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ESSENTIALThe Private Sector’s Role in Development
IFC Presentation, Dec 8, 2015 to RGIT
1
Vorbemerkung
Dr. Thomas Rehermann
Senior Strategy Officer
Corporate Strategy Department
International Finance Corporation – The World Bank Group, Washington, DC
The slides carry the name of the author and should be cited accordingly. The findings,
interpretations, and conclusions expressed in these slides are entirely those of the
author. They do not necessarily represent the views of the International Finance
Corporation / World Bank and its affiliated organizations, or those of the Executive
Directors of the World Bank or the governments they represent.
TABLE OF CONTENTS
2
IFC and the World Bank Group (Slides 2- 4)
Introduction to IFC (Slides 5 -12)
How IFC Creates Opportunity (Slides 13 - 16)
IFC's Business, Reach and Results (Slides 17 - 36)
PROVIDING DEVELOPMENT SOLUTIONS … Customized To Meet Client Needs
A member of the World Bank Group
Provides investment, advice,
resource mobilization
AAA credit rating; nearly 60-year
history in emerging markets
Present in 100 countries
3
IFC is the largest global development institution focused exclusively
on the private sector in developing countries.
4
Conciliation
and arbitration
of investment
disputes
Guarantees of
foreign direct
investment’s
non-
commercial
risks
Interest-free
loans and
grants to
governments
of poorest
countries
Loans to
middle-income
and credit-
worthy low-
income country
governments
Solutions
in
private
sector
development
IBRD
International
Bank for
Reconstruction
and
Development
IDA
International
Development
Association
IFC
International
Finance
Corporation
MIGA
Multilateral
Investment
Guarantee
Agency
ICSID
International
Centre for
Settlement of
Investment
Disputes
IFC: A MEMBER OF THE WORLD BANK GROUP
Ending
Extreme
Poverty
Boosting
Shared
Prosperity
From 18%
to 3% of world
population by
2030
Increased incomes
for bottom 40% of
every country
Private sector investment is ESSENTIAL
5
THE WORLD BANK GROUP’S TWIN GOALS
6
7
The extreme Poor since 1820
• Around 1820, there were about one billion people living
in poverty by the standards of today’s poorest countries.
• That was then over 80% of the world’s population.
• On a comparable basis (as best we can determine),
there are still over one billion people who are poor by
this measure today.
• But now less than 20%.
8Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
Huge progress over 200 years
9
0
20
40
60
80
100
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Bourguignon-Morrisson
Chen-RavallionGlobal poverty rate (% below $1 a day)
1.5 billion people!
1950 saw a turning point, with much faster progress against extreme poverty
Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
Uneven but huge overall progress against
absolute poverty in China since 1980
10
0
20
40
60
80
100
1980 1984 1988 1992 1996 2000 2004 2008 2012
Poverty rate for China
Poverty rate for developing world less China
Poverty rate (% of population living below $1.25 a day at 2005 PPP)
Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
But this is not just about success in China!
Since 2000 we have
seen a marked
acceleration in
absolute poverty
reduction outside
China.
11
0
10
20
30
40
50
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Headcount index (% below $1.25 a day; excluding China)
0.4% point per year
1.0% point per year
MDGs?
Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
Looking forward: the pessimistic benchmark
for absolute poverty
• This assumes that the developing world outside China
returns to its pre-2000 pace of poverty reduction, but
China remains on track.
• Projecting the series forward, this implies that the
number of poor would fall from 1.1 billion in 2012 to 0.9
billion by 2022, and 0.8 billion by 2030.
• Almost one billion people will still be poor in 2030.
• This path will take 50 years to lift one billion people out
of poverty!
12Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
Two paths for extreme absolute poverty
13
0
10
20
30
40
50
60
1980 1990 2000 2010 2020 2030
Poverty rate: Percentage living below $1.25 a day
Optimistic
trajectory
Pessimistic
trajectory
Source: Martin Ravallion, More relatively-poor people in a less absolutely-poor world. Presentation
provided at WBG, Dec 3, 2013.
Where the poor are - absolutely and most prevalently
14
*Top ten countries according to share of global poor at $1.25/day: India (34.0%), China (13.30%), Nigeria (9.1%), Bangladesh (5.5%), DRC (4.4%), Indonesia (3.7%),
Pakistan (3.0%), Tanzania (2.4%), Ethiopia (2.2%), Philippines (1.4%)
**Top ten countries according to poverty headcount ratio at $1.25/day: DRC (87.7%), Liberia (83.8%), Madagascar (81.3%), Burundi (81.3%), Malawi (73.9%), Zambia
(68.5%), Nigeria (68.0%), Tanzania (67.9%), Rwanda (63.2%), Central African Republic (62.8%),
Source: PovCalNet URL: “http://iresearch.worldbank.org/PovcalNet/index.htm?0”
• India (IDA Blend) and China
(non-IDA) house approx. 558
million, 47% of world’s
extreme poor
• Nearly 80% of world’s
extreme poor are in ten
countries*: India, China,
Nigeria, Bangladesh, DRC,
Indonesia, Pakistan, Tanzania,
Ethiopia, Philippines. Almost
90% are in 20 countries,
• On poverty headcount ratio (%
population poor), most
prevalently poor in this
cohort are in Africa
15
Frontier markets
Climate change
and environmental
& social sustainability Local financial
markets
Long-term
client relationships
in emerging markets
Strategic
Focus
Areas
Constraints to private sector growth in infrastructure,
health, education, and the food supply chain
HOW IFC HELPS END EXTREME POVERTY
AND BOOST SHARED PROSPERITY
16
Loans, grants, equity
investments, guarantees,
and advice to support
development
*Excluding mobilizations
($7.1 bn)
Recipient-Executed
Trust Funds
$3.9
IFC* – $10.6
MIGA
$2.8
IDA
$19
IBRD
$23.5
All dollar figures are in US$ bn
39%
17%
32%
5%7%
WORLD BANK GROUP COMMITMENTS, FY15Total Commitments: Nearly $60 BN
17
IFC’S HISTORYA Global Institution, Now Owned By 184 Member Countries
IFC Launch
PSD added to
the global
economic
agenda
IFC coins
term
“emerging
markets”
IFC scales up
Investments
and builds
global
advisory
footprint
The global
leader in
private
sector
development
1990-
2000s19801956 Today
18
30+ IFIs/DFIs
Host County
Governments
Sovereign
Wealth Funds/
Institutional
Investors
900 Financial
Institution Clients
Civil Society
2,000+ Clients
20+ Bilateral Donors/
15+ Private
Foundations
IFC’S GLOBAL
NETWORK FOR
SOLUTIONS
THE POWER OF PARTNERSHIPS
IFC: A VALUABLE PARTNERWe Help Clients In Good Times And Bad By Offering:
19
A strong financial position, strategy, staff
Low leverage ratios, prudent risk management policies
A long-term partnership perspective, providing clients important
countercyclical financing when commercial banks cut back
The expertise and experience needed to make a difference,
focusing on innovative transactions where our development
impact is the highest
20
WHAT CLIENTS VALUE ABOUT IFC Results of IFC Client Survey
Long-Term
Partner Role
Stamp of
Approval
Financing
Not Readily
Available
Elsewhere
Worldwide
Presence
Global
Expertise and
Knowledge
Affiliation
with the
World Bank
Group
Ability to
Mobilize
Additional
Funds
Pricing
21
BUSINESS RESULTS:
Profitability,
Competitiveness,
Client Satisfaction
IFC’s Results
DEVELOPMENT IMPACT:
Helping the Private Sector
Reduce Poverty &
Foster Inclusive Growth
IFC
Clients
INNOVATION Innovation in key areas
INFLUENCEInfluence on outcomes
DEMONSTRATIONDemonstration effect on
others
IMPACTImpact on development
IFC’s Brand Value
CREATING OPPORTUNITY WHERE IT’S NEEDED MOST What IFC Delivers
Creating OPPORTUNITY
Unlocking CAPITAL
Promoting GROWTH
Driving IMPACT
22
BUILDING THE PRIVATE SECTOR’S ROLE IN
4 ESSENTIAL WAYS
Create jobs
Expand women’s
opportunities
Modernize health and
education
23
DEMOCRATIC REPUBLIC OF CONGO
Helping the private sector:
The private sector provides 90%
of the developing world’s jobs.
Inclusive growth is ESSENTIAL.
ESSENTIALHow IFC Creates OPPORTUNITY
Mitigate risks
Raise environmental,
social, and governance
standards
Attract new investment
needed for growth
24
BHUTAN
Helping the private sector:
90% of the world’s future population
growth will be in cities.
Sustainable urbanization is ESSENTIAL.
ESSENTIALHow IFC Unlocks CAPITAL
Strengthen infrastructure
Boost SMEs
Provide access to finance
25
INFRASTRUCTURE
Helping the private sector:
There is enormous need for new infrastructure.
Increased private investment is ESSENTIAL.
ESSENTIALHow IFC Promote GROWTH
Spark innovation
Provide essential goods
and services
Promote inclusive growth
26
EGYPT
Helping the private sector:
2.5 billion adults still lack access to basic
financial services.
Greater financial inclusion is ESSENTIAL.
ESSENTIALHow IFC Drives IMPACT
27
INVESTMENT
(Loans, Equity, Trade Finance, Syndications,
Derivative and Structured Finance, Blended Finance)
ADVICE
(Value-adding knowledge; either integrated into IFC investments or
standing alone at a broader level)
IFC ASSET MANAGEMENT COMPANY
(Mobilizing and Managing Capital for Investment)
4 Focus
Industries:
3 Product
Areas:
MANUFACTURING
AGRIBUSINESS
AND SERVICES
FINANCIAL
INSTITUTIONS
INFRASTRUCTURE
AND NATURAL
RESOURCES
TELECOMMUNICATIONS
AND INFORMATION
TECHNOLOGY
Creating Opportunity Where It’s Needed Most
WHAT WE DO: THREE MUTUALLY REINFORCING SERVICESIntegrated Solutions, Increased Impact
28
Loans Project and corporate financing
On-lending through intermediary institutions
Equity Direct equity investments
Private equity funds
Trade Finance
And Supply
Chain
Guarantee of trade-related payment obligations of
approved financial institutions
Syndications Capital mobilization to serve developmental needs
Over 60 co-financiers: banks, funds, DFIs
Derivative and
Structured
Finance
Derivative products to hedge interest rate, currency, or
commodity-price exposures of IFC clients
Blended Finance Augmenting IFC resources with donor funds
INVESTMENT
29
Financial Sector Increasing access to finance
Helping financial institutions increase financing for
housing, sustainable energy, and micro/SMEs
Investment
Climate
Supporting government reforms that attract and retain
private investment
Public-Private
Partnerships
Helping governments with PPPs in power, water, health
and education
Agribusiness Improving clients’ productivity and standards
Focusing on efficient food value chains and food security
Energy and
Resource
Efficiency
Helping clients develop solutions across the value chain
Accelerating development of commercial markets for
renewables
Cross-Cutting Gender, corporate governance, supply chains, others
ADVICE
IFC Capitalization Fund
IFC African, Latin American
Africa Capitalization Fund
IFC Russian Bank Capitalization Fund
IFC Catalyst Fund
IFC Global Infrastructure Fund
China-Mexico Fund
IFC Financial Institutions Growth Fund
IFC Global Emerging Markets Fund Of Funds
30
AMC FUNDS
IFC Asset
Management
Company had about
$8.5 BILLION in assets under
management in FY15
IFC ASSET MANAGEMENT COMPANY
IFC’S GLOBAL REACH
108 regional offices present in 100
countries worldwide, AAA credit rating
3,358 staff (59% are based outside
Washington DC)
31
32 32
Note: IFC changed its reporting practice regarding investment amounts, beginning in the current fiscal year. To align our
approach with that of commercial banks, we now report short-term finance investments separately from long-term
investments. Short-term investments are reported as the average outstanding balance for the year. This chart reflects five
years’ worth of data, calculated under the new reporting policy.
7.5
9.2
11.010.0
10.6
6.5 5.0
6.5
5.1
7.1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY11 FY12 FY13 FY14 FY15
IFC's Own Account Mobilization
$17.7 bn
$15.1 bn
$17.5 bn
$14.2 bn$14 bn
FY15 LONG-TERM INVESTMENT COMMITMENTS: $17.7 Billion
45%
19%
13%
7%
5%
5%3%3%
Financial Markets
Infrastructure
Agribusiness & Forestry
Consumer & SocialServices
Oil, Gas, & Mining
Funds
Manufacturing
Telecommunications &Information Technology
33
FY15 LONG-TERM COMMITMENTS BY INDUSTRYCommitments For IFC’s Account: 10.6 Billion
23%
22%
17%
15%
13%
8%2%
Latin America and theCaribbean
East Asia and thePacific
Sub-Saharan Africa
Europe and Central Asia
South Asia
Middle East and NorthAfrica
Global
34
FY15 LONG-TERM COMMITMENTS BY REGIONCommitments For IFC’s Account: 10.6 Billion
32%
20%11%
8%
8%
7%
5%
5%4%
Financial Markets
Infrastructure
Manufacturing
Consumer & Social Services
Funds
Agribusiness & Forestry
Oil, Gas, & Mining
Trade Finance
Telecommunications &Information Technology
35
FY15 COMITTED PORTFOLIO BY INDUSTRYTotal Portfolio: $50.4 Billion
22%
18%
17%
17%
12%
12%2%
Latin America and theCaribbean
Europe and Central Asia
Sub-Saharan Africa
East Asia and thePacific
South Asia
Middle East and NorthAfrica
Global
36
FY15 COMITTED PORTFOLIO BY REGIONTotal Portfolio: $50.4 Billion
37
BUSINESS
LINES
CLIENT
ENGAGEMENTS
Financial Sector* 425
Investment Climate* 151
Public-Private Partnerships 102
Agribusiness 102
Energy & Resource Efficiency 102
Cross-Industry 102
*Delivered through integrated WBG global practices
Total Portfolio: $1.2 Billion
FY15 ACTIVE ADVISORY PORTFOLIO
BY BUSINESS LINE
38
ANNEX
39
2.5 million jobs
Health services to 17.3 million
patients
Education to 3.5 million students
Improved opportunities for 3.4 million
farmers
Power generated for 55.8 million
customers
Water distribution to 23.4 million
people
THE REACH OF IFC’S
PROJECTS—2015
INDIA
48 million microfinance and SME loans,
totaling $270 billion
965,000 housing finance loans,
totaling $22 billion
237 million people receiving phone
connections
26.4 million people purchasing
affordable off-grid lighting
16 million people with improved
infrastructure and health services from
18 new PPPs
40
THE REACH OF IFC’S
PROJECTS—2015
TURKEY
41
$17.7 billion in long-term investment:
• $10.6 billion for IFC’s own account,
• $7.1 billion mobilized
$50.4 billion committed portfolio
$4.7 billion invested in IDA Countries
Long-Term Investments: 406 new
projects in 83 countries
Advice: 65% of program in IDA
countries, 20% in fragile and conflict-
affected areas
FISCAL YEAR 2015
HIGHLIGHTS
PHILIPPINES
42
1Assessment and management of environmental and social risks and impacts
2 Labor and working conditions
3 Resource efficiency and pollution prevention
4 Community, health, safety and security
Land acquisition and involuntary resettlement
Biodiversity conservation and sustainable management of living natural resources
Cultural heritage
Indigenous peoples
5
6
7
8
STANDARD SETTINGOur Performance Standards
43
Moscow
Minsk
Kiev
WarsawLondon
Frankfurt
Zagreb BelgradeBucharest
SofiaTirana Istanbul
Tbilisi
Yerevan Baku
Dushanbe
BishkekAlmaty
Rabat
Cairo
Jerusalem
Dubai
Tashkent
KabulIslamabad
Karachi
Sana’a
Paris
Brussels
Beirut
Amman
Tunis
ATLANTIC
OCEAN
Mediterranean
Sea
Black Sea
Aral
Sea
Barents
Sea
North
Sea
IFC Hub Offices
IFC Operational Centers
IFC Offices
Vienna
Baghdad
Sarajevo Pristina
IFC IN WESTERN EUROPE, THE MIDDLE EAST,AND NORTH AFRICA
44
Istanbul
St. Petersburg
Tirana
Zagreb
Sarajevo
Moscow
Warsaw
Belgrade
SofiaSkopje
Bucharest
Kiev
Minsk
Tbilisi
Yerevan Baku
Dushanbe
Kabul
Tashkent
BishkekAlmaty
IFC Hub Offices
IFC Operational Centers
IFC Offices
Vienna
IFC IN EUROPE AND CENTRAL ASIA
45
PACIFIC
OCEAN
INDIAN
OCEAN
Ulaanbaatar
BishkekTashkent
DushanbeKabul
Islamabad
Karachi
New Delhi
Mumbai
Colombo
Beijing
Tokyo
Dhaka
HanoiVientiane
Ho Chi Minh City
Phnom Penh
Bangkok
Hong Kong
Manila
JakartaDili Port Moresby
Sydney
Almaty
Yangon
Kathmandu
Thimphu (Bhutan)
Singapore
Honiara
IFC Hub Offices
World Bank Group Hub Office
IFC Country Offices
Seoul
IFC IN ASIA AND THE PACIFIC
IFC Hub Offices
IFC Country Offices
Caribbean Sea
ATLANTIC
OCEAN
Gulf of Mexico
PACIFIC
OCEAN
ATLANTIC
OCEAN
Rio de Janeiro
Buenos Aires
La Paz
Lima
Bogota
Port-of-Spain
Santo Domingo
Managua
Mexico City
São Paulo
Port-au-Prince
TegucigalpaGuatemala City
Kingston
San Salvador
46
IFC IN LATIN AMERICA AND THE CARIBBEAN
47
IFC Hub Offices
IFC Country Offices
ATLANTIC
OCEAN
Mediterranean
Sea
INDIAN
OCEAN
JohannesburgMaputo
Antananarivo
Lusaka
Freetown
NairobiKigali
Douala
N’Djamena
LagosAccra
Ouagadougou
Abidjan
Dakar
CairoAmman
JerusalemBeirut
Algiers
Rabat
Sana’a
Dubai
Monrovia
Kinshasa
Addis Ababa
Dar es-Salaam
Bujumbura
Bamako
Bangui Juba
Tunis
AbujaConakry
IFC IN SUB-SAHARAN AFRICA
