WASHINGTON, D.C., September 21, 2004
– Posting strong portfolio and income growth for the past fiscal year, the International Finance Corporation, the private sector lending arm of the World Bank Group, on Tuesday announced a marked increase in its own contribution to grant-funded sustainable development projects.
“Our progress reflects the stability and healthier fundamentals across the emerging markets, more product and geographical diversity in our portfolio, and productivity gains from our recent restructuring,” said Peter Woicke, Executive Vice President of IFC and World Bank Group Managing Director for Private Sector Development.
“We intend to leverage these gains into greater developmental impact through more support for our project development facilities, which we operate in partnership with our donor nations,” he added.
In FY04, IFC committed investments for its own account of $4.75 billion, a 23 percent increase over FY03 commitments of $3.85 billion. Operating income for the fiscal year was $982 million, up from $528 million the previous fiscal year.
IFC, as a development finance institution, emphasizes investments in sectors that have multiple effects on economic growth and poverty reduction in developing nations – the financial sector, infrastructure, information technology, health, education, and small and medium enterprises. For FY04, these sectors represented 64 percent of IFC’s investment.
Of IFC’s $4.75 billion in new investments, $3.4 billion was in loans, $1.1 billion was in equity and quasi-equity products, and $231 million was in structured finance and risk management products. IFC mobilized an additional $880 million in development finance through its loan syndications.
Total expenditures for grant-funded technical assistance and advisory activities amounted to $90 million for FY04 (see fact sheet below). These activities cover a broad array of issues supported by IFC and donors, from privatization advice and investment climate reform to renewable energy and development of small enterprises.
Within a new initiative approved by its Board of Directors earlier this year, IFC will be able to designate a portion of its retained earnings for multiyear technical assistance and advisory services. The approved amount designated for FY05 is $225 million, which will be partially used, with matched donor funding, to sustain project development facilities and other IFC activities focusing on development of small and medium enterprises, environmental and social programs, and corporate governance initiatives, as well as technical assistance that complements project development costs in frontier markets.
“Our technical assistance to clients – helping them on training, project design, corporate governance, renewable energy, energy efficiency, environmental and social performance, and many other issues – is becoming more central to our value proposition,” Mr. Woicke said. “This new approach will provide a more stable platform for partnerships with donors, who have been very supportive of these efforts.”
Over the past four years, IFC’s technical assistance and advisory programs have more than doubled, from five initiatives representing $126 million in combined direct and donor financing commitments to 24 initiatives representing roughly $350 million.
In addition to providing advisory services to government on private sector issues, IFC has established regional initiatives to assist small and medium enterprises, several of which were launched over the past year, including the Latin America and Caribbean SME Facility, the Private Enterprise Partnership for the Middle East, the Program for Eastern Indonesia SME Assistance, and the SME Solutions Center in Madagascar.
Mr. Woicke noted several highlights of IFC investment operations for the past fiscal year:
· Investments committed in
Sub-Saharan Africa
nearly tripled, from $140 million in FY03 to $405 million in FY04, increasing from 4 percent of IFC’s commitments in FY03 to 9 percent in FY04.
· Investments in
Europe and Central Asia
increased substantially for the second straight year. In the region as a whole, IFC committed about $1.7 billion – up from $1.2 billion in FY03 – or 35 percent of total commitments.
· In Asia, IFC committed about $1.13 billion, compared to $958 million in FY03. Commitments in
East Asia
increased significantly, from $573 million in FY03 to $730 million in FY04, mainly because of the significant growth of commitments in China. Investments in
South Asia
topped $400 million for the first time ever.
· IFC invested $171 million and mobilized a further $528 million through
structured finance transactions.
Highlights of these transactions include the first securitization of nonperforming assets in Latin America and the first structured municipal bond in South Africa. “Structured finance continues to be a strategically important area for IFC, in terms of both developing local currency instruments and deepening local capital markets,” Mr. Woicke said.
The mission of IFC
(
www.ifc.org
)
is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
***********
Regional Contacts
Latin America & Caribbean
Adriana Gomez
Phone:+(202) 458 5204
Cell: +(202) 294 4698
Middle East & Africa
Ahmed Badawi
Phone: +(202) 458 7148
Cell: +(202) 361 9175
Central & Eastern Europe
Irina Likhachova
Phone: +(202) 473 1813
Cell: +(202) 247 7231
Western Europe
Georg Schmidt
Phone: +(202) 458 2934
Cell: +(202) 294 4854
East Asia & Pacific
Desmond Dodd
Phone: +(852) 2509 8183 (Hong Kong)
Cell: +(852) 6478 7749 (Hong Kong)
South Asia
Ludwina Joseph
Phone: +(202) 473 7700
Cell: +(202) 294 4699
FACT SHEET
IFC DONOR-FUNDED OPERATIONS
· Over the past four years, IFC’s technical assistance and advisory programs have
more than doubled
, from five initiatives representing $126 million in combined direct and donor financing commitments (multiple-year funding) to 24 initiatives representing roughly $350 million.
· For the past fiscal year, total grant expenditures for grant-funded technical assistance and advisory activities supported by IFC and donors amounted to
$90 million
.
· IFC provided technical assistance in
79 countries
last fiscal year, and 97 percent of those projects were in low- and lower-middle income countries. More than 60 percent of those projects were in countries with very high risk ratings.
· IFC approves roughly
130 technical assistance projects per year
, the average size of which is approximately $175,000.
·
The top 10 recipients of IFC technical assistance
are (in order) China, Serbia and Montenegro, Tajikistan, the Russian Federation, Philippines, Mongolia, Ukraine, Vietnam, Afghanistan, and El Salvador.
· About
one-third of IFC staff
are engaged in full-time work for donor-funded operations, much of which is based in the field.
· IFC’s Board earlier this year approved the creation of
a new funding mechanism
for technical assistance and advisory services. In every year that IFC’s net income exceeds $150 million, a portion of the net income will be designated for these activities.
· The mechanism will thus provide a better, more stable way for IFC to meet its own commitments over the long term. It will also give the Corporation some added flexibility: IFC can potentially make an upfront commitment for bigger programs, including project facilities, with donors joining the funding exercise depending on their own budget cycles. The amount based on this year’s income is
$225 million
.
· Current
major areas of technical assistance and advisory activity
:
·
Small and Medium Enterprises.
Some 75 percent of new funding commitments from donor nations went to IFC’s 12 regional project development facilities. In collaboration with the SME facilities and industry departments, IFC’s SME Department is also increasingly developing linkage programs. Currently, programs in 14 countries are linked to over $1 billion in IFC investments. Two prominent programs underway are related to the Chad-Cameroon and the Baku-Tbilisi-Ceyhan (BTC) pipeline projects.
·
Financial Market Development.
IFC’s Financial Markets Advisory Service is currently engaged in 88 technical assistance projects in 60 countries, worth almost $38 million in aggregate. Over 75 percent of this portfolio involves strengthening finance for micro, small, and medium enterprises. Helping countries diversify into nonbank financial services accounts for 35 percent of the portfolio, primarily for firms to diversify into SME-related leasing. Over 70 percent of this portfolio is helping strengthen individual financial institutions, largely where IFC has investments.
·
Sustainability.
In July 2002, IFC created three new donor-funded facilities to help businesses address issues of environmental and social sustainability. These facilities, grouped together under the Sustainable Business Assistance Program, help expand the range of activities associated with IFC’s investments and accelerate wider market adoption of new technologies, services, and business models in renewable energy, energy efficiency, biodiversity, and other areas. In addition, IFC manages a part of the Global Environment Facility; carries out updates of the Environmental, Health, and Safety Guidelines; and engages in energy efficiency initiatives, many of which are funded by the donors.
· IFC’s
donor-funded activities at the global level
are:
Technical Assistance Trust Funds Foreign Investment Advisory Service
SME Capacity Building Facility DevCo—Infrastructure Development Partnership
Sustainable Business Assistance Program Facility
o Environmental Opportunities Facility
o Sustainable Financial Markets Facility
o Corporate Citizenship Facility
· IFC’s
donor-funded activities at the regional level
are:
Africa Project Development Facility SouthAsia Enterprise Development Facility
Pacific Enterprise Development Facility Mekong Private Sector Development Facility
China Project Development Facility Program for Eastern Indonesia SME Assistance
Private Enterprise Partnership Balkan Infrastructure Development Facility
Southeast Europe Enterprise Development Facility Latin America and the Caribbean SME Facility
North Africa Enterprise Development Facility Private Enterprise Partnership for Middle East
