ВОЗДЕЙСТВИЕ ИÐ?Ð?ОВÐ?ЦИИ 79883 ВЛИЯÐ?ИЕ ДЕМОÐ?СТРÐ?ЦИЯ IMPACTO INNOVACIÓN INFLUENCIA v1 DEMOSTRACIÓN IMPACT INNOVATION INFLUENCE DÉMONSTRATION 效益 ‫܇‬新 å½±å“? 示范 IMPACT INNOVATION INFLUENCE DEMONSTRATION インパクト イ ノベーション 影響力 デモンストレーション IMPACTO INOVAÇÃO INFLUÊNCIA DEMONSTRAÇÃO ВОЗДЕЙСТВИЕ ИÐ?Ð?ОВÐ?ЦИИ ВЛИЯÐ?ИЕ ДЕМОÐ?СТРÐ?ЦИЯ IMPACTO INNOVACIÓN INFLUENCIA DEMOSTRACIÓN IMPACT INNOVATION INFLUENCE DÉMONSTRATION 效益 IMPACT ‫܇‬新 å½±å“? 示范 INNOVATION INFLUENCE DEMONSTRATION インパクト イ ノベーション 影響力 デモンストレーション IMPACTO INOVAÇÃO INFLUÊNCIA DEMONSTRAÇÃO ВОЗДЕЙСТВИЕ ИÐ?Ð?ОВÐ?ЦИИ ВЛИЯÐ?ИЕ ДЕМОÐ?СТРÐ?ЦИЯ IMPACTO INNOVACIÓN INFLUENCIA DEMOSTRACIÓN IMPACT INNOVATION INFLUENCE DÉMONSTRATION 效益 ‫܇‬新 å½±å“? 示范 IMPACT INNOVATION INFLUENCE DEMONSTRATION インパクト イ ノベーション 影響力 デモンストレーション IMPACTO INOVAÇÃO INFLUÊNCIA DEMONSTRAÇÃO ВОЗДЕЙСТВИЕ ИÐ?Ð?ОВÐ?ЦИИ ВЛИЯÐ?ИЕ ДЕМОÐ?СТРÐ?ЦИЯ IMPACTO INNOVACIÓN INFLUENCIA DEMOSTRACIÓN IMPACT INNOVATION INFLUENCE DÉMONSTRATION 效益 ‫܇‬新 å½±å“? 示范 IMPACT INNOVATION INFLUENCE DEMONSTRATION インパクト イ ノベーション 影響力 デモンストレーション IMPACTO INOVAÇÃO INFLUÊNCIA ANNUAL REPORT 2012 DEMONSTRAÇÃO 2–5 24–31 Leadership Perspectives IMPACT IFC GLOBAL RESULTS 25 IFC Financial Highlights 25 IFC Operational Highlights 26 IFC Global Results 6–23 30 Our Management Team For nearly six decades, IFC has worked to provide opportunity for the poor. It’s 32–65 OUR STORY a history of innovation and 32 The Leader in Private Sector Development growth that has resulted in 40 Our Priority Sectors signiï¬?cant impact. 50 Frontier Markets 58 Mobilizing for Maximum Impact CONTENTS This report summarizes IFC’s innovation and leadership role in the private 2121 PENNSYLVANIA AVENUE, NW sector. It is organized to highlight our WASHINGTON, DC 20433 USA strategy—our role (The Leader in Private Sector 202 473 3800 Development, pages 32–39), what we do (Our Priority Sectors, pages 40–49), where we WWW.IFC.ORG do it (Frontier Markets, pages 50–57), and how we do it (Mobilizing for Maximum Impact, pages 58–65). Our strategy is designed to achieve impact, results of the kind that matter most to us—opportunities created, lives improved. ABOUT IFC IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by ï¬?nancing private sector investment, mobilizing capital in international ï¬?nancial markets, and providing advisory services to businesses and governments. We play a catalytic role by demonstrating the proï¬?tability of investments in emerging markets. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work in more than 100 countries allows companies and ï¬?nancial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives. 2 MESSAGE FROM ROBERT B. ZOELLICK, WORLD BANK GROUP PRESIDENT, 2007–2012 The World Bank Group has paid special attention to the central role of the private sector in development. We are sup- porting the enabling environment for investment and private sector activity, extending ï¬?nancing to small and medium businesses and microï¬?nance, supporting trade ï¬?nance, pro- moting greater attention to public-private partnerships, and encouraging investment in countries that need it the most— especially conflict-affected and fragile states. IFC is central to these efforts. By building productive private sectors, the Corporation is spurring growth, creating jobs, and solving problems in poor and middle-income coun- tries. IFC is about helping entrepreneurs achieve dreams, while enriching their communities. IFC’s work makes busi- nesses and countries more resilient when crises hit, arming them to take on the toughest development challenges—from climate change to food security to creating wealth and incomes. The past ï¬?ve years have been a time of In FY12, IFC provided more than $20 billion in ï¬?nanc- testing for the World Bank Group and ing, including nearly $5 billion mobilized from partners. Under the leadership of Lars Thunell, IFC has put the poorest our ability to respond to the needs countries and regions at the heart of its strategy. Almost half of of our clients. Developing and developed new projects this year were in IDA countries, where IFC can countries have been challenged by the make the greatest difference. In FY12, IFC invested nearly $6 billion in 283 projects in 58 IDA countries. triple threat of the food, fuel, and In the Middle East and North Africa, a region in turmoil ï¬?nancial crises. and transition, IFC is boosting small businesses’ access to ï¬?nance, making sure young people can get job skills that They’ve faced hunger, poverty, joblessness, and debt—an match the needs of the market, and funding long-neglected economic, social, and human crisis with political implications. infrastructure needs. Since the Arab transformation began Through these difficult times, the World Bank Group has in 2011, IFC has invested more than $2 billion in the region. stepped up to support our clients with flexibility, speed, inno- IFC has also ramped up its activities in short-term vation, and a focus on results. Out of challenge, we have looked ï¬?nance, which is essential for trade to flow smoothly between for opportunity and hope. countries and critical commodities to remain affordable. This The World Bank Group’s shareholders have supported work offers a big boost to development and open markets with our priorities and performance with ï¬?rst-rate ï¬?nancial sup- relatively little risk. port. In 2007 and 2010, two record-breaking IDA replenish- IFC Asset Management Company demonstrates how an ments raised more than $90 billion. In 2010, shareholders innovative idea can quickly reap beneï¬?ts in developing econo- backed the IBRD’s ï¬?rst capital increase in more than 20 years. mies. AMC is creating new channels to mobilize capital: it Today, we have a well-resourced Bank with a triple-A rating. currently has $4.5 billion under management, almost $3 bil- We have been modernizing multilateralism for a world lion of which comes from outside investors that have had economy with multiple poles of growth, and democratizing little exposure to emerging markets. development through greater openness and accountability, Lars Thunell is also closing out his term as IFC Executive sharing knowledge and information. We are laying the founda- Vice President and CEO. IFC’s successes in recent years reflect tions for expanding social accountability, ï¬?ghting corruption, his vision, creativity, and drive for private sector development. and building better governance. We have maintained our focus He has been a valued partner and counselor in the leadership on the poor in all regions, especially Africa, emphasizing of the World Bank Group. the need for ï¬?scally responsible human safety nets to protect the most vulnerable. At the same time, we have customized new products for the middle-income countries that are increasingly important drivers of growth. Our agenda has included gender equality, food security, climate change and biodiversity, infra- structure investment, disaster prevention, ï¬?nancial innovation, and inclusion. ELLICK ROBERT B. ZOELLICK World Bank Group President June 30, 2012 MESSAGE FROM JIM YONG KIM, 3 INCOMING WORLD BANK GROUP PRESIDENT I am pleased to transmit IFC’s 2012 Annual Report. This report highlights the achievements and effectiveness of the Corporation despite a challenging global economic environment. It also underscores the importance of collaboration across the World Bank Group and working with external partners to advance our shared goal of building prosperity and eradicat- ing poverty. Today, the World Bank Group has a unique opportunity to accelerate inclusive and sustainable growth and social progress. We are continuing to support our clients as they respond to immediate pressures, especially through helping BUILDING countries develop cost-effective social safety nets. But we are also well positioned to assist countries as they design and implement longer-term development strategies through our lending, knowledge, experience, and expertise. PROSPERITY, I look forward to working with the Board, our partners and clients, as well as the Bank Group’s dedicated staff in Washington, D.C., and around the world. Our mission remains more important than ever—to help developing ERADICATING countries respond to immediate pressures, as well as to look toward future opportunities. It is a privilege to undertake this great work. POVERTY JIM YONG KIM World Bank Group President July 1, 2012 4 MESSAGE FROM LARS H. THUNELL, IFC EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER, 2006–2012 IFC is adapting to a world in transfor- Against that backdrop, IFC has redeï¬?ned development ï¬?nance and the way we do business. We have established mation. Developing countries, which innovative ways to mobilize capital, and expanded our work once accounted for a small share of the in the poorest and most fragile areas of the world. We have world economy, are now major drivers more than doubled our investments in Africa over the last ï¬?ve years and have increased our activities in equity and of global growth. short-term ï¬?nance, providing essential liquidity for global trade and smaller enterprises. We have helped build crucial These countries are home to an ascendant consumer class— global partnerships for development and have been a leader and more than a billion people who survive on less than $1.25 in thinking through the challenges of private sector a day. Financial crises have heightened the need for faster job development. creation. The rise of social media has ampliï¬?ed popular Our success has helped governments and stakeholders demands for greater transparency and accountability among recognize the vital role the private sector can play in devel- governments and public institutions. opment. For entrepreneurship and job creation to even exist in poor countries, for tax revenues to rise where govern- ments are breaking free from years of conflict, there must be a functioning private sector. Consider that hundreds of millions of new jobs are needed to lower unemployment over the next decade. Or that up to $300 billion in annual investment will be needed in the next two decades to mitigate and adapt to climate change. It cannot be done without the private sector. As the NEW MARKET world’s largest private sector development institution, IFC’s role is clear. New market players are changing the face of develop- PLAYERS ARE ment. We must create more opportunity through partner- ships—collaborating with the Group of 20, with foundations, with the full array of mobilization partners, and with our colleagues across the World Bank Group. That philosophy is CHANGING THE behind our access-to-ï¬?nance and inclusive-business work with the G-20, our efforts to increase local-currency ï¬?nance, our Water Resources Group partnership with private sector businesses to boost the availability of water, and our push for FACE OF more companies and development institutions to embrace our environmental and social standards. DEVELOPMENT 5 Recent economic and ï¬?nancial crises have triggered new challenges. In times of uncertainty, banks often con- serve capital and pull back lending in areas traditionally considered to be risky, including emerging markets. IFC HAS REDEFINED DEVELOPMENT The consequences can be severe. We are responding by ï¬?nding and catalyzing new sources of capital, ramping up our short-term ï¬?nance activities, and putting a special emphasis on creating opportunities for women—who own more than a third of small enterprises in developing countries. The World Bank Group has committed to make $27 billion in funding available for countries affected by FINANCE AND THE WAY WE DO BUSINESS the euro-zone crisis. IFC is a critical part of that effort—we have launched an array of innovative initiatives to increase the availability of capital and support vulnerable markets in eastern and southern Europe. We created the IFC Asset Management Company in 2009 so developing countries could have a new source of long-term equity capital. AMC is already showing its prom- ise, with $4.5 billion under management at the end of FY12. We have also taken strides to ensure that trade and com- modity ï¬?nance—without which international trade comes to a standstill—doesn’t disappear in developing countries. Our trade-ï¬?nance investments, a low-risk way to expand our development impact, continue to grow. We are also changing the way we work within IFC, I want to thank the entire team at IFC for making my part of a drive to bring staff and decision-making authority time at the Corporation so personally and professionally closer to clients. More than half of our staff now work in fulï¬?lling. Their dedication and unrelenting focus on creat- offices in developing countries. We opened new offices in a ing opportunity and improving lives have given IFC a host of countries, and an operations center in Istanbul to remarkable record of success. speed the processing of our transactions. These changes It has been an honor to be a part of this effort over the have allowed us to make the most of our global knowledge past six years. The work we do here is having a critical and local expertise. We are also redoubling our focus on impact—making a difference for the poor and building results—introducing the IFC Development Goals to help resilient private sectors where none had previously existed. drive IFC strategy and decision-making. I am conï¬?dent IFC is in position to address the devel- oping world’s current challenges, and to respond with agility and ingenuity to new opportunities to achieve our vision in the years ahead. LARS H. THUNELL IFC Executive Vice President and Chief Executive Officer June 30, 2012 6 THIS IS THE STORY OF IFC’S IMPACT IN A RAPIDLY CHANGING WORLD Five years ago, IFC was an institution focused on project ï¬?nance, operating mostly out of Washington, D.C. Not today. We have since redeï¬?ned development ï¬?nance—by designing innovative ï¬?nancial products and advisory services, emphasizing clients, and maximizing our impact. Today, we are the world’s preeminent development institution focused on the private sector, with offices in nearly 100 countries. Key to that transformation: a consistent strategy that leverages all of our strengths as a leader in private sector development, and focuses our efforts wherever they can do the greatest good. 8 ADVISORY IMPACT BRAND STRATEGY GROWTH PARTNERS 9 AFRICA CLIENTS AMC IDA SHORT-TERM FINANCE building blocks of our success IFC’S ACHIEVEMENTS OVER THE PAST FIVE YEARS IFC succeeds through persistence and creativity. By employing a steady strategy, we achieved a half decade of growth, innovation, and increased development impact. We are now the largest global private sector development institution. 10 12 12 14 16 GROWTH OF FOCUS ON FRONTIER EXPANDING OUR ADVISORY SHORT-TERM THE BUSINESS AND IDA COUNTRIES WORK IN AFRICA SERVICES FINANCE 18 20 20 22 22 CREATION A THOUGHT LEADER AND GETTING CLOSER BUILDING IMPLEMENTING OF AMC A CRITICAL PARTNER TO OUR CLIENTS OUR BRAND STRATEGY IFC INVESTMENT COMMITTED INVESTMENT ALMOST HALF OF OUR PROJECTS PORTFOLIO DOUBLED TO INVESTMENT PROJECTS ARE DOUBLED TO MORE THAN IN IDA COUNTRIES 576 $45 283 BILLION PROJECTS Small-business owner Mohammed Nasim Ahmed with his bus ï¬?nanced by India’s Magma Fincorp Private Limited, an IFC client. 11 IMPACT GROWTH GROWTH OF THE BUSINESS We doubled our investments in private enterprises in developing countries—to more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. We launched pioneering initiatives to mitigate economic crises, expanding the scope of our work from 66 countries to more than 100. 12 FOCUS ON FRONTIER AND IDA COUNTRIES We strengthened our focus on the world’s poorest countries, fragile and conflict-affected situations, and frontier regions of middle-income countries, helping IFC to reach more people in a broader range of places than imagined six years ago. Since FY05, our IDA investments have grown sixfold to nearly $6 billion. Almost half of IFC investment projects are now in the poorest countries, while about two-thirds of our Advisory Services program expenditures are in IDA countries. IFC is an active investor in 19 fragile and conflict-affected states, and a provider of advisory services in 32. IFC’S CLIENTS PROVIDED MORE THAN IMPACT IDA IMPACT AFRICA EXPANDING OUR WORK IN AFRICA Spurring development in Sub-Saharan Africa—where nearly one out of every two people lives on less than $1.25 a day—is a priority for IFC. We have more than doubled our investments in the region over the last ï¬?ve years, to about $4 billion, including mobilization. The region accounts for a ï¬?fth of our global investments each year. IFC’s clients provided more than 250,000 jobs in Sub-Saharan Africa last year. Sub-Saharan Africa also is the most active region for IFC Advisory Services, accounting for nearly 30 percent of program expenditures. 250,000 JOBS IN SUB-SAHARAN AFRICA LAST YEAR IFC’s work to improve Rwanda’s investment climate has led to the creation of 16,000 jobs and 8,000 new enterprises. $3 TRILLION OUR CHINA SECURED TRANSACTIONS PROJECT HELPED SMALLER CHINESE ENTERPRISES OBTAIN SIGNIFICANT FINANCING 15 IMPACT ADVISORY ADVISORY SERVICES We built Advisory Services into a key IFC business, blending it into all of our work to promote private sector development. Our advisory work focuses on expanding access to ï¬?nance, improving the investment climate, facilitating public-private partnerships, and promoting sustainable business. Since FY08, IFC program expenditures have grown nearly 50 per- cent to about $200 million. We offer advice to businesses and governments in 105 countries. 16 IMPACT IFC’S GLOBAL TRADE LIQUIDITY PROGRAM HAS SHORT-TERM SUPPORTED MORE THAN FINANCE $21 BILLION IN TRADE SINCE IT WAS LAUNCHED IN 2009 SHORT-TERM FINANCE We expanded our short-term ï¬?nance activities, providing essential liquidity for global trade and for small and medium enterprises. Under our Global Trade Finance Program, more than 12,000 guarantees have been issued since 2005. We continue to innovate with short-term ï¬?nance products, including the Global Trade Supplier Finance Program and the Global Warehouse Finance Program. MORE THAN 12,000 GUARANTEES ISSUED UNDER THE GLOBAL TRADE FINANCE PROGRAM Our Global Warehouse Finance Program is help- ing small farmers—like those from Paraguay’s Pindo Cooperative—get paid more quickly. 18 IMPACT AMC CREATION OF AMC IFC Asset Management Company offers a promising way to channel ï¬?nance to the poor and help investors beneï¬?t from IFC’s 56 years of experience in developing countries. We established it in 2009 to expand the supply of long- term equity capital to developing countries and enhance our development impact. Today, AMC has $4.5 billion under management. AMC funds have made 33 investments totaling more than $1.7 billion since 2009. Nearly half of AMC’s investments are in the world’s poorest countries. NEARLY HALF OF AMC’S INVESTMENTS ARE IN THE POOREST COUNTRIES With support from IFC and AMC, Bank South Paciï¬?c offers mobile banking to farmers in remote areas of Papua New Guinea. 20 A THOUGHT LEADER AND A CRITICAL PARTNER Our expertise in sustainable private sector development is widely recognized—including by the Group of 20 major economies, which sought IFC’s help to boost access to ï¬?nance for small and medium enterprises. Our clients and partners look to us for thought leadership, convening power, and clear evidence of development impact. Our work helps raise environmental, social, and governance standards. IFC was the ï¬?rst multilateral development bank to report on development results for its entire portfolio. IMPACT PARTNERS IMPACT CLIENTS GETTING CLOSER TO OUR CLIENTS In a time of rapid economic and technological change, we moved closer to our clients to respond quickly to their evolving needs. Today, more than half of IFC’s staff work in offices in developing countries. That has enabled us to streamline client interaction, integrate investment with advisory services, and expand our devel- opment impact. We help more than 1,700 clients create opportunity and improve lives in developing countries. 50+ WE PROVIDE FINANCING IN MORE THAN 50 LOCAL CURRENCIES IFC is a key sponsor of the 2030 Water Resources Group, a partnership with private sector businesses aimed at reducing water scarcity. MORE THAN 1 MILLION PEOPLE HAVE BEEN REACHED THROUGH OUR SOCIAL-MEDIA CAMPAIGN ON THE PRIVATE SECTOR’S ROLE IN DEVELOPMENT 23 BUILDING OUR BRAND We have solidiï¬?ed IFC’s role as a leader among international ï¬?nance institu- tions. We did so by leveraging our Brand Value Proposition—our record of innovation, our ability to demonstrate the beneï¬?ts of venturing into challenging markets, the influence we exercise to raise standards and shape policy, and the development impact we achieve. We reached more than 1 million people through our social-media campaign on the private sector’s role in development. IMPACT BRAND IMPACT STRATEGY CREATING A MANAGEMENT STRUCTURE TO IMPLEMENT STRATEGY IFC adopted a rigorous and structured approach to strategic planning. We put in place a seasoned team of executives to ensure that IFC deployed its resources effectively, with a focus on maximizing development impact and meeting the needs of clients. At every level, we linked budget resources and performance objectives to the achievement of strategic priorities. 24 IN FY12, IFC’S INVESTMENTS AND ADVICE REMOVED BARRIERS TO GROWTH AND HELPED THE PRIVATE SECTOR CREATE JOBS, BOLSTER INFRASTRUCTURE, IMPROVE FOOD SECURITY, CONFRONT CLIMATE CHANGE, AND ADDRESS OTHER DEVELOPMENT CHALLENGES IN EMERGING MARKETS. 25 IFC FINANCIAL HIGHLIGHTS 2012 2011 2010 2009 2008 Dollars in millions, for the years ended June 30* Net income (loss) $ 1,328 $ 1,579 $ 1,746 $ (151) $ 1,547 Grants to IDA $ 330 $ 600 $ 200 $ 450 $ 500 Income before grants to IDA $ 1,658 $ 2,179 $ 1,946 $ 299 $ 2,047 Total assets $75,761 $68,490 $61,075 $51,483 $49,471 Loans, equity investments, and debt securities, net $31,438 $29,934 $25,944 $22,214 $23,319 Estimated fair value of equity investments $11,977 $13,126 $10,146 $ 7,932 $10,979 Key Ratios Return on average assets (GAAP basis) 1.8% 2.4% 3.1% -0.3% 3.4% Return on average capital (GAAP basis) 6.5% 8.2% 10.1% -0.9% 9.6% Cash and liquid investments as a percentage of next three years’ estimated net cash requirements 77% 83% 71% 75% 62% Debt-to-equity ratio 2.7:1 2.6:1 2.2:1 2.1:1 1.6:1 Total resources required ($ billions) $ 15.5 $ 14.4 $ 12.8 $ 10.9 $ 10.4 Total resources available ($ billions) $ 19.2 $ 17.9 $ 16.8 $ 14.8 $ 15.0 Total reserve against losses on loans to total disbursed loan portfolio 6.6% 6.6% 7.4% 7.4% 5.5% *See Management’s Discussion and Analysis and Consolidated Financial Statements for details on the calculation of these numbers: http://www.ifc.org/FinancialReporting IFC OPERATIONAL HIGHLIGHTS 2012 2011 2010 2009 2008 Dollars in millions, for the years ended June 30 New Investment Commitments Number of projects 576 518 528 447 372 Number of countries 103 102 103 103 85 For IFC’s own account $15,462 $12,186 $12,664 $10,547 $11,399 Core Mobilization* Syndicated loans 1 $ 2,691 $ 4,680 $ 1,986 $ 1,858 $ 3,250 Structured ï¬?nance — — $ 797 $ 169 $ 1,403 IFC initiatives & other $ 1,727 $ 1,340 $ 2,358 $ 1,927 — Asset Management Company $ 437 $ 454 $ 236 $ 8 — Public-Private Partnership mobilization2 $ 41 — — — — Total core mobilization $ 4,896 $ 6,474 $ 5,377 $ 3,962 $ 4,653 Investment Disbursements For IFC’s own account $ 7,981 $ 6,715 $ 6,793 $ 5,640 $ 7,539 Syndicated loans 3 $ 2,587 $ 2,029 $ 2,855 $ 1,958 $ 2,382 Committed Portfolio Number of ï¬?rms 1,825 1,737 1,656 1,579 1,490 For IFC’s own account $45,279 $42,828 $38,864 $34,502 $32,366 Syndicated loans 4 $11,166 $12,387 $ 9,302 $ 8,299 $ 7,525 Advisory Services Advisory Services program expenditures $ 197.0 $ 181.7 $ 166.4 $ 157.8 $ 130.8 Share of program in IDA countries5 65% 64% 62% 52% 49% *Financing from entities other than IFC that becomes available to client due to IFC’s direct involvement in raising resources. 1 Includes B-Loans, Parallel Loans and A-Loan Participation Sales (ALPS). 2 Third-party ï¬? nancing made available for public-private partnership projects due to IFC’s mandated lead advisor role to national, local, or other government entity. 3 Includes B-Loans and Agented Parallel Loans. 4 Includes B-Loans, A-Loan Participation Sales (ALPS), Agented Parallel Loans, and Unfunded Risk Participation (URP). 5 All references in this report to percentages of advisory program expenditures in IDA countries and fragile and conflict-affected areas exclude global projects. 26 IFC GLOBAL RESULTS $3.7 BILLION LATIN AMERICA AND THE CARIBBEAN In FY12, IFC invested a record $20.4 bil- lion in 103 developing countries, reflecting a doubling of our annual commitments over the last five years. Those investments included nearly $5 billion mobilized from other investors. Our investments for our own account in Sub-Saharan Africa totaled $2.7 billion—nearly twice as much as five years ago. Our Advisory Services program expenditures grew to $197 million, up more $2.9 BILLION EUROPE AND than 50 percent over the last five years. CENTRAL ASIA Our clients once again took full advantage of our investments and advice, creating real impact for the poor. IFC investment clients helped support 2.5 mil- lion jobs in 2011, and made 23 million $2.2 BILLION MIDDLE EAST AND loans totaling more than $200 billion to NORTH AFRICA micro, small, and medium enterprises. Our $2.7 Advisory Services helped 33 client govern- ments introduce 56 investment-climate reforms, and conclude public-private part- BILLION SUB-SAHARAN AFRICA nerships that will improve access to basic services for more than 16 million people. That is signiï¬?cant development impact, and we achieved it profitably. Our net income before grants to the International Development Association, the World Bank’s fund for the poorest, totaled $1.66 billion. Since FY07, we have contributed more than $2 billion of our income to IDA. In addition, we have invested more than $23 billion in IDA countries, nearly $6 bil- lion of it in FY12 alone. $2.5 BILLION EAST ASIA AND THE PACIFIC $1.3 BILLION SOUTH ASIA 27 $20.4 BILLION IN INVESTMENTS, INCLUDING $15.5 BILLION IN COMMITMENTS FOR OUR OWN ACCOUNT 65% OF OUR ADVISORY SERVICES PROGRAM EXPENDITURES WERE IN THE POOREST COUNTRIES SERVED BY IDA 28 FY12 COMMITMENTS FY12 COMMITMENTS BY ENVIRONMENTAL Dollar amounts in millions AND SOCIAL CATEGORY Total $15,461.76 (100.00%) Category1 Commitments Number of By Industry ($ millions) Projects Trade Finance $6,003.67 (38.83%) A 931 17 Financial Markets $3,371.33 (21.80%) B 3,629 153 Infrastructure $1,447.43 (9.36%) C 6,975 267 Consumer & Social Services $1,374.82 (8.89%) FI 3,340 120 Manufacturing $1,021.30 (6.61%) FI-1 140 2 Agribusiness & Forestry $1,020.92 (6.60%) FI-2 410 11 Oil, Gas & Mining $490.55 (3.17%) FI-3 37 6 Funds $484.28 (3.13%) Total 15,462 576 Telecommunications & Information Technology $247.45 (1.60%) 1 See category descriptions on p. 37 on the flip side of this report. By Product Loans1 $6,667.88 (43.13%) FY12 LARGEST COUNTRY EXPOSURES 1 Guarantees2 $6,401.66 (41.40%) June 30, 2012 (Based on IFC’s Account) Equity3 $2,281.91 (14.76%) Risk-management products $110.30 (0.71%) Country Committed % of 1 Includes loan-type, quasi-equity products. (Rank) Portfolio Global 2 Includes trade ï¬? nance. ($ millions) Portfolio 3 Includes equity-type, quasi-equity products. India (1) 3,965 9% By Region Brazil (2) 2,572 6% Latin America and the Caribbean $3,679.79 (23.80%) China (3) 2,429 5% Europe and Central Asia $2,915.37 (18.86%) Turkey (4) 2,329 5% Sub-Saharan Africa $2,733.25 (17.68%) Russian Federation (5) 2,263 5% East Asia and the Paciï¬?c $2,548.15 (16.48%) Mexico (6) 1,188 3% Middle East and North Africa $2,209.71 (14.29%) Egypt (7) 1,153 3% South Asia $1,312.16 (8.49%) Nigeria (8) 1,106 2% Global $63.31 (0.41%) Philippines (9) 1,055 2% Some amounts include regional shares of investments that are ofï¬? cially classiï¬? ed as global projects. Vietnam (10) 1,025 2% 1 Excludes individual country shares of regional and global projects. COMMITTED PORTFOLIO For IFC’s own account as of June 30, 2012 Total $45,279 (100%) By Industry Financial Markets $13,881 (31%) Infrastructure $8,608 (19%) Manufacturing $5,578 (12%) Consumer & Social Services $3,826 (8%) Agribusiness & Forestry $3,556 (8%) Trade Finance $2,961 (7%) Funds $2,952 (7%) Oil, Gas & Mining $2,392 (5%) Telecommunications & Information Technology $1,520 (3%) Other $5 (0%) By Region Europe and Central Asia $10,503 (23%) Latin America and the Caribbean $10,371 (23%) East Asia and the Paciï¬?c $7,216 (16%) Sub-Saharan Africa $6,461 (14%) Middle East and North Africa $5,585 (12%) South Asia $4,697 (10%) Global $445 (1%) Some amounts include regional shares of investments that are ofï¬? cially classiï¬? ed as global projects. 29 FY12 INVESTMENT SERVICES DOTS SCORE BY INDUSTRY IFC’S CLIENT LEADERSHIP AWARD Infrastructure 80 ($3,478) 76% IFC’s Client Leadership Award honors Funds 73 ($945) 73% an organization that best exempliï¬?es Agribusiness & Forestry 71 ($2,903) 72% innovation, operational excellence, Financial Markets 218 ($20,775) 70% and strong corporate governance. It’s Manufacturing 88 ($3,352) 69% our way to recognize a corporate client Oil, Gas & Mining 29 ($1,918) 63% that shares our values and commit- Consumer & Social Services 84 ($1,762) 57% ment to sustainable best practices and Telecommunications & Information Technology 25 ($765) 56% development impact. IFC Total 668 ($35,897) 68% Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects. This year’s award will honor the work of Jordan’s Hikma Pharmaceuticals, FY12 INVESTMENT SERVICES DOTS SCORE BY REGION the leading manufacturer of generic drugs in the Middle East. Hikma East Asia and the Paciï¬?c 96 ($5,645) 80% delivers high-quality, affordable medi- South Asia 78 ($2,569) 73% cines to people in the region, many of Latin America and the Caribbean 148 ($9,984) 72% whom lack access to modern health Sub-Saharan Africa 102 ($4,717) 64% care. Hikma serves as a model—it Europe and Central Asia 158 ($8,861) 61% was the ï¬?rst pharmaceutical com- Middle East and North Africa 75 ($3,824) 60% pany in the Middle East and North IFC Total 668 ($35,897) 68% Africa to obtain U.S. Food and Drug Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects. Administration approvals, producing export-quality medicines for the local market. FY12 ADVISORY SERVICES PROGRAM EXPENDITURES Dollar amounts in millions In 2009, Hikma introduced injectable Total $197.0 (100.00%) oncology drugs at up to 80 percent By Business Line below the then-prevailing price. This Access to Finance $62.6 (32%) signiï¬?cantly beneï¬?ted patients who Investment Climate $56.5 (29%) otherwise would have been unable Sustainable Business $47.9 (24%) to afford cancer treatment. The com- Public-Private Partnerships $30.0 (15%) pany also has strong corporate social By Region responsibility programs and engages Sub-Saharan Africa $57.4 (29%) staff, as well as the broader community, Europe and Central Asia $34.4 (17%) through vocational training and edu- East Asia and the Paciï¬?c $28.2 (14%) cational campaigns related to environ- South Asia $27.6 (14%) mental awareness and development. Latin America and the Caribbean $20.9 (11%) Middle East and North Africa $17.9 (9%) Global $10.6 (5%) WEIGHTED AND UNWEIGHTED OVERALL INVESTMENT SERVICES DOTS SCORES FY10 71% 82% FY11 67% 77% FY12 68% 72% Dr. Abdallah Awidi of Jordan Unweighted Weighted University Hospital treats cancer patients with Hikma medicines. Our seasoned team of executives ensures that IFC’s resources are deployed effectively, with a focus on maximizing development impact and meeting the needs of our clients. IFC’s Management Team beneï¬?ts from years of development experience, a diversity of knowledge, and distinct cultural perspectives—qualities that enhance IFC’s uniqueness. The team shapes our strategies and policies, positioning IFC to help improve the lives of more poor people in the developing world. Our executives are vital in maintaining IFC’s corporate culture of performance, accountability, and engagement. OUR MANAGEMENT Janamitra Devan Vice President, Jingdong Hua Vice President, Rachel Robbins Vice President and Dimitris Tsitsiragos Vice President, Karin Finkelston Vice President, Thierry Tanoh Vice President, Financial and Private Treasury, Syndications, General Counsel Eastern and Southern Asia-Paciï¬?c Sub-Saharan Africa, TEAM Sector Development and Information Europe, Central Asia, Latin America and Technology Middle East and the Caribbean, North Africa and Western Europe 31 Nena Stoiljkovic Rashad Kaldany Dorothy Berry Lars H. Thunell Gavin Wilson Saadia Khairi Jorge Familiar Vice President, Vice President, Vice President, Executive CEO, Vice President, Calderon Business Advisory Global Industries Human Resources, Vice President and IFC Asset Management Risk Management, Vice President and Services Communications, and Chief Executive Officer Company Financial Reporting, and Corporate Secretary Administration Corporate Strategy (not pictured) 32 34 36 38 IFC AND THE POWER OUR COMPREHENSIVE OUR GLOBAL ROLE OF THE PRIVATE APPROACH TO JOB IN EXPANDING SECTOR CREATION ACCESS TO FINANCE 33 A vibrant private sector is indispensable to tackling the world’s most urgent development challenges. It takes a special kind of leadership, however, to ensure that the benefits of private sector growth reach people who need it most—the poor. As the world’s foremost private sector develop- ment institution, we strive to provide that leadership. IFC aims to create opportunity for people to escape poverty and improve their lives. We do so by leveraging our global presence and expertise to provide investment and advice that help developing countries achieve long-term, sustainable growth. We bring a distinctive set of capabilities to bear: We innovate to strengthen the private sector, we exercise influence to raise standards and shape policy, we demonstrate the benefits of ventur- ing into challenging markets, and we achieve development impact that can be measured. 34 PRIVATE SECTOR DEVELOPMENT IFC’s share of all development ï¬?nancing to the private sector by international ï¬?nance institutions 35 IFC AND THE POWER OF THE PRIVATE SECTOR Jobs. Innovation. Opportunity. The private sector drives them all. $1.1 TRILLION NEEDED ANNUALLY FOR INFRASTRUCTURE IN In developing countries, it fuels the eco- DEVELOPING COUNTRIES nomic growth and entrepreneurship that improve living standards and give people a shot at a better life. It is a vital source of tax revenues, providing governments with essential funding for health, education, and infrastructure. And it is especially important in uncertain times, when the world increasingly looks to emerging markets to power more economic growth. IFC is uniquely positioned to catalyze the power of the private sector to create growth that infrastructure projects would go unfunded— beneï¬?ts the poor. We account for almost a third developing countries need an estimated $1.1 tril- of all development ï¬?nancing provided to the lion in annual expenditures to satisfy demand for private sector by international ï¬?nance institu- infrastructure services. Much of it will come from tions, and we provide leading-edge advisory private sector sources. services to improve the investment climate and We’re also working to create a better invest- make businesses more sustainable. We work with ment climate in developing countries, because clients and policymakers to promote environ- businesses can’t thrive and create jobs when red mental, social, and governance standards and tape and unnecessary regulations thwart entre- risk-management practices that make markets preneurs. Our work with other members of the stronger, more transparent, and more attractive World Bank Group helps governments implement to investors. a legal, regulatory, and institutional environment As a central element in the World Bank conducive to job creation and growth. Group’s drive to leverage the private sector for In ï¬?nancial markets, our projects are aimed robust and sustained growth, we have identiï¬?ed at giving small and medium enterprises better a number of areas where we can make a differ- access to ï¬?nancial services, and strengthening ence, areas where the needs are too great to be local-currency bond markets. Our work also satisï¬?ed by public resources alone. enhances access to trade, which is responsible To bolster telecommunications, ports, power for half of global economic output and a crucial generation, land transport, and water and sanita- bulwark against economic crises. IFC’s trade and tion, we support public-private partnerships in supply-chain ï¬?nance programs help compa- infrastructure. Without the private sector, vital nies in emerging markets access much-needed ï¬?nancing, assuring growth and employment. Leading global policymaking institutions seek us out for our broad experience in private Left sector development. We’re working with the IFC’s work on green buildings Group of 20 major economies to foster inno- could mean “a better futureâ€? vative inclusive-business models. The G-20 for Indonesia, says Anton Suparlan, who heads a Jakarta Challenge on Inclusive Business Innovation, construction company. which IFC managed in FY12, recognized 15 com- panies that have found creative ways to improve the lives of millions of people at the base of the economic pyramid. 36 PRIVATE SECTOR DEVELOPMENT OUR COMPREHENSIVE APPROACH TO JOB CREATION For the poor, a job is the surest route to a better We’re also ï¬?nancing crucial job-producing life. Without work, it’s hard—often impossible— projects. Our $250 million investment in Egypt’s for people to care for themselves or their families. Orascom Construction Industries is expected Social and economic unrest follow. The cycle to provide more than 2,500 jobs and help boost repeats. Poverty intensiï¬?es. agricultural production. That’s why unemployment is the most In Latin America and the Caribbean, our pressing challenge of our time. Nowhere is $130 million investment in Belcorp, a Peruvian the situation more urgent than in developing cosmetics company, is expected to generate countries, home to three-quarters of the world’s nearly 9,000 jobs, three-quarters of them jobless—around 150 million people. for women. Hundreds of millions of jobs are needed We know that the beneï¬?ts of our investment simply to keep up with population growth and and advisory work aren’t always so direct. They make a dent in the global unemployment rate. can be indirect, and tricky to measure. Our work It won’t be possible without the private sector, to promote access to ï¬?nance and strengthen 150 which already accounts for 90 percent of the jobs the investment climate, for example, translates in developing countries. We’re working with our into jobs that wouldn’t otherwise exist, but these clients and partners to ensure that the private sec- tor doesn’t just create lots of jobs, but creates effects aren’t easy to capture. To better understand our indirect impact MILLION PEOPLE JOBLESS IN good jobs—jobs with safe working conditions, good on jobs, we conducted an open-source study on DEVELOPING COUNTRIES beneï¬?ts, and plenty of opportunity for workers IFC’s contributions to job creation, a ï¬?rst-of- to move up to better jobs. its-kind undertaking designed to deepen our The situation is acute in the Middle East understanding of the private sector and employ- and North Africa region, where young people in ment, and shape the way we make decisions. particular haven’t received training or education Early ï¬?ndings have provided key insights into relevant to the needs of today’s labor market. the links between economic growth, productivity, IFC is addressing that mismatch by mobilizing and job creation. donor partners, working with our extensive client That information, and the lessons we learn network, and investing in high-quality education from our clients, won’t be applied just to IFC’s under our e4e Initiative for Arab Youth. work. It will help policymakers, other develop- ment ï¬?nance institutions, and private companies fuel entrepreneurship, competitiveness, and, ultimately, job creation. We work to ensure the private sector creates good jobs—with safe working conditions, good ben- eï¬?ts, and opportunities for advancement. 90 37 % of the jobs in developing countries come from the private sector 400 38 PRIVATE SECTOR DEVELOPMENT million businesses lack the ï¬?nancing needed for growth 39 OUR GLOBAL ROLE IN EXPANDING ACCESS TO FINANCE MORE Access to ï¬?nance is critical to prosperity. But one out of two people in developing countries—more THAN 800 FINANCIAL INSTITUTIONS WORK WITH IFC AROUND than 2.5 billion in all—has no bank account. THE WORLD Nearly 400 million businesses lack the ï¬?nancing they need to grow. Estimates of the credit gap for these businesses top $2 trillion. strengthen the role of small and medium enter- The Group of 20 advanced and developing prises in growth, employment, and poverty countries recognized that deï¬?ciency as a funda- reduction. We also published several research mental obstacle to development. And it turned to reports on best practices for promoting IFC to help carry out the work of its new Global SME ï¬?nance—including the SME Finance Partnership for Financial Inclusion, which is Policy Guide, a reference book for governments designed to improve access to ï¬?nance for busi- and regulators. nesses and individuals that most need it. Our work can have signiï¬?cant catalytic Our role has been crucial. It takes skill and effects, as one of our advisory projects in China broad partnerships—involving governments, demonstrated. For many small Chinese ï¬?rms, development institutions, and the private obtaining ï¬?nance is a major challenge because sector—to address a challenge of such magni- they lack the type of collateral accepted by local tude. That’s an area of strength for us. We lending institutions. We helped Ethiopian coffee farmers have decades of experience in helping expand In 2005, Chinese authorities embarked on raise their incomes by increasing access to ï¬?nance in developing countries, reforms to encourage ï¬?nancing against a broader the quality and quantity of coffee they produce. working through a client network of more array of collateral—speciï¬?cally, valuable mov- than 800 ï¬?nancial institutions. able assets such as inventory and receivables. In FY12, as part of our work related to We were an active partner. Our China Secured the G-20, we launched the Global SME Finance Transactions Project helped promote the devel- Forum, a knowledge-sharing initiative to opment of small and medium enterprises, an important national priority. An external evaluation of the project showed that Chinese businesses received more than $3 trillion in credit through more than 385,000 loans as of June 2011. Many of the beneï¬?ciaries were small businesses—whose assets are mostly in the form of inventory and receivables. A loan from Bancamia, an IFC- supported microï¬?nance company, boosted Millar Landy Mateus Quiroga’s small lumber business in Colombia. 40 Developing countries have halved the poverty rate in the past 20 years. Yet 1.3 billion people still scrape by on less than $1.25 a day. In the decades ahead, these countries are likely to face signifi- cant new threats to prosperity—including a shift of populations from villages to cities that strains infrastructure, endangers food security, and harms the environment. Addressing those dangers is a priority for IFC. Our work with the private sec- tor is helping modernize infrastructure in places that need it most—especially Africa—and broaden people’s access to good education and health care. It is expanding and diversifying the food supply wherever it is scarce. It is help- ing establish strong and resilient local financial markets. And it is empowering businesses in developing countries to do more to mitigate and adapt to the effects of climate change. 41 42 44 46 47 48 ADDRESSING CLIMATE PROMOTING A STRENGTHENING HELPING THE POOR PIONEERING CHANGE, AN URGENT VIRTUOUS CYCLE BY FOOD SECURITY OBTAIN BETTER LOCAL-CURRENCY PRIORITY MODERNIZING AFRICA’S IN DEVELOPING EDUCATION AND FINANCE INFRASTRUCTURE COUNTRIES HEALTH CARE 42 OUR PRIORITY SECTORS % of funds needed to address climate change will come from the private sector $1.6 BILLION COMMITTED TO CLIMATE- RELATED INVESTMENTS 43 ADDRESSING CLIMATE CHANGE, AN URGENT PRIORITY In developing nations, basic resources such as food, water, and land are increasingly pressed by urbanization and population growth. Climate change intensiï¬?es those strains, especially for the poorest of the poor. The private sector is essential in addressing investment by the private sector. About the challenges—it will need to provide an esti- 30 percent of our new mandates for public- mated 80 percent of the investment required to private partnerships were climate-related. stabilize climate change. Investment of that mag- Making offices, homes, and other buildings nitude requires partnerships between govern- more energy efficient can have a big impact. ments, civil society, and international ï¬?nancial Building-related greenhouse emissions could institutions. Private sector innovation, moreover, double by 2030, with most of the increase in can lower the cost of mitigation and adaptation. developing countries. IFC is helping builders all IFC is incorporating climate change into over the world put a new emphasis on sustain- virtually every aspect of our business. We spur ability and energy efficiency—by ramping up innovation by providing investment, including investments and by developing building codes venture capital and blended ï¬?nance, and advisory that lower operating costs, cut carbon emissions, services—including standard setting and primary and reduce vulnerability to severe weather events. research into the business risks posed by climate In Colombia, we are working with the cen- change. Over the last few years, we have also tral government and the National Chamber of established a strong record of projects involving Construction to develop the ï¬?rst national Green climate-related public-private partnerships. Building Code. The new code will be imple- In FY12, IFC invested $1.6 billion in mented in the construction of up to 700,000 climate-related investments—more than low-income houses, which represent 72 percent 10 percent of our overall commitments for of new construction by 2020. Similar work is the year. Our target for FY15 is 20 percent of underway in Bangladesh, Indonesia, Mexico, the our long-term ï¬?nance commitments. About Philippines, and Vietnam. 70 percent of our investments in the power Local ï¬?nancial institutions also have a pivotal sector involved energy efficiency and renewable role in climate ï¬?nance. By providing guidance energy—including Karadzhalovo, a landmark and resources to Chinese policymakers and banks, 60-megawatt solar farm in Bulgaria. We also we’re supporting a transformation of the Chinese implemented a $35 million global portfolio of ï¬?nancial sector. The ground-breaking Green advisory programs to support climate-related Credit Policy encourages Chinese banks to invest more in energy-efficient and sustainable compa- nies. This project is vital in a country that emits more greenhouse gases than any other—it will set Our support has enabled a powerful example for the rest of the world. EnergoStroy to repair and modernize steam-power plants in Russia. 44 OUR PRIORITY SECTORS $1.6 billion invested in African infrastructure 45 PROMOTING A VIRTUOUS CYCLE BY MODERNIZING AFRICA’S INFRASTRUCTURE Even as crews put the ï¬?nishing touches on newly built roads, ports, and power stations across Africa, the continent’s people and its growing economies are demanding more. 500,000 PEOPLE TO GAIN Africa’s recent economic growth is highlight- ACCESS TO ing——even deepening— —long-standing structural IMPROVED SERVICES problems, with infrastructure growth failing to keep pace. Congested roads, a lack of clean water, and frequent power outages are the reality in many African cities. Most of Africa’s population has no access to electricity at all. IFC responded on a historic scale in 2012. For the ï¬?rst time, we invested and mobilized nearly $1.6 billion in investments in all types of private infrastructure in Africa. This was more than double the amount in 2011. Our focus is on the building blocks of any These and many other projects underscore modern economy: ports, railways, telecoms, and the strides Africa is making. But it will take time power, including renewable energy. and sustained investment for the continent to Recent successful projects highlight the build a solid infrastructure foundation. various ways IFC is helping Africa build its IFC is also leading the way in strengthening infrastructure. In Senegal, we supported private Africa’s know-how on developing and guiding sector involvement in the Dakar Toll Road, infrastructure projects in ways that achieve the which will greatly improve transport and trade right balance between private and public inter- in and around the capital. In Togo, our invest- ests and manage environmental and social risks. ment and advisory support is helping Togolese We have successfully advised African govern- power company ContourGlobal Togo S.A. ments, including local municipalities, on how to develop, build, and operate a 100-megawatt engage the private sector in essential public services, thermal power plant in the capital, Lome. and on how to restructure state-owned enter- prises. Our support for public-private partnerships between ï¬?scal years 2008 and 2012 is expected to facilitate more than $175 million in private ï¬?nanc- ing for infrastructure and health, and to provide improved services to 500,000 people. Political risks, corruption, and regulatory Far left Supported by an IFC interference remain formidable obstacles, but partnership, Liberia’s main electrical utility has installed 33,600 new economists and analysts are pointing to the connections in Monrovia. outlines of a virtuous cycle: as Africa grows, it is attracting increased investment and expertise Left Zorlu Energy Group tapped to fund and drive future expansion. Pakistan’s wind-energy potential to help alleviate the country’s chronic power shortages. 46 OUR PRIORITY SECTORS STRENGTHENING FOOD SECURITY IN DEVELOPING COUNTRIES The world produces plenty of food—more than enough We helped farmers earn a steady income through our to feed every man, woman, and child. Yet nearly a billion new Global Warehouse Finance Program. The program people go hungry every day, most of them in developing allows farmers to get cash quickly when they deliver their countries. crops to warehouses. Ordinarily, farmers must wait until That paradox reflects an unpleasant fact: poverty and their goods are shipped from the warehouse—which hunger are inextricably linked. Poor people spend most of can take weeks. Our program enables farmers to bor- their scant income on food, making them acutely vulnerable row instantly against receipts they obtain for commodity to food-price increases. Even short-term increases can have deliveries. long-term consequences, depriving children of the nutrition In addition, we expanded our Agricultural Price Risk necessary for a healthy and productive life. Management program to Africa and the Middle East, Food prices have soared over the last few years, posing an enabling access to funding and risk management for urgent development challenge. IFC has responded strongly. importers and exporters in these two critical regions. We have made food security a strategic priority, launching a IFC also manages the private sector window of the variety of innovative initiatives to help make food available World Bank Group’s Global Agribusiness and Food where it’s needed most, and at affordable prices. Security Program, which is designed to expand funding Our approach is comprehensive. It emphasizes for food-security programs in developing countries. The increased access to ï¬?nance for farmers and agribusinesses, private sector window provides loans, credit guarantees, a more favorable investment climate, knowledge and and equity investment to support private sector activities technology transfer, environmental and social sustainability, to strengthen food security. public-private partnerships, and more efficient use of land, We know that food security is a challenge we cannot water, and energy. address on our own. As the global population grows in the In FY12, we launched the Critical Commodities Finance next four decades, food production will need to increase Program to expand agricultural-commodity trade ï¬?nance by 70 percent. Developing countries will need an average in all developing countries while addressing energy needs in annual net investment of $83 billion. Getting there will the poorest countries. The program is expected to support require innovation and collaboration on a global scale. up to $18 billion in trade over the next three years. IFC is ideally positioned to play a critical role. IFC has responded strongly to rising food prices, helping to make food available where it’s needed most, at affordable prices. 47 30 countries beneï¬?ted from IFC health and education projects HELPING THE POOR OBTAIN BETTER EDUCATION AND HEALTH CARE Uneducated workers are at a severe disadvantage and establish four new ones, adding capacity for $2.2 in today’s fast-changing global economy. Without 5,000 new students. specialized training, it’s nearly impossible to The result: low- and middle-income students ï¬?nd meaningful employment—jobs that offer in the Philippines—many of them disadvantaged economic stability and social mobility. BILLION women—will have better access to specialized That’s too often the reality for low- and INVESTED IN HEALTH training, and more hope for a good job. middle-income people in developing countries. AND EDUCATION COMPANIES Education and health are top priorities for And when generation after generation goes IN EMERGING MARKETS IFC—we invest more than any other multilateral untrained, poverty becomes entrenched. institution in private sector health and educa- By investing in education, IFC is working tion in emerging markets. And we collaborate to reverse the trend. Our projects boost access to closely with the World Bank to design strategies quality education, providing skills that ï¬?t the for countries that do not have the resources to needs of the global marketplace. We invest provide high-quality health care or education directly in education companies, support lending Above, center services for all their people. Our support for specialized voca- to students, inform government policy, and share IFC is expanding access to quality health tional training in the Philippines knowledge we’ve learned working in the industry. helped Jovelyn Manamat improve care by investing in innovative business models. Over the past decade, IFC has invested her job prospects in the country’s Over the past decade, we have invested $1.6 bil- more than $2.2 billion in health and education hospitality industry. lion in health care. companies in emerging markets, with projects in Our work with Archimedes Global offered more than 30 countries. Our work in technical a new way to bring vital health services to and vocational education, an area where we are underserved populations. In our ï¬?rst direct increasingly active, can have a signiï¬?cant impact. investment in the health-insurance sector, These programs are targeted at underserved we invested $3 million in equity in Archimedes people who are often the ï¬?rst members of their Health Developments, a ï¬?rm that provides families to receive post-secondary education. health insurance and health services in Georgia We lent $24 million to TCG Holdings of and Kazakhstan. The investment will help the Philippines, a company that runs a chain Archimedes open 24 clinics and provide insur- of schools focused on the hospitality industry. ance to 670,000 people by 2018. Our investment will help expand two existing campuses of the Asian School of Hospitality Arts 48 OUR PRIORITY SECTORS + currencies in which we provided ï¬?nancing 49 PIONEERING LOCAL-CURRENCY FINANCE In most developing countries, small entrepre- 10+ YEARS IFC HAS BEEN A LEADER IN LOCAL-CURRENCY FINANCE neurs aiming to expand their businesses confront an immediate obstacle: limited access to local- currency ï¬?nancing. Local-currency bond markets tend to be small and unsophisticated. Banks are often more comfortable lending to larger, more estab- lished companies. This means that long-term We were the ï¬?rst to issue partial credit guar- local-currency ï¬?nance is not readily available for antees for domestic bond issuances in Algeria, small and medium enterprises, forcing them to India, Mexico, Russia, Saudi Arabia, and borrow in foreign currencies in order to grow. Thailand. We have provided ï¬?nancing in more Recognizing the risk this presents, ï¬?nance than 50 currencies—more than any other multi- ministers and central bank governors from the lateral development institution. Group of 20 leading advanced and developing To further advance local-currency lending countries called for a concerted effort to sup- and bond issuance in Africa, IFC signed a master port local-currency bond markets in developing agreement with the African Development Bank countries. Such markets, they said last year, can to enter into cross-currency swap transactions. provide a “spare tireâ€? in a ï¬?nancial crisis, tapping This allows us to beneï¬?t from each other’s local- local investors as a powerful alternative source currency bond issues, enhancing our capacity to of ï¬?nance. support clients’ development projects. It is the ï¬?rst That’s an area we know well. This year, we such swap agreement either institution has signed obtained approval from Ghana and eight mem- with another multilateral ï¬?nancial institution. bers of the West African Monetary Union to We also became the ï¬?rst multilateral institu- establish local-currency bond programs that will tion to sign a local swap agreement with Chinese strengthen domestic capital markets and sup- banks to provide local-currency lending. Our port private sector development in countries that agreements with China Development Bank and need it most. Our flagship Pan-African Domestic the Export-Import Bank of China will enable us Medium-Term-Note Programme will allow us to extend long-term renminbi loans for private to issue more than $1 billion in Ghanaian cedis sector development projects. and CFA francs over the next decade. Expanding long-term local-currency ï¬?nance For more than a decade, we have played a is a cornerstone of IFC’s strategy to strengthen leading role in expanding the availability of capital markets in developing countries. By local-currency ï¬?nance in developing countries. working with regulators and local institutions, we can promote effective capital-market regula- tions. It also allows us to help our clients mitigate currency risks in ways that can create jobs and expand their businesses. 50 52 54 56 57 SPARKING GROWTH IMPROVING LIVES EXPANDING HELPING COUNTRIES AND OPPORTUNITY IN FRONTIER REGIONS ECONOMIC RECOVER FROM IN THE POOREST OF MIDDLE-INCOME OPPORTUNITIES FOR CONFLICT AND COUNTRIES COUNTRIES WOMEN INSTABILITY 51 To fight poverty, it is essential to know where the poor live. Two decades ago, the answer was straightforward— 90 percent of the poor lived in poor countries. Today, only a quarter of the 1.3 billion people living on less than $1.25 a day are in low-income countries. The rest live in middle- income countries. Those numbers underscore the need for a calibrated approach to combating poverty. Poverty tends to be entrenched in the poorest countries. Even with strong economic growth, poverty rates tend to fall slowly in places like Africa. It also is harder to roll back in countries debilitated by conflict or political insta- bility. Such countries are a priority for IFC. But so are the poorest areas of middle-income countries, where large numbers of people await our help. 52 FRONTIER MARKETS SPARKING GROWTH AND OPPORTUNITY IN THE POOREST COUNTRIES Jobs were scarce in Ouanaminthe, a small city in northeast Haiti. Rolande Pericles, and thousands like her, struggled to ï¬?nd work and feed her family. That changed with the development of Codevi, an indus- trial park owned by Grupo M of the Dominican Republic. IFC’s support has allowed Grupo M to expand the park. As a result, 6,500 people now have jobs at Codevi making high-quality brand-name clothing for export. These workers now also have health and education beneï¬?ts, and an active union, a rarity for Haiti. “After being a sewing-machine operator, I became a super- Right IFC helped Grupo M visor, and now I’m a coordinator,â€? Pericles said. “The salary expand Haiti’s Codevi garment helps me take care of my home and my family.â€? factory, helping thousands of Haiti and the world’s other poorest countries struggle to workers like Rolande Pericles eradicate preventable diseases, overcome conflict, and reduce improve their livelihoods. poverty. Creating opportunity and sustainable growth in these Below Mamikon Yepremyan countries— —which are eligible to borrow from the International launched his dairy business in Development Association, the World Bank’s fund for the 2011 with a loan from IFC client poorest—is a priority for IFC. We do it by providing integrated ACBA-Credit Agricole Bank. investment and advisory support. Since 2005, our investments in IDA countries have grown sixfold, reaching nearly $6 billion in FY12. IDA countries account for nearly half of our investment projects, and 65 per- cent of our advisory program expenditures. Our record in those countries has been impressive: for every $1 in equity that IFC invested, we received a return of $2.45. Our ï¬?nancial performance has allowed us to contribute a signiï¬?cant sum to IDA replenishments—$2.2 billion so far. That’s nearly as much as our paid-in capital of $2.4 billion. 53 investments in IDA countries have grown sixfold since 2005 In our work in IDA countries, we have focused on projects that allow us to create opportunity and improve lives quickly and $6 BILLION INVESTED IN IDA COUNTRIES sustainably. In FY12, for example, we provided a $5.5 million ï¬?nancing package to develop a 138-room Hilton hotel in Burundi—a country emerging from years of civil unrest that virtu- ally devastated the economy. Burundi has been working with IDA to regain stability and strengthen and modernize its economy. The country has already seen signiï¬?- cant improvement. In the World Bank’s Doing Business 2012 report, it was ranked the seventh- most-improved economy in the world. The new hotel will improve Burundi’s appeal to businesses and international travelers, offer- ing international-standard accommodation and high-quality conference facilities. It is expected to create 155 permanent jobs, a third of which will be ï¬?lled by women. 54 FRONTIER MARKETS $7 BILLION INVESTED IN INCLUSIVE- BUSINESS MODELS 55 IMPROVING LIVES IN FRONTIER REGIONS OF MIDDLE-INCOME COUNTRIES Mobile phones can transform lives—unless you are one of the 1.6 billion people living in the remote areas where they don’t work. Most mobile-phone companies inevitably reach a spot in a country’s geography where it is simply not commercially viable to operate. For them, the distances are too great, the populations too small to justify the costs of installing the necessary equipment. People are cut off from the communications revolution as a result. Some entrepreneurs, however, see oppor- 80 countries— —has helped us reach more than tunity in bringing phone services to people in 250 million people at the base of the pyramid. remote areas. IFC specializes in backing these We also work to strengthen the private sector emerging leaders whose innovative inclusive- in frontier regions of middle-income coun- business models bring affordable, life-improving tries, helping introduce innovative solutions to solutions to people who constitute the base of the urgent development challenges. In Croatia, for economic pyramid. Our work also helps improve example, we are ï¬?nancing a wind farm near the lives for people in frontier regions of middle- town of Sibenik that will provide a steady supply income countries. of power to homes and factories while helping “Remote communities are not lost causes,â€? combat climate change. says Mike Fitzgerald, CEO of Altobridge, an Irish In Indonesia, Altobridge’s core product is technology ï¬?rm. “On the contrary, there is now the “lite siteâ€? base station that it sells to mobile substantial evidence and proven case studies carriers in developing countries for $50,000— —a throughout Africa, Asia, and the Middle East ï¬?fth of the cost of prohibitively expensive con- dispelling the myth that remote communities ventional systems in ultra-rural areas. Run with cannot deliver highly attractive returns proprietary software and low-cost solar panels, on investment.â€? Altobridge systems let clients reach communities Over the past eight years, inclusive-business of 3,000 efficiently. models have accounted for about 7 to 10 percent Last year, IFC made an early-stage $5 mil- of IFC’s annual commitments, amounting to lion equity investment in Altobridge. Indosat, more than $7 billion in all. Our work— —with more one of Indonesia’s largest carriers, used than 300 inclusive-business clients in more than Altobridge’s system to ï¬?nd new subscribers in Mambi, a remote village on Sulawesi, 15 hours by car from the nearest airport. Until recently, Mambi’s residents had almost no communications options, having to travel three hours to make a call— —or ï¬?ve hours to Our investment in Altobridge’s the nearest hospital. Now the hospital can text low-cost technology has enabled them health updates. Small entrepreneurs can mobile-phone carriers to serve make calls on their Indosat phones, which helps customers in remote villages in Indonesia. improve the efficiency of their businesses. 56 FRONTIER MARKETS Jobs in the chemical industry generally pay well. In India, however, women have historically been locked out of the market—on the assumption that they can’t work safely in such a setting. Working with our client Meghmani Organics, IFC set out to prove that wrong. In 2008, we helped Meghmani set up its ï¬?rst chemical plant with women employees. With our assistance, the company estab- lished policies that better met the needs of women employees at its new FineChem factory—including flexible work hours and special health and safety requirements. It also created separate locker rooms and shower facilities for women. The results have been noteworthy, setting an example for other chemical companies in India. About 45 women now work at FineChem, many of them from villages near the port city of Dahej, Gujarat. The company found that women were just as capable at their jobs as men—and also more productive and attentive to safety rules. The women, for their part, enjoyed stable jobs, higher incomes, and empower- ment in their homes and villages. Women are a powerful source of economic growth and opportunity. In developing countries, they account for about a third of small and medium enterprises— the engine of job creation. They make up 40 percent of the global workforce. By expanding opportunity for women in their roles as entrepreneurs, employees, consumers, and stakeholders, we can transform local and global markets. We increase access to ï¬?nance for women entrepre- neurs. We dismantle barriers to women in business. We work with our clients to improve working conditions for women. We work with local chambers of commerce and other partners to provide business and manage- ment skills training to women entrepreneurs. In Egypt, for example, we worked with Cairo Investment and Real Estate Development to conduct a EXPANDING ECONOMIC corporate governance review, encouraging the company that runs the country’s largest private network of schools to add women to its board of directors. Based on our OPPORTUNITIES FOR WOMEN recommendation, the company diversiï¬?ed its board of directors. The result was a signiï¬?cant improvement in board effectiveness, the company reported. Since we launched our Banking on Women program in late 2010, IFC has invested more than $78 million in support of women-owned small enterprises in Eastern Europe and East Asia, build- ing on our experience in Sub-Saharan Africa. Overall, our clients provided about 760,000 jobs to women in 2011. We invested $200 million in the new Global SME Finance Facility, which over its 10-year lifetime is expected to provide ï¬?nancing for 600,000 small businesses—a quarter of which will be women-owned. A microï¬?nance loan from an IFC client helped Mastura Asoeva expand her basket-making business in Tajikistan. 57 HELPING COUNTRIES RECOVER FROM CONFLICT AND INSTABILITY In the Middle East and North Africa— where the Arab Spring has deepened develop- ment challenges— —IFC has invested more than $2 billion since the unrest began in 2011. We have launched initiatives designed to expand access to ï¬?nance for small and medium enter- prises, address youth unemployment, improve job skills, and increase funding for critical $537 INVESTED IN CONFLICT- AFFECTED AREAS MILLION infrastructure initiatives. Advisory services are typically IFC’s ï¬?rst step in post-conflict regions— —they attract investment and, on the individual level, can be transforma- tive for entrepreneurs seeking a fresh start. In mineral-rich Côte d’Ivoire, for example, political and military turmoil for the past 10 years has nearly crippled the mining industry. IFC invested about $1.2 million through the West African Sama Resources to support a nickel and copper exploration project. The project will create jobs and promote growth. It will also For the 1.5 billion people living in areas affected by conflict and establish good environmental and social stan- instability, starting over isn’t easy. War and civil unrest reduce dards for future investment in the country. security, damage infrastructure and trade, destroy the regulatory In FY12, IFC invested $537 million in framework, and deny potential entrepreneurs access to credit. 45 projects in fragile and conflict-affected areas, IFC provides immediate and long-term support to help such and delivered a $31 million advisory services regions recover. We help them rebuild their private sectors and fos- program. In February, the World Bank opened ter entrepreneurship, and help get their populations back to work. a new Global Center on Conflict, Security, and In Rwanda, a country that lost as much as one-ï¬?fth of its Development in Nairobi, Kenya. Through population to genocide less than two decades ago, economic much-needed ï¬?nancial support and expertise, growth and private sector investment are key to alleviating poverty. the Center will help poor, war-torn communities Yet the country’s entrepreneurs have long had to contend with rebuild their economies. tedious legal and administrative roadblocks—red tape that makes it difficult to register a company, settle a commercial dispute, or engage in cross-border trade. 45 Through the Rwanda Investment Climate Reform program, IFC helped the Rwandan government update complicated regula- tions. The result was more than 16,000 new jobs and 8,000 new projects financed in enterprises. Rwanda is now one of the world’s leading investment- conflict-affected areas climate reformers, according to the World Bank Group’s Doing Business report. The improved investment climate makes entre- preneurs more likely to start a business, create jobs, and invest in the country. 58 Global economic uncertainty has prompted a significant decline in the flow of capital to developing countries. Private flows have shrunk by nearly 25 percent over the past two years. Aid to develop- ing countries has declined, too. In a time of scarce resources, IFC has continued to provide significant capital to developing countries. We have increasingly brought in other investors to supplement our own grow- ing investments. In FY12, for example, such investors accounted for nearly $5 billion—roughly a quarter of our overall investment commitments. Unlocking new sources of capital is central to our approach. We do so by encouraging businesses in devel- oping countries to invest in other developing countries, by tapping the resources of private equity funds, and by finding a variety of creative ways to free up capital wherever it’s needed most. 59 60 62 64 65 THE POWER OF FREEING UP CAPITAL THE GROWING WHY TRADE FINANCE MOBILIZATION FOR DEVELOPMENT IN IMPORTANCE OF MATTERS FOR EMERGING MARKETS SOUTH-SOUTH DEVELOPMENT INVESTMENT 60 MOBILIZING FOR MAXIMUM IMPACT $2.7 billion mobilized in syndicated loans 61 1,460 MILES LENGTH OF THE VITAL KENYA-UGANDA RAILWAY THE POWER OF MOBILIZATION From Mombasa on the Indian Ocean to the shores of Lake Victoria, the Kenya-Uganda rail- way crosses about 1,500 miles of arid scrublands, highlands, and valleys. It is a vital transport and trade link for East Africa. Only a few years ago, the rail network was deteriorating after decades of scarce funding and inadequate management. Accidents were frequent. for development— —about $1.1 billion more Turnaround times for railcars were unpredictable. than we mobilized in FY07 (see Operational Private investment was essential to bring- Highlights on page 25). ing this historic line back on track. In 2011, we IFC typically mobilizes third-party resources teamed up with several ï¬?nancial institutions, through our syndicated lending program, the drawing in about $274 million in ï¬?nancing for oldest and largest among multilateral develop- the new railway owner, Africa Railways Ltd. The ment banks. By providing a variety of syndicated owner invested in new equipment and brought in loan products, we let other investors join us in technical experts to build a faster, safer railroad. investments in challenging markets. In FY12, we Mobilizing funds from other investors— —who mobilized $2.7 billion in syndicated loans. invest alongside us— —is a central aspect of our IFC Asset Management Company is a fast- strategy. It allows us to achieve more than we growing component of our mobilization efforts. could on our own. It allows us to pool not only A wholly owned subsidiary of IFC, it lets investors funding but also knowledge and expertise. beneï¬?t from our expertise while delivering Our record of strong and consistent proï¬?t- strong equity returns and development impact. ability enables us to mobilize capital effectively. In In FY12, IFC Asset Management Company FY12, we worked with banks, international ï¬?nan- accounted for $437 million of the funds we mobi- cial institutions, sovereign funds, foundations, lized and committed. and other partners to mobilize nearly $5 billion Joining us in the railway project were three European development-ï¬?nance institutions— — FMO of the Netherlands, DEG of Germany, and Proparco of France—and a fund managed by IFC Asset Management Company. The Egypt-based Left private equity ï¬?rm Citadel Capital SAE also Once prone to delays and acci- played a key role. dents, the now privately owned Improvements in the railway already are Kenya-Uganda railway has under- gone a signiï¬?cant turnaround, evident. Cargo volumes have increased by 8 per- with IFC’s help. cent. The frequency of passenger trains has doubled. The accident rate has been cut nearly in Right half. We could not have done that alone. IFC helped Colombia raise funds for the $2.7 billion Ruta del Sol highway, one of the country’s key transport arteries. 62 MOBILIZING FOR MAXIMUM IMPACT $10 FREEING UP CAPITAL FOR million invested in earthquake- devastated Haiti DEVELOPMENT IN EMERGING MARKETS For small businesses in developing countries, obtaining a loan is difficult. It could soon become much more so. In the wake of the global economic crisis, investors, which would facilitate up to $4 billion regulators are eager to ï¬?nd ways to keep taxpayers in lending to SMEs in emerging markets. from having to pay for bank bailouts. Under new IFC has a long record of innovation in tapping global rules, banks will have to raise more than new sources of capital to support development in $600 billion in capital to cover potential losses. emerging markets— —especially in times of crisis and Banks will face hard choices as the rules take uncertainty. Private-equity investment can play a effect in 2013. signiï¬?cant role here, as our experience shows. One choice could be to reduce lending— We are a signiï¬?cant backer of private-equity particularly to small and medium enterprises in funds in emerging markets, and have invested in emerging markets, where capital requirements them since the 1980s. Our private-equity port- are relatively high. folio of $3 billion is invested in about 180 funds We anticipated that challenge— —and helped across the world. By investing in these funds, establish an innovative fund to enable banks we bring our performance standards and policy to increase loans to emerging-market SMEs requirements to them, which can help enhance without running afoul of capital limits. This year, the environmental and social performance of IFC invested $100 million in the new Capital their projects. Release and Redeployment Fund, which is man- We back private-equity funds because aged by the private-equity ï¬?rm Christofferson, they provide capital and expertise to small and Robb & Company. medium enterprises. In 2011, our private-equity The fund allows banks to transfer some of the investments helped support about 795,000 jobs— credit risks of SME loans to third parties, free- nearly a third of all jobs provided by our clients. ing up capital for further lending. It is expected We are often the ï¬?rst private-equity inves- to attract an additional $300 million from other tor in some of the poorest countries. This year, we made our ï¬?rst private-equity investment in earthquake-devastated Haiti. We expect our $10 million investment in Leopard Capital’s Haiti Fund to support affordable housing, renewable energy, and food production. 63 IN FY12, WE MADE OUR FIRST PRIVATE EQUITY INVESTMENT IN HAITI 64 MOBILIZING FOR MAXIMUM IMPACT THE GROWING IMPORTANCE OF SOUTH-SOUTH INVESTMENT IFC ï¬?nancing is helping Turkey’s Zorlu Energy build a wind farm that will help alleviate Paki- stan’s severe power shortages. Emerging economies need private capital. But it an IFC mobilization in Africa, uses the banking sec- all can’t originate in developed countries, where tor to anchor environmental and social standards, economic uncertainty can squeeze banks’ ability— a new avenue for our work. The transaction will have and willingness— —to lend. an impact on the poor—by making telecommunica- The movement of capital from one developing tions services more reliable and affordable, and by or middle-income country to another—South- spurring competition. South investment—is an increasingly important South-South investment doesn’t flow only out way to deepen ï¬?nancial markets, generate growth, of China. We’re also helping private sector funds and put new sources of funds to use. move into the country’s poor regions. IFC is work- It’s also a strategic priority for IFC. Over the ing with XacBank, Mongolia’s fourth-largest bank past eight years, such investment has accounted for and the country’s leading microï¬?nance lender, and 20 up to 20 percent of our projects and commitment other investors to set up a microcredit company in volumes— —increasingly in the poorest countries, Xinjiang, one of China’s poorest and most remote % in Africa, and in the Middle East. According to provinces. The project will create jobs and promote the Independent Evaluation Group, it has yielded entrepreneurship by expanding access to ï¬?nance of investment volume is strong development outcomes and helped raise for small and medium enterprises. in South-South projects environmental and social standards. IFC also encourages African countries to invest IFC is working with Chinese banks and com- across their borders, a trend that can help econo- panies to ensure that their growing investments mies emerge from years of conflict and create an in other parts of the world aren’t just proï¬?table, environment conducive to entrepreneurship. but also sustainable. By adhering to robust envi- In FY12, we provided $2.8 million to help ronmental and social standards, these projects will Nigeria’s Vitafoam expand in Sierra Leone. The be more successful in the long haul, with direct investment, IFC’s ï¬?rst manufacturing project beneï¬?ts for the poor. in Sierra Leone since the country’s civil war ended In FY12, IFC invested $1.5 billion in 41 South- a decade ago, demonstrates the signiï¬?cance of South projects. We arranged a $115 million ï¬?nancing investment between African countries and sends package for Ghana Vodafone, including $72 million a signal that Sierra Leone is open for business. in parallel loans from China Development Bank and Most crucially, the project will produce jobs and the Export-Import Bank of China. The deal, mark- government revenues, and reduce Sierra Leone’s ing the ï¬?rst time Chinese banks have participated in dependence on imports. 25 65 of trade-ï¬?nance commitments support farmers % and agribusiness Our Global Trade Finance Program has issued more than 12,500 guarantees totaling $19 billion since 2005, more than half of which went to the poorest countries. Our work has opened the door for us to engage in more than 15 fragile and conflict-affected areas. Of the trade-ï¬?nance guarantees issued under the pro- gram, more than 80 percent has beneï¬?ted small and medium enterprises. More than 25 percent of our commitments under the program has sup- WHY TRADE FINANCE MATTERS ported farmers and agribusinesses. In addition, our Global Trade Liquidity Program has supported $21 billion in trade since FOR DEVELOPMENT it was launched in 2009. In FY12, our commit- ments in the two programs totaled $6.1 billion— a 23 percent increase over FY11. International trade powers economic development— 80% and trade depends on the availability of ï¬?nance. Yet, for businesses in developing countries, trade ï¬?nance is one of the ï¬?rst things to become inaccessible in times of ï¬?nancial turbulence. This year, the economic downturn in developed coun- OF TRADE-FINANCE tries hurt businesses in Asia, Africa, and Latin America. GUARANTEES BENEFIT Several European banks, traditionally big suppliers of trade SMALL AND MEDIUM ï¬?nance, cut back in many developing countries. As the avail- BUSINESSES ability of trade ï¬?nance dwindled, its cost rose signiï¬?cantly. IFC has stepped in to bridge the gap, playing a leading role among multilateral development banks. Over the last few years, we have signiï¬?cantly increased our invest- ments in trade ï¬?nance, launching an array of innovative global initiatives to expand it in developing countries. This year, we also became the ï¬?rst international ï¬?nancial institution to begin measuring the development impact of our work in trade ï¬?nance. We think trade ï¬?nance is a signiï¬?cant area of oppor- tunity to expand our development impact. That’s partly because the private sector can’t ï¬?ll the need on its own—the “market gapâ€? in trade ï¬?nance is at least $25 billion, by some estimates. But it’s also because we’ve found that trade ï¬?nance allows us to make progress on all of our strategic priorities, helping improve the lives of people who need us most. 66 Stay Connected Web and Social-Media Resources IFC’s website, www.ifc.org, provides compre- hensive information on every aspect of our activities. It includes contact information for offices worldwide, news releases and feature stories, data on results measurement, disclo- For more information on several key sure documents for proposed investments, topics, please visit the following Web and key policies and guidelines affecting resources: IFC and our client companies. The IFC/World Bank Doing The online version of IFC’s Annual Business report www.doingbusiness.org Report 2012 provides downloadable PDFs of all materials in this volume and transla- Facebook The joint IFC and World Bank tions as they become available. It is available www.facebook.com/IFCwbg Women, Business, and the Law project http://wbl.worldbank.org/ at www.ifc.org/annualreport. The website Twitter also provides more information on sustain- www.twitter.com/IFC_org IFC/World Bank enterprise surveys #IFC and #IFCAR2012 www.enterprisesurveys.org ability, including a Global Reporting Initiative index. LinkedIn IFC issue briefs http://www.ifc.org/LinkedIn www.ifc.org/issuebriefs Scribd IFC’s project mapping tool www.scribd.com/IFCpublications www.ifc.org/projectmappingtool YouTube Africa—the Power of the Private Sector www.youtube.com/IFCvideocasts www.ifc.org/TOSAfrica IFC website Climate Change—Private www.ifc.org Sector Solutions www.ifc.org/TOSClimatechange Social Media Index www.ifc.org/SocialMediaIndex Infrastructure—How the Private Sector Helps Annual Report www.ifc.org/TOSInfrastructure www.ifc.org/AnnualReport www.ifc.org/annualreport ISBN: 978-0-8213-9751-0 eISBN: 978-0-8213-9753-4 DOI: 10.1596/978-0-8213-9751-0 67 Page 29: Abdallah Awidi Pages 30–31: Iwan Bagus Page 33: Shiho Fukada/Panos Page 34: Adi Setiadi Page 35: Mads Nissen/Panos Page 36: Belcorp Page 37: Truong Vu Minh Hieu Page 38: John McNally Page 39: Chris Jordan Page 40: Tim Smith/Panos Page 42: Alexander Charin Page 44: Sando Moore (left) Page 44: Zorlu Energy Group (right) Page 46: Xaykham Manilasith Page 47: ASHA Philippines (left) Page 47: Abbie Trayler-Smith/Panos (right) Page 48: Sven Torï¬?nn/Panos Page 49: Kesara Ratnavibhushana Page 51: Alfredo Caliz/Panos Page 52: Harutyun Poghosyan (top) CREDITS Page 52: William Daniels/Panos (bottom) Page 53: Romel Simon A product of IFC Corporate Relations. Page 54: Altobridge Design: Addison Page 56: Chris Wright www.addison.com Page 57: Great Lakes Communication and Media Center Printing: Sandy Alexander Page 58: Crispin Hughes/Panos www.sandyinc.com Page 60: Citadel Capital SAE Photography: Page 61: Constructora Noberto Inside front cover: Odebrecht Mikkel Ostergaard/Panos Page 63: josine/Getty (top) Page 2: Deborah Campos/WB Photolab Page 63: Thony Belizaire/Getty (bottom) Page 3: Ray Rayburn/WB Photolab Page 64: Zorlu Energy Group Page 4: Iwan Bagus Page 65: Sven Torï¬?nn/Panos Page 7: Dorling Kindersley/Getty Page 67: Julio Etchart/Panos Page 10: Dilip Banerjee Page 13: Great Lakes Communication and Media Center Pages 14–15: Natalie Behring/Panos Page 17: John McNally Page 19: Sara King Page 21: Dieter Telemans/Panos Page 22: Julio Etchart/Panos Page 24: Tim Smith/Panos