BASIC FACTS ABOUT IFC
Oct 23 - Nov 05, 2006
The International Finance Corporation promotes economically, socially, and environmentally sustainable private sector investment in developing countries as a way to reduce poverty and improve peopleís lives.
IFC, with 178 member countries, is the private sector arm of the World Bank Group, with headquarters in Washington, D.C., and hubs in seven developing regions. It shares the primary objective of all World Bank Group institutions: to improve the quality of life for people in its developing member countries.
IFC is the largest multilateral source of loan and equity financing for private sector projects in the developing world. It invests in for-profit ventures and charges market rates for its products and services. IFC funds project finance, corporate finance, and trade finance in the following broad areas:
Financial Products: IFCís largest activity is financing private sector projects in developing countries through loans, equity finance, and quasi-equity. IFC also offers financial risk management products and intermediary finance. A growing number of investments are in local currencies.
Resource Mobilization: IFC helps companies in developing countries tap into international capital markets. Efforts include the loan participation program, which arranges syndicated loans from banks. IFC also mobilizes financing from international financial institutions through structured finance, investment funds, private placement, and other innovative approaches. By acting as a catalyst, IFC is able to leverage its resources.
Technical Assistance and Advisory Services: IFC provides advice and technical expertise to private businesses and governments in developing countries. These services cover a broad spectrum, including advice on privatization, business-related public policy, and industry-specific issues.
From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services.
OVERVIEW OF IFCÍS ACTIVITY IN THE MENA REGION FOR FY06
IFC' strategy for the Middle East and North Africa is to support economic reform through investment and advice on global best practices; focus investments in the financial, infrastructure, and small and medium enterprise sectors; provide targeted, high-impact technical assistance for the financial sector, small and medium enterprises, the business environment, public-private partnerships, and privatizations; promote intra- and interregional investments to accelerate economic integration and business expansion.
In FY06, IFCí commitments in the region jumped more than 100 percent, for a total of $668 million in 29 projects, compared with $315 million for 21 projects during the previous year. IFCís FY06 investments were spread across the region, in economic sectors including infrastructure, manufacturing, oil and gas, and financial institutions, with the last category representing over 40 percent of IFCís regional commitments. IFCís technical assistance for client companies, government entities, and business associations, provided primarily by IFCís private enterprise partnership facility (PEP-MENA) also increased substantially this year. Total expenditures for technical assistance and advisory service projects increased from $5 million in FY05 to $20 million in FY06.
OVERVIEW OF IFCÍS ACTIVITY IN PAKISTAN FOR FY06
In FY06, IFCís commitments in Pakistan reached $125 million in 9 projects, thus increasing significantly if compared with $43 million in the previous fiscal year. During FY06, IFC was successful in launching a sizeable technical assistance program addressing small and medium enterprises, the business environment, banks and non banking financial institutions in the financial sector. To support this portfolio expansion, IFC increased its staffing by four investment officers and six technical assistance project officers, with further expansions on the technical assistance side envisioned for the first quarters of FY07. The Corporation currently operates out of its two country offices in Islamabad and Karachi.
During the next four years, IFC will be increasing its investment within the target range of $500-600 million. IFC will also explore opportunities in pre-privatization investment. The Corporation also plans to make more equity investment and intends to be a catalyst for mobilizing private equity in the country. IFC expects a solid pipeline of new business in the financial, energy, infrastructure and small and medium enterprise sectors. Active business development and the identification of investment opportunities in the manufacturing, retail, service, agribusiness, health and education sectors have also been initiated.