São Paulo, Brazil October 25, 2005—
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed a cooperation agreement with the Municipality of São Paulo to work together to improve the business enabling environment by reforming procedures for complying with key regulations, such as registering a business or getting a construction permit.
This project, being undertaken by IFC’s Technical Assistance Facility in Latin America and sponsored in part by the UK Department for International Development, builds on IFC’s experience in simplifying municipal business regulations in other countries, most recently in Peru. The project aims to reduce the time required to register a new business, which, in turn, will encourage movement of businesses into the formal economy. The project will begin in November and is expected to be completed in 12-15 months.
“Registering a new business or getting a construction permit in Brazil is far more difficult than in most of Latin America,” said Michael Klein, IFC’s Chief Economist and Vice President of Private Sector Development at the World Bank Group. Referring to the recently released Doing Business in 2006 report, a joint IFC and the World Bank’s study, Klein added: “the burden on new businesses is particularly acute in São Paulo, where registration takes 152 days, and where getting a construction permit takes 460 days. Experiences in other countries show that reducing such regulatory burdens can have significant impact on improving investment climate and reducing the degree of informality in the economy”, he noted.
Improving the business environment is an important part of IFC’s regional strategy for private sector development. In 2004, IFC helped establish five working groups in Brazil to encourage open dialogue between the public and private sectors on ways to improve the investment climate. These groups bring together a wide cross-section of private and public sector partners, including the American Chamber of Commerce, the National Confederation of Industry, several law firms, and the Brazilian Support Service for Micro and Small Enterprises (SEBRAE).
According to IFC’s Director for Latin America and the Caribbean, Atul Mehta, “The working groups formed to follow up on the Doing Business findings continue to play an important role in focusing public attention on the need to improve the investment climate locally. Today, by working with the Municipality of São Paulo, IFC is taking an even more active role in implementing effective reforms.”
About IFC in Brazil
During FY 2005 (which ended in June 2005), Brazil received the largest amount of IFC financing in dollar value in the Latin American region. IFC invested a total of $591million million, including $190 million in syndications, in sectors ranging from agribusiness and transport to pulp and paper and the financial sector. IFC’s total portfolio in Brazil was $913 million as of June 2005. Since 1956, when Brazil joined IFC, the Corporation has provided $7.45 billion, including syndications, for 162 companies.
IFC's strategy for Brazil focuses on enhancing the prospects for competitiveness and growth, improving the country's social equity through voluntary actions by the private sector, and continuing the Corporation’s role as a leading promoter of sustainability in Brazil and emerging markets.
These strategic priorities entail focused investments on export and growth companies; business opportunities that support the internationalization of Brazilian companies (South-South investments); infrastructure and logistics, notably public-private partnerships to improve low-income population inclusion, and financial and capital markets development. IFC also seeks to finance firms committed to environmental and social sustainability, to help improve corporate governance, and to support microfinance and socially-oriented entrepreneurship.
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
About IFC’s Technical Assistance Facility
The IFC Technical Assistance Facility for Latin America and the Caribbean (IFC Plus) is a multilateral initiative backed by core IFC funds and program-specific funds from various donors (including Canada, Netherlands, Norway, Switzerland, and the United Kingdom). The facility's work focuses on improving the business environment, enhancing local benefits from IFC investments, and broadening access to finance for and strengthening the competitiveness of small and medium enterprises. Based in Lima, the facility is operating in Bolivia, Brazil, Colombia, Honduras, Nicaragua, and Peru and is exploring opportunities in other countries of the region. For more information, visit
www.ifc.org/lac/ifcplus.
