Istanbul, Turkey, June 23, 2021—IFC signed an investment agreement today to help Izmir, Turkey's third-largest city, finance the addition of hundreds of kilometers of sewers and water pipes, as part of an effort to conserve water and enhance public services in the fast-growing municipality.
IFC will provide the Izmir Water and Sewerage Administration (IZSU) with a sustainability-linked long-term loan denominated in Turkish Lira worth up to US$30 million. IFC's financing will fund water, wastewater, and stormwater infrastructure improvements in seven Izmir districts, including a water treatment plant and the construction and rehabilitation of 315 kilometers of stormwater and sewerage infrastructure. The investments will improve the reliability of Izmir's water supply network, benefiting an estimated 463,000 citizens, and provide better-quality drinking water to approximately 200,000 people.
IFC and the International Bank for Reconstruction and Development are also advising IZSU to apply cutting-edge behavioral insights to design and implement low-cost approaches that promote water conservation and on-time invoice payments by customers to boost the company's collection rates.
"As promised, we continue to work ambitiously for a sparkling bay, a clean environment and healthy drinking water" said Mustafa Tunç Soyer, Major of Izmir. "And, as always, we state that our priority is to use public resources transparently and efficiently on behalf of the public."
The financing is part of a multi-year policy dialogue between the World Bank Group, the Ministry of Treasury and Finance of Turkey, and Turkish municipalities. It marks the first non-sovereign guaranteed long-term commercial loan denominated in Turkish Lira by an international financial institution to a municipal borrower in Turkey. This will help remove exchange rate volatility risk for the municipality and its municipal companies. Furthermore, IFC's loan is the first sustainability-linked loan to a municipality in Turkey, aligned with the United Nations' Sustainable Development Goal focused on gender equality. IZSU is aiming to hire at least 300 female contracted employees by December 2025 into jobs where women are currently under-represented. If these ambitious targets are met, under the sustainability-linked structure, IZSU will receive a slight decrease in the all-in interest rate paid on the IFC loan.
"In Izmir, and much of Turkey, demand for water is rising as supplies are falling," said Arnaud Dupoizat, IFC's Country Manager for Turkey. "But by conserving water and investing in critical infrastructure, cities can ensure they have the steady supplies of water that are crucial to their continued sustainable development."
The project is the result of a decade-long partnership between IFC and the Izmir Metropolitan Municipality, which has focused on improving the sustainability and social benefits of the city's infrastructure through comprehensive investment and advisory solutions. To date, IFC supported IZSU and Izmir Municipality with five investments and several advisory engagements focusing on public transport and wastewater services, contributing to the reduction of travel times, and increasing the volume and quality of wastewater services in the City of Izmir. IFC has also been supporting the city's gender equality and inclusion efforts to help promote increased female participation in IZSU's workforce and boost awareness and prevention of gender-based violence. IZSU is also a founding member of IFC's "Utilities for Climate" (U4C) initiative.
This project is part of IFC's Cities Initiative, which combines investment and advisory services to help municipal authorities build climate-resilient, inclusive and sustainable cities. Since 2004, IFC has invested and mobilized over US$9 billion in more than 280 projects in the cities' infrastructure space.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
IZSU was established in 1987 as the water and sewerage administration of the Izmir Metropolitan Municipality, responsible for undertaking water and wastewater-related infrastructure investments in the City of Izmir, serving around 4.3 million citizens.