Leadership Perspectives 79890 Letter from the IFC EVP and CEO—Lars Thunell This is the year of the client. Our clients in the private sector make IFC’s work real. Their partnership with us promotes ­development and helps create opportunity for the poor—and they deserve special recognition for it. They are innovators as much as entrepreneurs. They create jobs where you would not think possible. They pioneer renewable energy projects. They provide food for millions. They take one-room shops and transform them into thriving international firms. In short, they make lives better. They are our clients—but more, our partners in development. They are individuals who, through their entrepreneurship, embody the imaginative ways in which we expand opportunity in developing countries and across the globe. Our clients help us achieve the full impact of our investments. Over the past year, our investment clients provided employment to about 2.4 million people—a record. They made nearly 10 million loans totaling about $140 billion to micro, small, and medium enterprises. They helped bring health care to 7.5 million patients. Our advice helped strengthen the capacity of over 9,000 farmers and businesses in 71 countries. During my travels this year, I saw firsthand how IFC, together with its clients, is turning volume into value and value into impact. Our investment clients contributed about $20 billion to government revenues and $36 billion to purchases in local economies. Considering that total global aid flows are about $100 billion, it is clear that the work of IFC and our clients is having a giant impact in developing countries. In the past year, we mobilized more money than ever for development—$6.5 billion. New commitments reached $18.7 billion, which is more than double the size of our investments just five years ago and reflects an estimated project value of nearly $100 billion. highlights IFC Asset Management Company, a wholly owned subsidiary, invested $682 million in IFC projects during the year—more than double the previous year’s tally. AMC, which is a fund from manager for governments, pension funds, sovereign wealth funds, and others, now has about $4 billion under management. the IFC Annual A vibrant and sustainable private sector needs more than just investment. To support our clients, we offer over 25 years of experience in providing advisory services that improve the Report 2011 investment climate; foster vital public-private partnerships; raise environmental, social, and ­corporate governance standards; build inclusive supply chains; and strengthen expertise. In FY11, Advisory Services project expenditures reached a record of over $200 million, about two-thirds of which was attributable to clients in IDA countries. We have updated our Sustainability Framework after an extensive, 18-month consultation process with numerous stakeholders. We have also adopted a new strategy for the palm oil industry. Political leaders around the world increasingly recognize the leadership role IFC can play supporting clients in private sector development. IFC is prominent in the Group of 20’s Financial Inclusion Initiative and is working to promote price hedging in the food market, which G-20 ­agricultural ministers agree can reduce volatility. We recently struck a deal with JPMorgan Chase to provide $4 billion in price-risk management for agricultural commodities. This will enable farmers to promote food security. Events across the Middle East and North Africa are reminders that we are living in a world of heightened political, social, and economic volatility. They are also reminders of the importance of the private sector and job creation for equitable growth. These are countries with high youth ­populations, but also high unemployment. IFC and the Islamic Development Bank have suggested one innovative solution to this problem through the Education for Employment program, or e4e. We’re bringing together govern- ments and companies to match education with necessary job skills. We look to mobilize $1.5 billion to $2 billion for the program over the next three to five years, funds that will support job creation across the region. IFC’s strategy is working. And our strong corporate values and vision position us well for 2012 and beyond. Lars H. Thunell IFC Executive Vice President and Chief Executive Officer IFC At a Glance We invested nearly $19 billion in more than 500 projects in 102 countries, of which $12.2 billion was for our own account. In addi- tion, we mobilized nearly $6.5 billion from other investors. Our Advisory Services project expenditures totaled $206.7 million. Half our investment projects—totaling $4.9 billion in commit- ments—and about two-thirds of our Advisory Services project expenditures were in the poorest countries, those served by the International Development Association. We committed about $3 billion for our own account in Latin America and the Caribbean. We also committed about $2.7 billion in Europe and Central Asia, about $2.2 billion in Sub-Saharan Africa, $1.6 billion in the Middle East and North Africa, $1.9 billion in East Asia and the Pacific, and $742 million in South Asia. IFC Operational Highlights 2011 2010 2009 2008 2007 Dollars in millions, as of and for the years ended June 30 New Investment Commitments Number of projects  518 528 447 372 299 Number of countries  102 103 103 85 69 For IFC’s own account  $12,186 $12,664 $10,547 $11,399 $  8,220 Mobilization Syndicated loans  1  $  4,680 $  1,986 $  1,858 $  3,250 $  1,775 Structured finance  $     0 $   797 $   169 $  1,403 $  2,083 IFC initiatives & other  $  1,340 $  2,358 $  1,927 n/a n/a Asset Management Company  $   454 $   236 $     8 n/a n/a Total mobilization  $  6,474 $  5,377 $  3,962 $  4,653 $  3,858 Investment Disbursements For IFC’s own account  $  6,715 $  6,793 $  5,640 $  7,539 $  5,841 Syndicated loans  2  $  2,029 $  2,855 $  1,958 $  2,382 $  1,615 Committed Portfolio Number of firms  1,737 1,656 1,579 1,490 1,410 For IFC’s own account  $42,828 $38,864 $34,502 $32,366 $25,411 Syndicated loans  1  $12,387 $  9,302 $  8,299 $  7,525 $  5,543 Advisory Services Number of projects  642 736 872 862 1,018 Approved value  $   820 $    859 $   941 $   919 $   846 Advisory Services project expenditures  $   207 $   188 $   183 $   152 $   118 1 Includes B-Loans, Parallel Loans, and A-Loan Participations. 2 Includes B-Loans and Agented Parallel Loans. Development Results fy11 development outcome by industry fy11 commitments by environmental and social category Oil, Gas, & Mining 23 ($1,119) 83% Infrastructure 74 ($2,798) 77% Category1 Commitments Number of Agribusiness & Forestry 64 ($2,781) 70% ($ millions) Projects Funds 63 ($829) 68% A 554 10 Financial Markets 196 ($15,123) 66% B 2,975 133 Telecommunications & Information Technology 25 ($692) 64% C 5,445 246 Manufacturing 69 ($2,447) 59% FI 3,212 129 Consumer & Social Services 68 ($1,396) 59% Total 12,186 518 IFC Total 582 ($27,184) 67% 1 See category descriptions on p. 97 of the FY11 Annual Report. Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects. fy11 development outcome by region East Asia and the Pacific 86 ($4,024) 76% Latin America and the Caribbean 131 ($7,975) 74% South Asia 64 ($2,118) 72% Sub-Saharan Africa 92 ($3,450) 63% Europe and Central Asia 134 ($6,582) 60% Middle East and North Africa 66 ($2,853) 56% IFC Total 582 ($27,184) 67% Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects. Development Reach by IFC’s Investment Clients New Business Portfolio Portfolio Expectations CY09 CY10 FY11  4 Investments Employment (millions of jobs)  2.2 2.4 0.2 Microfinance loans1 Number (million)  8.5 8.0 24.7  5 Amount ($ billions)  10.79 12.62 13.73  5 SME loans1 Number (million)  1.5 1.7 1.0 Amount ($ billions)  101.32 127.82 49.12 Customers reached with services (millions) Power generation2  57.4 41.9 12.8 Power distribution  29.4 32.0 0.3 Water distribution3  26.6 20.1 0.4  6 Gas distribution  15.7 17.2 n/a Phone connections  169.3 179.7 7.4 Patients reached  7.6 7.5 2.6 Students reached  1.4 1.0 0.5 Farmers reached  2.1 2.5 1.2 Payments to suppliers and governments Domestic purchases of goods and services ($ billions)  38.02 39.51 7.47 Contribution to government revenues or savings ($ billions)  20.08 20.28 6.44 1 In many cases, results also reflect contributions from IFC Advisory Services. I FC has revised its methodology for estimating residential power customers served. Estimates for past years have been revised accordingly. 2 3 CY09 water figure has been corrected. It included 7 million customers of sewage services. N ew Business figures for all reach indicators other than infrastructure or telecom are reported as targets and not increments. 4  For FY11, expected Microfinance reach includes one project in South Asia that accounts for 12 million loans and $4.2 billion of outstanding portfolio, by 5  March 2016. I n FY11, in addition to water distributed, we also expect to reach 1.6 million sewerage and wastewater customers. 6  fy11 commitments Our Vision Dollar amounts in millions That people should have the Total $12,185.69 (100.00%) opportunity to escape poverty and By Industry improve their lives. Agribusiness & Forestry $512.10 (4.20%) Consumer & Social Services $445.29 (3.65%) Our Values Financial Markets $3,088.03 (25.34%) Funds $434.49 (3.57%) Infrastructure $1,620.87 (13.30%) Excellence, commitment, integrity, Manufacturing $830.20 (6.81%) and teamwork. Oil, Gas, & Mining $229.27 (1.88%) Telecommunications & Information Technology $337.21 (2.77%) Our Purpose Trade Finance $4,653.44 (38.19%) Other Sectors $34.77 (0.29%) To create opportunity for people Industry sectors have been aligned to the new IFC organization structure implemented in FY11. Prior years reported throughout this Annual Report have also been converted to ensure accurate comparability. to escape poverty and improve their lives by catalyzing the means By Region for inclusive and sustainable East Asia and the Pacific $1,925.92 (15.80%) growth, through: Europe and Central Asia $2,682.45 (22.01%) • Mobilizing other sources of Latin America and the Caribbean $3,031.13 (24.87%) Middle East and North Africa $1,603.26 (13.16%) finance for private enterprise South Asia $742.45 (6.09%) development. Sub-Saharan Africa $2,150.15 (17.64%) • Promoting open and com- Global $50.32 (0.41%) petitive markets in developing Some amounts include regional shares of investments that are officially classified as global projects. countries. • Supporting companies and committed portfolio other private sector partners For IFC’s own account as of June 30, 2011 where there is a gap. • Helping generate productive Total $42,828 (100%) jobs and deliver essential services By Industry to the poor and vulnerable. Agribusiness & Forestry $3,095 (7%) To achieve our purpose, Consumer & Social Services $3,071 (7%) IFC offers development-impact Financial Markets $14,095 (33%) Funds $3,137 (7%) solutions through firm-level inter- Infrastructure $7,490 (17%) ventions (direct investments, Manufacturing $5,095 (12%) advisory services, and the IFC Oil, Gas, & Mining $2,169 (5%) Asset Management Company); Telecommunications & Information Technology $1,635 (4%) by promoting global collective Trade Finance $2,424 (6%) action; by strengthening gov- Other $615 (1%) ernance and standard-setting; By Region and through business-enabling-­ East Asia and the Pacific $6,188 (14%) environment work. Europe and Central Asia $11,064 (26%) Latin America and the Caribbean $10,144 (24%) Stay Connected Middle East and North Africa $4,750 (11%) South Asia $4,353 (10%) Sub-Saharan Africa $5,900 (14%) Facebook Global $429 (1%) www.facebook.com/IFCwbg Some amounts include regional shares of investments that are officially classified as global projects. Twitter www.twitter.com/IFC_org FY11 advisory services project expenditures (dollar amounts in millions) #IFC and #IFCAR2011 YouTube Total $206.66 (100.00%) www.youtube.com/IFCvideocasts By Business Line Access to Finance $63.27 (31%) IFC website Investment Climate $55.87 (27%) www.ifc.org Public Private Partnerships $27.75 (13%) Sustainable Business $59.78 (29%) By Region East Asia and the Pacific $26.80 (13%) Europe and Central Asia $34.80 (17%) Latin America and the Caribbean $19.33 (9%) Middle East and North Africa $16.29 (8%) South Asia $22.69 (11%) Sub-Saharan Africa $51.12 (25%) Global $35.63 (17%) 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA 202 473 3800