainable way of financing the economic empowerment of African women · Strengthening the localfinaJlcial sector ·. Building on the success of microfinance by helping larger coITlmercial bapks see the business case for lllvesting in larger women-owned businesses: a vast undersenred market Women Clients: Target Market for a Nigerian Bank · · access · · · · · Breaking the Logjam Muni Shoniba.re owns a successful 150-employee furniture company in Nigeria with high growth potential. Her clients include Shell, Texaco, the · · Ahuja Hilton, and others. Demand for her products is high. · · She has considerable potential to increase earnings and create more jobs in the local economy. But something has always blocked her way. Male bankers · · in Lagos simply did not want to finance the ambi- tious plans of a woman-owned small business, and Muni could not speak the language of finance well · · enough to convince them. Access Bank is different. Nigeria's seventh-largest · · Muni Shonibore: A Nigerian entrepreneur looks to the foture. bank, it saw hidden opportunities in the women's market. IFC provided a $30 million line of credit and related. business advice on breaking into the · · women's market from market leaders Royal Bank of Canada and Westpac (see below). With that funding and training in hand, Access Bank has now given Muni an $800,000, five-year local currency loan-financing, at last, for the long-term capital expansion plans · · she has always had in mind. · · IFe's Advisory Services Partners · · · Training Access Bank's Lagos Hosting Access Bank's managers and staff in best 'Ilestpac women's banking program practices in women's banking manager at industry meetings in Australia · · · · "Successfully reaching the women's market in Nigeria will be key to achieving our retail and small business goals. " · · Aigboje Aig-Imoukhuede Managing Director, Access Bank · · · · · · For further information, visit www.ifcorg< A'! n Last updated March 2007 I · · ~ Frontier Markets Projects in countries or regions with low per capita income, severe economic challenges, or political instability The 2008 World Development Report is clear: the Millennium Development Goal of cutting world poverty and hunger in half by 2015 can be achieved only by harnessing the power of agriculture for development. This is why IFe makes agribusiness a priority sedor, investing more than $600 million a year in projeds that often help bring local producers into the global supply chains of major agribusiness firms. Our $1.7 billion agribusiness portfolio has a strong focus on sustainability, reaching companies that together have nearly 140,000 workers and support more than 500,000 farmers. Increasingly the emphasis is on helping expand tbis industry's transforming effed in the poorest countries and regions. The Approach IFC offers three forms of financial support that strengthen the industry's impact on local economies and can be bol- stered with additional support from our more than 1,500 advisory services professionals: · Corporate Finance: Creating long-term strategic alliances with emerging industry leaders, includ- ing regional players who can transfer capital and expertise from one developing country to another · Asia! By financing a $283 million expan- sion of Bajaj Hindustan's sugar mill in one of the poorest regions of India, IFC reached 130,000 local farmers, many of whom then doubled their incomes through new sales of sugar cane. · Wholesale Fmance through Processors and Traders: Expanding working capital, preharvest financing, and trade finance in agribusiness- enabling IFC to reach many smaller industry players · Africa! IFC's $65 million investment Agribusiness: A key driver ofpoverty reduction in enables Singapore-based commodity developing countries. supplier Olam International to provide more flexible pre-export financing for its supply chain management activities and purchase more from producers in Benin, Burkina Faso, Cameroon, Nigeria, Togo, and other countries. · Wholesale Finance through Financial Intermediaries: Providing risk-sharing facilities with financial institutions active in agribusiness · Latin America! IFC has invested $30 million in Latin American Agribusiness Development Corporation SA, a Miami-based intermediary making $200,000 to $2 million loans to small and medium enterprises in agribusiness. Its financial support has helped create more than 85,000 jobs and generate nearly $1 billion in new exports. Development Impact . 11 Income generation, job creation, and skills development in rural areas · Linking farmers and small and medium enterprises to global supply chains · Support for sustainable agriculture, including the creation of global industry standards Unlocking New Markets · · The global economy rarely touches small-scale farmers in the poorest countries, leaving them with few ways to build a better life. IFC helps by creating opportunity, helping them gain the quality and financing needed to find new · · international buyers-and raise their family incomes. · · Latin America: Thousands of small-scale farmers in three of the region's poorest countrier-Nicaragua, · · El Salvador, and Honduras-will soon earn consider- ably higher incomes, using IFC's support to sell high-quality coffee to the world's largest food and · · beverage company, Nesde. The breakthrough comes as IFC expands its successful model that has benefit- · · · ed 2,000 other coffee farmers from low-income parts of Costa Rica, Guatemala, and Mexico. A $25 million IFC loan to one of the Swiss giant's key suppliers, global commodity firm ECOM, · · Coffee: Better quality means higher earnings for formers in Nicaragua, Latin America spoorest country. enables farmers in all six countries to get necessary credit. Additional IFC/Nestle-funded advisory servic- es then help raise their production standards to the · · level required by the sophisticated drinkers of Nestle's most exclusive coffee brand, Nespresso. The farmers must gain independent approval from several sources, including Nestle's certification partner, · · the Rainforest Alliance, a respected nongovernmental organization focused on sustainable agriculture. Once cleared for entry, the farmers not only get higher selling prices, but the prospects for a long-term part- nership with Nespresso. A tearn from Central America's leading business school, Costa Rica-based INCAE, · · will closely monitor and evaluate the project's results over the next few years. Afghanistan: More than 400 small farmers in trou- · · bled Kandahar Province are now also starting to seize new export opportunities, thanks to an IFC · · · advisory project that strengthens the role of local wholesalers. As part of the project, IFC sent a leader of the Kandahar Dried Fruit Exporters Association on a · · trade mission to India, where he found potential buyers for raisins made from Kandahar's grapes. Sensing a good business opportunity, he and other · · Pomegranates: ready for export from Afghanistan. buyers then began offering the farmers productivi- ty-enhancing extension services and guaranteed prices for their grapes and pomegranates. The association has also set up a processing plant in a local · · industrial park where dried fruit from this conflict-affected region is readied for export. · · · · · · For further information, visit www.ifc.org. Last updated September 2007 · · · In many countries, low levels of foreign investment mean that local small and medium enterprises are most people's only source of stable employment. But business disputes often cripple these smaller firms, which lack the funds to fight lengthy legal battles and must cut jobs when a fair resolution cannot be found. Where available, commercial mediation is a cost-effective alternative that helps SMEs settle disputes through out-of-court settlements and get back to business. IFe and its donor partners have recently introduced commercial mediation in Southeast Europe, Pakistan, and elsewhere. The Approach · Establish a legal framework for alternative dispute resolution following a United Nations model and European Union recom- mendations · Ensure world-class local mediators through customized training and mentoring, then set up commercially viable mediation centers; also help laWlch and train local civil society institutions, such as associations of mediators · Create partnerships, both at the policy level (such as ministries of justice) and the implementation level (courts, training centers for judges and prosecutors, bar associations, civil society institutions) Business Mediation: Spreading worldwide through IFC's technical assistance · Build public awareness to foster understanding and create demand for mediation Track Record · Developing commercial mediation in the Balkans since 2003 under a program managed by IFe's Private Enterprise Partnership-Southeast Europe · Initial legal frameworks for mediation have been adopted in Bosnia, FYR Macedonia, and Serbia, which togeth- er now have five new mediation centers and more than 55 active mediators · As of November 2006, nearly 2,300 mediations have taken place, with about 81 percent of disputes success- fully resolved, releasing $17.2 million back to the parties, many of them SMEs · A project to introduce alternative dispute resolution in Pakistan through IFe's Private Enterprise Partnership-Middle East North Africa received an Award for Excellence from London's Center for Effective Dispute Resolution in September 2006 Donor Partners · Canada · Netherlands · Others Develppment Impact ·· Mediation allows cheaper and faster resolution of commercial disputes; unblocking assets previously caught upiJ1litigation,whic~ was partiFulyly one{Q~(9tsm~ h~esses. . :~~~~$.df·· eiW:i.;i;.oOll. · · · · · · «\tIe expect mediation to contribute to the achievement of two goals: · · giving citizens and businesses one more avenue to justice, and decreasing the backlog of cases in the courts. " · · Meri Mladenovska-Gjorgjievska Former Minister of Justice, Macedonia · · · · Bosnia: Making Mediation Pay · · IFC is working with the Ministry of Justice and the Association of Mediators in Bosnia to introduce out-of- court mediation, bringing in new mechanisms to help address a massive backlog of 1 million cases that was hold- · · ing back business growth. Since the passage of enabling legislation, new centers for court-referred mediation have opened in Banja Luka and Sarajevo. Local mediators have settled 313 cases, · · releasing dose to $10.8 million in once-blocked assets to the parties involved. The Association of Mediators is on its way to · · · financial sustainability and has developed its own set of media- tion products and services. In most cases, legal procedures' high costs and seemingly endless duration had threatened to disrupt permanently any prospect of · · future cooperation between the companies involved. But media- tion radically shortens the procedure, saves money, and allows companies reach a mutually satisfactory solution. · · One Bosnian participant was able to work with a mediator to resolve four long-standing disputes in just three hours, releasing almost $2 million in disputed funds. IFC has taken the same approach in Serbia, where 100 local mediators have been trained since 2005, resolving 1,550 cases and releasing $6.5 million in assets. Work is now · · underway in Albania, Macedonia, and Montenegro as well. · · · · · · · · · · For further information, please emaif wvanbenthem@ifcorg or visit www.ifc.org Last updated October 2006 · IFe's financial impact goes well beyond the amount it can invest diredly. Equally important is the way we help clients raise additional funds from commercial banks and other institutional investors through our syndicated loans. Participants in these loans share the advantages that IFC derives as a multilateral development institution, including preferred creditor access to foreign exchange in the event of a foreign currency crisis. In fiscal 2007 we raised $1.8 billion in new syndicated loans, intro~ ducing 90 investors to borrowers they had never lent to before. IFC is increasingly using this tool to bring capital where it is needed most-to the poorest countries that have yet to experience enough of the benefits of integrating into the global economy. The Approach · IFC offers other financial institutions the opportunity to lend to IFC-financed projects. · Participating financial institutions share fully in a project's commercial risk, with IFC remaining the lender of record. IFe's risk mitigation and "stamp of approval" often attracts them to projects and countries they would not consider otherwise. · European banks have traditionally been the most active participants. But the program is increasingly attracting lenders from emerging markets such as India, Russia, Brazil, and South Africa- [Fe Syndications: Private capital that finances especially those just starting to expand regionally or internationally, development. and value IFe's experience and support. · IFC also attracts funds, insurance companies, and other institutional investors into emerging markets. Track Record · Since its launch in 1957, the syndication program has attracted $25.7 billion in commercial financing for projects in 97 countries. · It helps borrowers finance projects by providing longer-term commercial financing than they could otherwise attract; in fiscal 2007 the average final maturity of IFC syndications was 7.3 years. Recent Examples · Nicaragua: IFC raised $11.5 million from Citibank and three Central American banks for the upgrade of an export-oriented sugar mill in Latin America's poorest country owned by Nicaraguan Sugar Estates. · Nigeria: IFC raised $80 million from Indian and Russian banks, as well as a Canadian fund, for an Indonesian company's purchase of the privatized Eleme Petrochemical Company plant in the troubled Niger River Delta. · Pakistan: IFC attracted $35 million from ABN AMRO and a Canadian fund for a new oil exploration and production project sponsored by a local company, Dewan Petroleum. It was the first international loan syn- dication in Pakistan since the 1998 Asian financial crisis. Development Impact !1tttacting new commercial financing for job-creating projects in high-impact sectors ,.Inuodqcing new investors to clients in developing countries l)eeding increased investment .II~ ~geasingthe impact ofIFC'sown financing ... ..... . . . .... ....... . .· . . . .. ·~!;~g~rti~~&n~ lll~b~in~~ng~iIltFatio~ lending activities~c6ther emergillg t,,~;.~~tti~,andshliH~kn.o;~~~jninte~n~tlQnaIJ~ding ...·. ' . . .... ' .' Malawi: Improving Rural Lives · · · · A mobile phone can dramatically improve people's lives in poor countries-providing information about crop prices, access to medical help, even banking services. This is seen most vividly in Mrica, where mobile technology often opens a door to the world and possibilities of all kinds. But many have still not benefited. · · Only 5 percent of Malawi's 12 million people have access to a cell phone today-something that Celtel Malawi, the local subsidiary · · of IFC client Celtel International, considers a major opportuni- ty. It had long focused on the need for a major expansion using · · · new technologies and "bottom of the pyramid" marketing strate- gies to make mass service affordable. But that meant heavy upfront capital investment, and reaching beyond Malawi's borders for financial support. · · The pace of expansion was slowed down until IFC stepped in with a $30 million long-term loan package: $15 million for its own · · · account, and $15 million mobilized from other sources, including three South African banks (First Rand Bank, Investec Bank, and Nedbank) that had never before joined an IFC syndication. The financing was part of a larger $320 million IFC financing for · · Celtel affIliates in the Democratic Republic of Congo, Madagascar, Sierra Leone, and Uganda as well as Malawi announced at the June · · · 2007 World Economic Forum meeting in Cape Town. The prece- dent-setting transaction is expected to spur increased private invest- "The cell phone is the single most ment in all five countries. · · · With the financing in place, Celtel Malawi is now en route to transformative technology for development, " Jiffrey Sachs, Columbia University economist quadrupling mobile phone use as Malawi's market leader, changing and key architect ofthe Millennium Development Goal.r. the lives of people from aU walks of life. Much of its new emphasis will be on rural areas. · · · · n~ would not have participated in this transaction without fFC They were efficient, quick, and speedy, and we drew a lot ofcomfort from the fact they were · · involved and so committed to it. " Ahjeeth JaiJai · · · Investec Bank, South Africa · · · · · · For further information, visit wvvw.ifcorg. Last updated September 2007 · · I" Too many business owners in developing countries manage by instinct, unable to get access to formal knowledge and skills because training is inappropriate, ineffective or overpriced-issues that severely limit productivity and business growth. In response, IFC has developed the Business Edge brand of practical management training products. Started in Vietnam, this affordable product line has since spread to the Middle East, western China, and beyond. The Approach · Tailoring internationally accepted management training material to local markets-and their range of literacy and educational levels · Using a market test for all delivery of products and services, with customers paying fair value to acquire Business Edge's knowledge and skills · Branding training products to ensure quality control and to develop the market · Multiple formats: workbooks, TV; Internet, group seminars, and international management certification programs · Partner and trainer development: a wide range of capacity building products and a rigorous certification procedure to increase the level of expertise and quality services to smaller businesses · Providing services at affordable commercial rates, with subsidies used only for content creation and Cambodia: Business Edge trainees at work. partner development Track Record · Since 2002 IFC has developed Business Edge through its global network of technical assistance facilities, starting in Vietnam. It now also operates in Cambodia, China, Egypt, Jordan, Laos, Oman, Saudi Arabia, the West Bank and Gaza, the United Arab Emirates, and Yemen. · Business Edge has produced 31 management training workbooks in Arabic, Chinese, English, Khmer, Laotian, and Vietnamese, as well as 24 seminar packages. · There have been 330,000 workbooks and 71,000 training days sold as of October 2006. · Business Edge offers a comprehensive trainer certification program that covers all aspects of the training process and maintains a network of certified trainers and training partners. ,+,"" . '!~inesep;>~~t high-quality programs have increased demand for management training products. ; . ;. c'~f.... .;..·(steport improved business performance after they complete programs and implement changes. "Cc,~bined,such performance improvements benefit the local economy through increased tax revenues, i·~h,~~en~demand for goods and servi~, and job creation. . ' .·. .lII!i1'!isbr.ind~rks exclusively through local channels, contributing to business growth in anwnber of sectors, . m~~tbe publishing industty and training and professional servi~ in the markets whenjtis active. · · Broadcasting Business Edge · · IFC and its partners have found an effective way to increase the audience for management train- ing: putting Business Edge on the air. · · In the Middle East, 60 percent of the population is below the age of25 and faces high unemploy- · · ment. To promote entrepreneurship and help cre- ate meaningful jobs for this target group, IFC teamed with Dubai-based MBC, the Arab world's · · leading free news and entertainment broadcaster with an audience of 130 million, on a popular · · TV business reality show called The Investor. Modeled on New York tycoon Donald Trump's popular u.s. program The Apprentice, it relies on · · United Arab Emirates: Training classes sharpen management skills. Business Edge trainers for business advice on- and off-camera. · · The show features a competition between teams of aspiring entrepreneurs who vie to win up to $500,000 in seed financing to start up business ventures. "Business Edge has improved our contestants' skill sets and has inspired them to perform at their highest level," says MBC's Salwa Soueid. "The Business Edge material is in · · valuable, as it offers the contestants the opponunity to sharpen their game plan and execute tasks with confidence." · · In Cambodia, Business Edge 11{ a weekly half-hour, fast-paced business magazine show, has been on air for three consecutive years, with 107 episodes shown to date. Broadcast on the most popular channel, the Cambodian Television Channel (CTN), Business Edge TV reached 22 percent of Cambodian viewers this year. · · · · "Business Edge tl'aining is very practical. I was able to implement what I learned · · and was surprised at how fast I began to see results at my company. " Mohamed Abdullah · · Travel Agencv Owner' Yemen / · · {'After attending Business Edge's human resources courses, I became inspired and refreshed. I no longer feel alone in working through my problems and · · finding solutions. " Vu Hoang Tien Bao · · !vlusic Company Director, Vietnam · · · · · · · For further information. visit www.ifc.org. Last updated January 2007 .. , ;u Many of the world's poorest countries have endured a major war in the past 15 years. Recovery requires economic stability and growth, factors that IFe helps bring about by reducing poverty through sustainable private sector development. IFe is now active in more than 20 conflict-affected countries and regions, working with donors, investment clients, and other partners to rebuild the private sector through $55 million in advisory services projects and a $1.6 billion investment portfolio. The challenges vary, but the goal is always the same: creating opportunities to improve the lives of those directly affected by conflict. IFe's Approach · LaundI Quickly but Stay for the Longer Term: With roughly 1,000 advisory staff working in developing coun- tries worldwide, IFC can develop new advisory programs quickly and deliver them over two or more years. · Strengthen the Business Enabling Environment: IFC draws on its experience working with governments, the private sector, and the World Bank; the expertise of the Foreign Investment Advisory Service; and the reform rankings and recommendations of the annual Doing Business report. · Improve Access to Finance: IFC's combination of advice and financing helps local financial intermediaries deliver Lebanon: Small businesses get back to work-with fFC loans the trade, micro, small, and medium enterprise finance channeled through local banks (see p. 2). needed to rebuild businesses and raise incomes. · Work through Partnerships: IFC attracts other investors for projects in infrastructure and other critical areas and collaborates with donors, NGOs, and others in its advisory work, thus building synergies and minimizing overlap. Track Record Conflict-affected countries where IFC is especially active include: · Afghanistan: IFC has invested $45.5 million in mobile phone services, banking, microfinance, and the upgrade of a landmark hotel in Kabul and provided advisory services in business education, agribusiness, and other areas. · Democratic Republic of Congo: IFC was a founding investor in the country's leading microfinance institu- tion, ProCredit Bank. . · Lebanon: The first multilateral institution to provide funds under the January 2007 Paris III accords, IFC is leading World Bank Group efforts on postconflict private sector development and investing in the country's local banks and businesses. · Liberia: IFC is helping the government assess barriers to private sector growth, improve infrastructure, attract new private investment, and address other key issues. Dev~l~pment Impact -:H~ping avoid renewed conflict by creating new income-generation opportunitieS and improving infiastruCl:1lI'e I' J)eQ:lonstrating the private sector's role in sustainable recovery Integrated Response · · IFC helps rekindle private sector activity once peace returns to war-scarred countries. · · Lebanon · · The summer 2006 conflict crippled Lebanon's private sector. Local banks have been reluctant to make new loans ever since, slowing down the country's usual fast pace of business activity. · · · Lasting recovery cannot occur until money starts to move again-a process IFC is jump-starting with a new $200 million package of lines of credit and lending incentives to the local financial sector. Some 1,500 local companies will get new loans for working capital, expansion, and · · other needs under the program-the centerpiece ofIFC's pledge at the January 2007 Lebanon donor meeting in · · Paris. The financing primarily supports small and medi- um enterprises, the main drivers of economic growth in Lebanon. · · IFC head Lars Thunelllaunched the initiative in Beirut Lebanon: &coveringfrom the summer 2006 conflict. two months later, signing an initial $50 million postcon- · · flict loan agreement with Blom Bank, another for $25 million with Fransabank, and an advisory services package to scale up Kafalat, a local company whose guar- antees help smaller businesses obtain commercial bank loans each year. It was one of the first arrivals of the · · international funds pledged in Paris, channeling money directly to local entrepreneurs--and standing as part of a broader IFC program to help the country recover from war. · · Liberia Liberia's electricity grid has been destroyed by nearly 14 years of war, · · leaving most of the population without power. In response, IFC is help- ing the government select a private operator to supply electricity in the capital city, Monrovia, temporarily until a more permanent solution can · · be found. This infrastructure focus is part of broader IFC support that indudes · · improving Liberiis investment climate, strengthening its financial sector, and financing sdected private sector companies. Among these efforts, IFC's Global Trade Finance Program approved a $2 million trade · · line to the Liberian Bank for Development and Investment to provide greater opportunity for local businesses and to help reintroduce the country to international business transactions and counterparts. · · Liberia: President Ellen Johnson Sirkaf speaks at IFC-sponsored investment forum, February 2007. · · · · · · · · For further information. visit www.de. org. Last updated May 2007 · · 4¢ IU i it Complex administrative hurdles hinder the development of small business in much of the former Soviet Union. For small and medium enterprises, information on changes to rules and requirements is hard to come by, difficult to interpret, and nearly impossible to keep up with. In Belarus, an entrepreneur wanting to register a business must visit 10 different government agencies and pay nearly $750-a third of the average person's annual income. IFe's surveys and Web-based solutions help fill this gap. The Approach · Identify key administrative and regulatory obstades for small and medium enterprises through regular surveys · Streamline the procedures regulating smaller businesses by working with governments and stakeholders to draft and implement new legislation · Increase legal awareness and improve access to information for smaller businesses · Creative approaches, for example, in Belarus a new Web portal, BEL.BIZ BELBIZ: A business solutions portal for entrepreneurs in one Track Record ofEurope's most challenging business environments. · IFC has built on the success of its earlier advisory projects in Central Asia and Ukraine to expand its work into neighboring countries. · More than 60 pieces of legislation recommended by IFC have passed in Belarus, Tajikistan, Ukraine, and Uzbekistan, reducing registration and inspections time. In Belarus, registration time has dropped by 11 days while registration costs have been cut in half for the average firm. · The results of regular small businesses surveys reach hundreds of government officials each year, allowing governments to track and assess private sector reform. Deve!opment Impact .. . · The BEL.BIZ Web po~ provides small busines5e$ in Belarus with a cornp1'ehensivesol.1l'£e of rest#totY infi;>imation, business advice, and furms . . . . .. ·. BEL.BIZ builds on the m~del of a similar portal in Ukraine, Vlasnasprav~infu. that is pactaf the IFC SME Toolkit, IFC's platform fur sharing business information, furms, and tools fur ~ntreprenellt$ and small businesses through 26 localized sites in 12 languages. These sites <;:ollective1y receive more than 2.4 million visits per year from users around the world: · The IFC SME Toolkit is now being expanded through a new partnership with IBM. · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ((The key distinguishingfoatures ofBEL.BIZ, compared to other sources of business-related information in Belarus, m+e frequent updates, accuracy, · · and a use1+-fiiendly presentation. " Denis Iskorzev BELBIZ User · · Belarus · · For further information, visit www.ifcorg. Last updated March 2007 · · r I*" Much of Peru's deep and chronic poverty stems from the sheer size of its underground economy-one of Latin America's largest and most unwieldy, and a severe restriction on business development. Remarkably, however, the capital city of Lima has recently seen a fourfold increase in official business registrations. More than 6,000 small firms have left the shadowy "informal sector" in the past year and gone legitimate, in the process have improved their access to bank finance, enhanced their ability to contract with large firms and ensure that their contracts can be enforced by the courts, all critical to firm growth. The increase is in part the result of an IFe technical assistance project that focuses on simplifying business registration procedures that is now being spread nationwide in Peru, in much of Latin America, and in many other countries. IFe's Approach · Help refurm-minded governments simplify business registration processes to promote formalization of firms, thereby increasing their access to finance and ability to contract with larger companies, and enabling them to grow and create jobs. · Help governments enlarge their tax base by making it easier for entrepreneurs to enter the formal sector. · Encourage governments to regulate more efficiendyand thereby improve compliance with zoning, health, and safety regulations. · Demonstrate how simplification of regulations enhances transparency and restrains corrup- tion-and can foster a simplification culture within governments. Donor Partners · Switzerland, UK, Canada, Peru: A new business registration center supported The Netherlands, Others by [Fe technical assistance saves valuable time for local entrepreneurs (see p. 2.) Similar Sub-National Simplication Projects Underway In: · Algeria, Bolivia, Brazil, Egypt, Honduras, Indonesia, Nicaragua, Mexico, Sri Lanka, Vietnam, Yemen .~!mpHfiCation expands the formal economy. "1III~~rIngthe formal sector gives firms better access to essential elements fot firm growth, including bank f;inance, ability to contract with larger fims, contract enforcementiftthe1ega1 system, allQ business services. · Efficient governments have more funding to use in support of the general welfare, especially health and education. "V,' /," · Efficient governments increase compHance with basic regulation and are more transparent and less subject to corruption. · · Peru: Making It Easier to Register a Business IFC is helping Peru improve its investment climate by streamlining its overly complex business registration · · procedures. Today's red tape confines 60 percent of Peru's economic activity to the informal sector-where it lies beyond · · the reach of government oversight and taxation, providing workers with little in the way of pensions, insur- ance, or other benefits. But since 2004, IFC's Technical Assistance Facility for Latin America and the Caribbean has worked with local government in Lima to simplifY registration and inspection processes, creat- · · ing a single, computerized licensing center where business owners can take the final step needed to join the formal sector. Results to date: · · · In the first nine months after reform took effuct in January 2006, more than 6,000 businesses registered-a more than 420 percent increase More films Registered In the Flfst 9 Months of 2006 Than III the Past five Years · · · Firms Ucensed in the flnlt 9 months 2005 vs 2006 7000 over the same period two years before. · ~O~~······ --------.~ ------~ .. · Days required to register a new business dropped from 60 to three. · Required visits to municipal offices, from 11 to one or two. . :4000 ~ 3000 . · · · Inspections, from five duplicative operations to one multipurpose inspection. 2000 1000 o. ------~ .......----~'----- .....- - - - · · · Official costs declined by 60 percent for the smallest firms and opportunities for corrup- tion have been dramatically reduced. 2005 · · To increase the impact of this work, the IFC facility has also helped create a National Municipal Simplification program in Peru, which is leading the effort to replicate this work across the country. · · · · · · · · · · · · · · · · · · For further information, visit wvwv.ifcorg, Last updated November 2006 · · · Almost 75 percent of India's poor-more than 200 million people-live in rural areas today, largely cut off from the economic boom centered in the major cities. Creating opportunity in a rural economy of 638,000 villages is a major challenge. But IFC is making a difference, partnering with Indian companies to bring investment and expertise that increase rural society's access to two of the key drivers of development: new markets and sources of finance. The Approach IFe fights poverty by building agribusiness supply chains, strengthening local companies who buy from small farmers: · Andhra Pradesh Paper Mills: IFe's $30 million investment has helped the company nearly double its capacity, including a state-of-the-art, environmentally sound paper factory built in 2005. No longer depend- ent on natural forests, it now gets all its pulpwood instead from more than 30,000 local families who receive its seedlings and technical support to develop new plantations on their waste and marginal lands. This allows them to earn up to $374 per acre of pulp- wood-almost three times their return on the same investment per acre of rice. This approach has also Rural India: The private sector creates jobs, raises incomes. helped the fast-growing, 4,000-employee company increase profits by 23 percent in the last year. · Suguna Poultry Farms: $11 million in IFe financing will help the company expand its supply chain, which currently includes 10,500 farmers who benefit from its guaranteed prices and hands-on advice. IFe's invest- ment has allowed Suguna to expand its breeder farms, hatchery, and feed mill capacity and increase farmers' payments by expanding contract farming. · Tata Tea Ltd.: IFe is providing $7.8 million and attracting other investors into a new ownership and man- agement structure promoting greater worker participation in the global beverage company's tea plantations in Assam, a source of 30,000 full-time jobs. IFe also helps raise rural incomes by increasing access to finance, investing in institutions such as: · BASIX: an Andhra Pradesh-based microfinance institution reaching 190,000 borrowers in eight states with farm and livestock loans, crop insurance, and other financial services. Its loan portfolio has increased from less than $5 million to $38 million since IFe became a shareholder in 2001. · FINO: a new information technology firm whose products help banks reach underserved rural areas, where less than half the population currently has bank accounts. Launched in 2006 by one of India's biggest lenders to microfinance, ICICI Bank, it now has $5 million in early-stage financing from IFe. Development Impact · J;