IFC and the
Ifc drive 10 per cent
increase in financing in developing countries in fy 1999
Oct 02 - 02, 2000
The International Finance Corporation increased investments by 10 per
cent in the 1999-2000 fiscal year and shifted more financing to the world's most
challenging markets, such as Sub-Saharan Africa where investments tripled in the past
year, according to the IFC annual report released.
IFC, the private sector investment arm of the World Bank Group, focuses
increasingly on investments that create a foundation for successful private enterprises.
Recognizing the key importance of the financial sector and infrastructure to local
entrepreneurs in developing countries, IFC placed almost 70 per cent of its new
investments in those two areas.
"These are the sectors where we can do most to build up business
in the developing world. Our investments, as well as the signals that we send to the
markets and other investors, can have a major impact," said IFC Executive Vice
President Peter Woicke.
The IFC annual repon for the fiscal year ending June 30, shows 259 new
projects in 81 countries. Some 70 per cent of those projects are in the poorest or
highest-risk frontier countries. Gross investments rose from $5.2 billion last year to
$5.8 billion, a 10 per cent increase, in FY 2000. Total project costs supported by IFC
amounted to over $21 billion. Forty-six per cent of the total dollar volume of approved
projects was in the financial sector and another 23 per cent in infrastructure. Eighty
projects were located in Africa, more than in any other region. Net income, at US$380
million, was the second highest ever.
Alongside its own loan and equity investments, IFC increased its
syndicated loan approvals to $2.3 billion in 45 projects, up almost 30 per cent from last
fiscal year. Signings of newly syndicated loans with commercial banks and other financial
institutions reached an additional $ 1.5 billion, nearly twice the level registered the
previous year. The resurgence indicates renewed interest by banks in lending to developing
countries in an environment where access to long-term finance remains highly constrained.
On the one hand, the results are evidence of a greater appetite for developing-country
exposure. On the other, participant banks remain clearly more comfortable lending in the
company of IFC or other multilateral institutions.
Among the landmark deals that IFC signed last year was the
Corporation's first foray into financing information technology. IFC and Softbank Corp., a
Japan-based global Internet company, founded Softbank Emerging Markets to incubate and
invest in Internet-related businesses in developing countries. That initiative will be
followed by more investments in the information communications technology sector in the
coming year as part of IFC's priority on investments aimed at bridging the digital divide.
IFC agreed to finance $100 million, and syndicate another $300 million, for an oil
pipeline in Chad and Cameroon in a World Bank Group project designed to support economic
and social development in one of the poorest regions in the world, building in safeguards
to protect the environment and local cultures, as well as a first of its kind revenue
management plan. A different kind of infrastructure deal was brokered in a matter of days,
when IFC provided an emergency loan of $30 million to Electricidad de Caracas to restore
power to the poorest neighborhoods hit last December by torrential rains and mudslides in
Although the difficult economic situation in Pakistan constrained IFC's
investment activities, IFC concentrated on helping its portfolio companies restructure
their debt. IFC also sought to find new ways to help local companies regain access to
international markets through the Pakistan Trade Enhancement Facility with a project size
of US$ 100 million. The project will provide a facility to guarantee documentary credits
originated by selected commercial banks in Pakistan.
Overall, IFC invested most in terms of dollar volume in Latin America,
with approvals valued at $2.7 billion, and most in terms of number of projects in Africa.
lFC invested for the first time last year in Armenia, Chad, Samoa. Saudi Arabia, and
Turkmenistan. IFC made its first investment in Syria, with an investment in Adritec, a
company that makes water-efficient irrigation systems.
IFC took the unprecedented step last year of selling its database that
tracked stock markets in emerging economies. The Emerging Markets Data Base was sold to
Standard & Poor's, a move prompted by clients' increasing demand for global benchmarks
beyond what IFC could supply.
The mission of IFC is to promote private sector investment in
developing countries, which will reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in the international
financial markets, and provides technical assistance and advice to governments and
An IFC Press Release