33817 2 0 0 2 REPORT TO THE DONOR COMMUNITY I F C D O N O R - S U P P O R T E D T E C H N I C A L A S S I S T A N C E P R O G R A M S ABOUT THE COVER This cover is the fifth in the series featuring flowers. We have used these images to symbolize our thanks to our development partners for their generous support. Previous years have featured cherry blossoms, dogwoods, tulips, and edelweiss. This year's cover features the Rosa `Bonica.' © U.S. National Arboretum Copyright © 2002 International Finance Corporation 2121 Pennsylvania Avenue, NW Washington, DC 20433, USA www.ifc.org All rights reserved Manufactured in the United States of America Environmentally-friendly printing on recycled paper using soy-based ink September 2002 The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Director, Trust Funds Department, IFC, at the address shown in the copyright notice above. 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Danvers, Massachusetts 01923, USA Table of Contents Message from IFC's Executive Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 CHAPTER 1: Future Directions for IFC Technical Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . 4 FY2002 Highlights of Donor and Promotional Meetings . . . . . . . . . . . . . . . . . 10 CHAPTER 2: IFC's Technical Assistance Trust Funds Program. . . . . . . . . . . . . . . . . . . . . . . . 14 Annex 1: TATF: TA Projects Approved for Support in FY2002 . . . . . . . . . . . . . 32 Annex 2: TATF Consultant Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 CHAPTER 3: IFC-Managed SME Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 CHAPTER 4: IFC's Private Enterprise Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Annex: The Partnership: TA Projects Approved for Support in FY2002. . . . . . . 68 CHAPTER 5: The Foreign Investment Advisory Service Program . . . . . . . . . . . . . . . . . . . . . . 72 CHAPTER 6: Promoting Environmental and Social Sustainability in Partnership with Donors . . . 78 ANNEXES: IFC Donor-Supported Technical Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . 86 Cumulative Financial Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Donor and Promotional Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 DIRECTORY:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 GLOSSARY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 (click on Chapter Title to jump to corresponding text) D O N O R R E P O R T 2 0 0 2 Message from IFC's Executive Vice President I am very pleased to be able to present to you this comprehensive report on IFC's donor-supported technical assistance (TA) programs. As in previous years, support from you, our donor partners, was significant--you provided US$75.3 million in new commitments--and I thank you all for this continuing confidence in our approach to private sector development and poverty reduction. Since I last wrote to you through this forum, a number of significant changes have taken place in the world business environment. · The atmosphere for private sector investment worldwide has changed for the worse. · Private money flows have declined sharply; investors who were keen to expand into emerging markets are now withdrawing. · Country after country is going through a crisis--Argentina, Brazil, and Turkey are but three examples. In such an environment the need for all of IFC's services in our developing member countries is higher than ever before. In anticipation of a strong demand, we have reoriented our organization to better offer the entire range of our services--funding, advice, and technical assistance--to all clients. We expect that the reorganization will also enable IFC to deliver even more effectively on its frontier strategy, which remains strongly oriented toward frontier markets and frontier sectors. Our TA programs are also IFC's mission is to promote sustainable private focused on these frontiers. The small and medium enterprise (SME) facilities and the Private Enterprise sector investment in developing countries, helping Partnership program operate in some of the poorest countries in the world, while the Technical to reduce poverty and improve people's lives. Assistance Trust Funds (TATF) program is able to provide complementary support for those essential IFC finances private sector investments in the one-off pioneering TA assignments. Some of the numbers from our technical assistance activities in developing world, mobilizes capital in the Chapter 2 will illustrate: international financial markets, and provides technical assistance and advice to governments · More than 95 percent of the TA assignments funded by the TATF program were in low- and and businesses. Since its founding in 1956 through lower-middle income countries. the close of the last fiscal year on June 30, 2002, · More than 55 percent were in high-risk countries. IFC committed more than US$34 billion of its own · More than 15 percent were in countries with a high incidence of poverty. funds and arranged US$21 billion in syndications for 2,825 companies in 140 developing countries. As mentioned last year, IFC has made sustainability a corporate priority because of the fundamental IFC's committed portfolio at the end of FY2002 was changes that are currently affecting firms, including our clients. The new awareness of the importance of US$15.1 billion for our own account and US$6.5 sustainability goes beyond environmental issues, extending to business-community relations, corruption, billion held for participants in loan syndications. and corporate governance. 2 D O N O R R E P O R T 2 0 0 2 The business case is a key tool to help achieve sustainability globally. To develop the business case, we teamed up with SustainAbility of the United Kingdom and the Ethos Institute of Brazil to gather some evidence about why it makes sense to integrate principles of sustainability into one's business. Such evidence was already available for developed countries, and this study focused on gathering it in emerging markets. The effort was funded by a generous donor and has resulted in the publication of a new report in July 2002: Developing Value: The Business Case for Sustainability in Emerging Markets. The report is based on 240 case studies of big and small firms in 60 countries on all continents. Its key findings highlight the major business benefits, the ways firms achieved those benefits, and the challenges involved. The report shows that by contributing to social development or environmental improvements, many firms around the world have reduced their costs, increased revenues, found new markets, improved access to capital, addressed risks, or achieved other business benefits. There are good business reasons for doing what they did. The business case is not always self-evident or universally strong. Where the provision of a public good directly coincides with a firm's private benefit, then that firm will bear the costs since there will be a business case. In some firms where some public goods can be delivered alongside private activity, the business case may not be as clear, or the firm may be too small to carry the often substantial costs. In the absence of an IFC client firm's willingness to pay for the cost of delivering these "additional" public goods (beyond the benefits accruing from the productive use of capital), either the public goods are forgone or their cost is borne by IFC. IFC is limited in the noncommercial costs it is able to bear by its mandate to operate commercially and by associated profitability objectives. But IFC's role requires us to reach beyond the core focus on commercially viable investments to engage in selected noncommercial activities when they are important to development. IFC is committed to follow through on this aspect of its role and seeks to work in close collaboration with its donor partners in doing so. Our shareholders and our Board support these partnerships, as evidenced in the budget for FY2003: IFC has allocated from net income US$26.2 million as its contribution toward technical assistance and advisory work, a vote of confidence to match that given to us by you, our donor partners. Peter Woicke IFC Executive Vice President September 2002 3 D O N O R R E P O R T 2 0 0 2 Future Directions for IFC Technical Assistance 4 D O N O R R E P O R T 2 0 0 2 1 IFC has made sustainability FY2002, IFC's Donor Funded Operations providing technical assistance (TA) maintained their In steady growth of recent years. Donor countries provided the bulk of these funds, which are a corporate priority and has complemented by contributions from IFC's own budget resources and staff time and, in some thus continued to work with programs, by contributions from other World Bank Group sources. donors to enhance the development impact of its Focus on Frontier Markets operations and programs. The global economic slowdown and economic crises in several major markets, combined with a sharp drop in private capital flows and the growing reluctance of many strategic investors, continue to present serious development challenges for our member countries. In this context, IFC's core strategy continues to focus on: · "Frontier" markets--countries, or sectors within a country, with limited access to capital. Market interventions are in the form of investments, advisory work (such as privatization), project facilities, and TA. IFC relies heavily on technical assistance programs to help in the difficult investment climate. · High-impact sectors, including domestic financial markets and infrastructure, whose impact generally goes well beyond the investment itself. · Support for small- and medium-size enterprises (SMEs). Because of the uncertain business environment, IFC is also giving more emphasis to supporting countries affected by volatile capital flows and to improving its own profitability, which has been under pressure over the past few years on account of several emerging market crises. Promoting Sustainable Development IFC has made sustainability a corporate priority and has thus continued to work with donors to enhance the development impact of its operations and programs. IFC is helping its clients to become aware of the opportunities to be gained from pursuing sustainability beyond existing minimum standards. In making the business case for sustainability, IFC seeks to show private firms how they can improve their financial returns while also addressing such important concerns as the environment, business-community relations, corruption, and corporate governance. 5 D O N O R R E P O R T 2 0 0 2 Strengthening Increased Donor Funding Environment recently signed a · Sweden PBS TA Trust Fund. Partnerships with Donors for Technical Assistance three-year, 44 million agreement The Swedish International with IFC to develop clean projects Development Cooperation Agency IFC continues to expand its partner- In recognition of the growing in developing countries to help has established this trust fund to ship with the donor community in importance of TA in private sector reduce global warming while also finance TA to prepare the Privredna helping to promote sustainable development, the following donor- providing the Netherlands with Banka Sarajevo in Bosnia- practices as a way to leverage its funded programs were established credits toward its carbon dioxide Herzegovina for privatization. development objectives and in-house during the year. reduction target laid out in the expertise. The business case for · Social and Environmental Kyoto Protocol. Future Programs sustainability is often more difficult Facilities. Three new facilities were · Dutch Partnership Programs. The for Delivering TA to make for firms in developing recently established in IFC's Ministry of Foreign Affairs and countries, who risk being left behind Environment and Social Ministry of Economic Affairs of In keeping with IFC's spirit of in this important area and finding Development Department: the Netherlands both entered into strengthened partnerships, IFC is themselves at a competitive ­ The Corporate Citizenship partnership programs that put all working closely with its donor disadvantage if they do not adopt Facility will help firms engage IFC TA programs funded by the partners to develop a number of sustainable practices. The challenge in public goods and community ministries under streamlined TA concepts into implementable for IFC is to promote sustainability development activities that structures. These facilitate programs. These would go beyond without departing from our core enhance their development contributions to stand-alone trust discrete TA assignments to become mandate to follow commercial impact beyond the narrow funds, various SME facilities, broader-based, multi-year, multi- principles. A strengthened partnership transaction. Foreign Investment Advisory donor programs or facilities that with the donor community helps ­ The Sustainable Financial Service (FIAS) programs, the address technical assistance needs in leverage IFC's work in promoting Markets Facility will strengthen Private Enterprise Partnership, a more comprehensive and strategic sustainability in developing countries the capacity of financial and other programs while reducing manner and often within a longer-term where the benefits of sustainability institutions and markets in administrative burdens. context. Some of these programs are are not immediately apparent or environmental and social · Italian TA Trust Fund for the outlined below: where firms are too small to afford assessment. Federal Republic of Yugoslavia. · A Global Approach to Financial the initial costs of incorporating ­ The Environmental The Italian Ministry of Economy Markets TA. This proposed sustainability into their strategic Opportunities Facility will help and Finance established this trust facility aims to strengthen access plans and activities. Sustainability finance projects addressing fund to finance privatization, to and the quality of financial and strengthened partnerships were local, as opposed to global, financial reform, and foreign services in developing countries the overriding themes of the IFC environmental issues. Projects investment promotion activities in by organizing IFC's current and Donor Roundtable held in Belgrade might be aimed, for example, at the Federal Republic of Yugoslavia anticipated financial markets TA in April 2002 and organized by IFC's reducing pollution or improving (Serbia and Montenegro). and advisory work under three Trust Funds Department. (p. 8) the use of scarce resources such · Bavaria TA Trust Fund. This trust global themes: institution building as water and energy. fund, established by the State of for mainstream financial banks; · IFC-Netherlands Carbon Facility. Bavaria, Germany, will help finance diversification into nonbank The Netherlands Ministry of project development activities in financial services; and increased Housing, Spatial Planning, and Europe, Latin America, and Asia. financing for SMEs. (p. 27) 6 D O N O R R E P O R T 2 0 0 2 · The Sustainable Mining Facility. member countries with a view to investment projects to broader Private Enterprise This facility would be a flexible promoting private sector growth. capacity-building initiatives. These Partnership mechanism funded by traditional The program is currently supported facilities are formed as collaborative donor countries as well as private by 40 bilateral trust funds provided ventures between participating donor The Private Enterprise Partnership sector companies. It would help by 22 donor government agencies. governments and IFC, usually for a (the Partnership) is a special IFC junior mining companies in frontier The program is administered under fixed period and subject to review program that provides a structured markets at an early stage in the the articles of individual trust fund and renewal. Each has its own approach for TA in the former Soviet project cycle by working with agreements negotiated between IFC unique but similar arrangements Union. Established in May 2000, the them in these major areas: advice and each donor agency. The regarding TA provision, management, Partnership now serves ten countries: on environmental and social sectoral and geographic coverage of and reporting. Armenia, Azerbaijan, Belarus, Georgia, assessment; capacity building for the TATF program reflects IFC's the Kyrgyz Republic, Russia, local communities and local overall strategic priorities as Existing and approved facilities and Tajikistan, Turkmenistan, Ukraine, governments; community develop- established annually as well as the programs include: and Uzbekistan. The Partnership ment plans; sector and feasibility priorities of individual donors. A enables IFC to consolidate its TA studies; and dissemination of best number of donor governments have · 1986: Africa Project Development activities and work closely with its practices. (p. 49) more than one trust fund within the Facility (APDF) donor partners to promote private program. Each agreement defines the · 1988: South Pacific Project Facility sector development in the region. geographic area or type of technical (SPPF) Existing Facilities and assistance that may be funded. · 1989: African Management Programs for Delivering TA Under TATF donor agencies work Services Company (AMSCO) Foreign Investment closely with IFC in the selection, · 1997: Mekong Project Advisory Service The existing facilities and programs approval, and follow-up evaluation Development Facility (MPDF) through which IFC delivers donor- of individual TA assignments. · 2000: Southeast Europe Enterprise Established by IFC in 1985, the funded TA are highlighted below, Development (SEED) Foreign Investment Advisory Service with further details presented in later · 2000: China Project Development is operated jointly by IFC and the chapters. The full operating details SME Facilities Facility (CPDF) World Bank, in collaboration with are provided in regular reports to · 2001: SouthAsia Enterprise several donor agencies. FIAS provides program donors. To support the special needs of Development Facility (SEDF) advice to the governments of devel- small- and medium-size enterprises, · 2002: North Africa Enterprise oping and transition countries on IFC manages, on behalf of a broad Development Facility (NAEDF) how they can improve their policies, Technical Assistance range of donors, a group of specialized · 2002: SME Pilots and programs, and institutions to make Trust Funds Program field-based facilities and programs. Partnerships, Linkages Program, their countries more attractive to They offer a variety of important and SME Business Enabling foreign investment. In implementing The TATF program mobilizes funds technical assistance and advisory Environment Program its activities, FIAS forms project teams from donor governments to finance programs and services for SMEs in made up of IFC and World Bank the hiring of consultants to provide developing countries with limited Planned facilities and programs staff and donor-funded consultants. technical assistance to firms and access to capital, ranging from the include the Indonesia Enterprise Since its establishment, FIAS has governments in IFC's developing preparation of business plans for Development Facility. assisted more than 120 countries. 7 D O N O R R E P O R T 2 0 0 2 IFC Donor Roundtable BELGRADE, APRIL 24­26, 2002 A broad cross-section of donor representatives attended Meetings with Donors and Consultant Promotional Seminars this IFC Donor Roundtable, as did a delegation of IFC staff and management, led by Mrs. Farida Khambata, Vice During the year IFC staff had several formal and informal meetings with donors and President Portfolio and Risk Management. Representatives consultants, both individually and in larger groups. Such meetings were intended to maintain from the European Bank for Reconstruction and Development close contact with donor agencies by discussing a range of issues, including progress with TA (EBRD) and the World Bank also attended. The Roundtable assignments, trust fund utilization, replenishment needs, amendments to trust fund agreements, provided an opportunity to share with the donors IFC's donor funding priorities, and relationships between IFC and consultants in their countries. strategic directions and its activities in different areas (such as TA, SMEs, environment, mining, and financial markets) The Annual Donors Breakfast, normally held as part of the World Bank Group/IMF Annual within the overall context of sustainable development. Meetings each year, unfortunately had to be canceled this year in the wake of the September 11 events. However, a Donor Roundtable, organized by the Trust Funds Department, was The Roundtable's overall theme was partnership. This held in April 2002 in Belgrade, Yugoslavia. (box, this page) theme was emphasized by holding the Roundtable in a developing country for the first time, enabling donors to The table of meetings (pp. 90-91) shows the extent of bilateral-IFC donor discussions held observe first-hand the outcome of IFC-donor collaboration. throughout the year, many in conjunction with consultant and business group seminars from Donors expressed satisfaction with IFC's strategic directions the donor countries. These seminars provide IFC (and consultants) with an opportunity to and the breadth of its operations. While welcoming IFC's develop contacts, to explain the TA programs and IFC's strategies and procedures, and to increased focus on sustainability, they cautioned that obtain feedback from participants. Improved contacts with the consultants and business implementing the new approach in developing country groups are key objectives of these meetings, and they help to promote IFC's collaboration firms, particularly SMEs, would be difficult and expensive. with the private sector in donor countries. They urged greater collaboration and less competition in TA activities between IFC and other multilateral institutions, Some of the meetings that took place during the year are highlighted on pages 10-13, especially the EBRD, and felt that IFC's private sector including donor meetings held by IFC for donor funded operations. approach to development, including linkages to SMEs and sustainability, should be more clearly reflected in the 8 D O N O R R E P O R T 2 0 0 2 Country Assistance Strategy and Poverty Reduction Strategy Paper processes. The donors welcomed IFC's continued efforts to develop a more coordinated and streamlined approach to donor fund-raising and expressed a desire to be involved at the early stages of program development. They called for a full discussion of trust fund management strategies at the next meeting. While generally satisfied with IFC's use of donor trust funds, they saw a need for a more streamlined approval process. They encouraged IFC to continue to seek effective ways of measuring the development impact of TA. They expressed an interest in being involved in the follow-up discussions on the TA topics proposed during the Roundtable. They encouraged IFC, when proposing new TA initiatives, to take into consideration the activities of other international financial institutions and bilateral institutions in the same sector and region, and to undertake appropriate consultations with the host government. The Roundtable concluded with a visit to Fresh & Co, a fruit juice production company in Subotica, Yugoslavia in which IFC has a US$7.7 million investment in an expansion project, and for which the Swedish International Development Cooperation Agency had provided the TA. The project sponsor, Mr. Zivojin Djordjevic, conducted a tour of the factory and described the contribution of IFC's investment and Sida's TA to the success of his enterprise. 9 D O N O R R E P O R T 2 0 0 2 FY2002 Highlights of Donor and Promotional Meetings: TATF Program October 2001 ­ Bavarian Trust Global SME Credit Enhancement Relations in the Bavarian Ministry Fund Signing, Munich, Germany Facility and the three social and of Economic Affairs, discussed his August 2001 ­ Washington DC environment facilities (Corporate ministry's interest in promoting the IFC signed an agreement with the Citizenship Facility, Sustainable participation of Bavarian companies The IFC Trust Funds Department State Government of Bavaria, Financial Markets Facility, and and consultants in the work of IFC. hosted an informal luncheon for the Germany on October 26 to establish Environment Opportunities Facility). Washington-based donor counter- a 2.5 million trust fund to help May 2002 ­ Bavarian Business parts. The luncheon gave IFC and finance private sector growth in April 2002 ­ Delegation donor representatives an opportunity developing countries. The agreement IFC Donor Roundtable to discuss recent TA activities at marks the first time IFC has estab- A trade delegation consisting of sup- IFC, including the TATF program, lished a trust fund with state govern- IFC held a Donor Roundtable in pliers and consulting firms, headed SME Facilities, the Private Enterprise ment authority, rather than a nation- Belgrade, FR Yugoslavia, on April by the Finance Minister of the State Partnership program, proposed new al government or agency. The trust 24-26. (box pp. 8-9) of Bavaria, visited IFC in May 2002. environment facilities, and financial fund will enable businesses in the A reception was hosted by Mr. Peter market initiatives, and to update German state of Bavaria to work April 2002 ­ Bavaria Business Woicke in honor of the delegation participants on IFC's strategic closely with IFC in private sector Presentation and was attended by members of the directions. development in emerging markets local German community and other and developing countries. The Bavaria Ministry of Economic international financial institutions. September 2001 ­ Finland, Affairs and the Bavarian Chamber of A presentation to the delegation Denmark, the Netherlands, October 2001 ­ Austria, France, Industry and Commerce organized a featured IFC's general commercial Iceland, and Sweden Germany, Switzerland, Sweden, seminar on April 22-23 in Munich. and development objectives, recent the Netherlands, and the United The seminar focused on the opportu- trends, and strategies. The purpose of A team of IFC staff met with Kingdom nities for Bavarian firms and consult- the delegation's visit to Washington government officials and made ants to participate in IFC's invest- was to strengthen the collaboration presentations at a series of consultant Staff from the Global Financial ments and technical assistance projects. between Bavaria's small-and- seminars in Finland, Denmark, the Markets Group and the Environment During the seminar, IFC representa- medium-size businesses and the Netherlands, Iceland, and Sweden. and Social Development Department tives discussed IFC's work in the international financial institutions. The consultant seminars were went to Europe to discuss and seek southeastern Europe region and the followed by meetings with individual early donor input regarding IFC's infrastructure sector. In addition, consultants to explore opportunities proposed Global Microfinance Mr. Norbert Stillfried, Head of the for working with the IFC. Credit Enhancement Facility, the Division for Foreign Economic 10 D O N O R R E P O R T 2 0 0 2 May 2002 ­ Dutch Visit to IFC In Dublin, IFC staff met with financial, food and agribusiness, officials of Ireland Aid to review and environment sectors, as well as Officials from the Netherlands the usage of their TA trust fund IFC's work in introducing private Ministry of Foreign Affairs visited and to discuss the importance that sector participation in state-owned IFC for its first policy consultation Ireland Aid places on poverty enterprises. Following the seminar, under the recently signed reduction and the contribution of one-on-one meetings with IFC Netherlands-IFC Partnership IFC's private sector work to this representatives and Spanish Program. Under the Partnership goal. In addition, IFC made a pres- companies were held to explore Program, the Netherlands Ministry entation to a group of consultants specific opportunities. of Foreign Affairs has pledged a organized by Enterprise Ireland. total of 11.4 million to fund June 2002 ­ Greece, various programs in CY2002. At the EBRD Technical Cooperation Business Presentation donors meeting in Belgrade, IFC staff May 2002 ­ United Kingdom, discussed how the two institutions The Greek Ministry of Economy Ireland, and EBRD Donors could continue to improve coordina- and Finance organized seminars in Meeting tion on TA work, particularly in Athens and Thessaloniki on the Eastern and Southern Europe and opportunities for Greek firms and In conjunction with the Trust Central Asia. As a follow-up to the consultants to participate in the Fund Director's participation in Belgrade meeting, a meeting was held World Bank Consultant Trust the EBRD Technical Cooperation in Washington with the EBRD to Funds and IFC technical assistance donors meeting in Belgrade, IFC further strengthen coordination efforts. programs, as well as in IFC's invest- staff visited donor counterparts in ment activities and the World Bank's London and Dublin. June 2002 ­ Spain, lending in the Balkan region. The Business Presentation World Bank and IFC representatives In London, meetings were held with discussed their operational activities the UK Department for Trade and The General Directorate for and processes. The Minister of Industry (DTI) and the UK Department International Financing of Spain's Economy and Finance discussed the for International Development Ministry of Economy and Finance, role of his ministry in supporting (DFID). At DTI, IFC staff reviewed together with Instituto Español de cooperation among Greek companies the usage to date of the trust fund, Comercio Exterior, organized a and companies in developing and and relative priorities were discussed. seminar on opportunities for Spanish transition economies. After the At DFID, IFC staff made a presenta- firms and consultants to participate seminar, individual meetings were tion on IFC's strategic directions in IFC's investment and technical held between Greek companies or focusing particularly on potential assistance projects. During the consultants and the team from the opportunities for partnerships seminar, a team from IFC discussed World Bank and IFC to explore between IFC and donor groups. IFC's investment program in the specific opportunities. 11 D O N O R R E P O R T 2 0 0 2 June 2002 ­ Israeli January and June 2002 ­ June 2002 ­ South Pacific Delegation Meeting Mekong Project Development Project Facility (SPPF) Facility (MPDF) Annual and Annual Donors Meeting About 20 leading Israeli companies Special Donors Meetings visited IFC during the annual visit of At SPPF's annual donors meeting in the Israeli Export Institute organized MPDF held three donors meetings in Sydney, all donors to the SPPF by the Economic and Trade Office FY2002. On January 18, 2002 the (Australia, IFC, Japan, New Zealand, of the Embassy of Israel. TATF staff annual donors and advisory board and Asian Development Bank) and made a presentation on IFC and on meeting was held in Hanoi to review representatives of the Board of the work of the World Bank Group the results of MPDF operations in Advisors confirmed their interest in as a whole. After the presentation, CY2001 and the proposed action and continuing financial support for separate meetings with different plan and budget for CY2002. In its activities. They also endorsed the industry specialists in IFC were held addition two special donor meetings development of a new strategic plan to explore specific opportunities. were held in June 2002, also in to reflect a shift in the focus of SPPF Hanoi: the first one to present and as it broadens its mandate further discuss the findings of the external into capacity-building work with SME Facilities evaluation of MPDF, carried out by SMEs in the region. an independent consultant under the December 2001 ­ China Project guidance of IFC Operations June 2002 ­ Southeast Europe Development Facility (CPDF) Evaluation Group; and the second Enterprise Development (SEED) to present possible strategic directions Annual Donors Meeting CPDF held its inaugural donor for a next phase of MPDF ("MPDF meeting in Chengdu, Sichuan II"). Donors were generally very On June 5-6 SEED held its annual Province, in early December 2002. pleased with the findings of the board meeting in Skopje, the FYR of The meeting was attended by evaluation and endorsed the pro- Macedonia, . All donors (Austria, representatives from Australia, the posed strategic shifts, including in Canada, Greece, the Netherlands, United Kingdom, and Switzerland, particular a greater focus on capacity Norway, Slovenia, Sweden, Switzerland, along with IFC. The donors building of local consultants and and the United Kingdom) were rep- reviewed and approved CPDF other support institutions and more resented. The donors accepted the establishment and initial work plans efforts on improving the regulatory work plan and budget for FY2003 and budgets. and institutional framework for and endorsed the results of FY2002. private enterprise. The donors were advised that an independent mid-term review of SEED is scheduled for FY2003, to be conducted by IFC's Operations Evaluation Group. It was agreed that the OEG terms of reference should 12 D O N O R R E P O R T 2 0 0 2 Reducing Emissions: be shared with the donors for comment January 2002 ­ Signing of Foreign Investment AN INNOVATIVE CARBON and that they will accept the OEG Agreement with Canadian Advisory Service FACILITY report as the mid-term evaluation. International Development Agency (CIDA) During FY2002, FIAS was in contact JANUARY 2002 ­ SIGNING OF THE with all its donors on a regular basis. NETHERLANDS CDM OPERATING June 2002 ­ Africa Project Following a series of meetings held Aside from individual visits and AGREEMENT AND A TRUST FUNDS Development Facility (APDF) throughout 2001 and in January 2002, contacts, FIAS held its annual meeting AGREEMENT Annual Donors Meeting the Private Enterprise Partnership of the consultative committee of finalized an agreement with CIDA donors to the FIAS Trust Fund on The government of the Netherlands has APDF held its annual donors meeting setting out a five year-program of October 29, 2001, in Paris. At the committed to reduce Dutch greenhouse in Abidjan, Côte d'Ivoire, on June 10. collaboration and providing a flexible meeting, FIAS management described gas emissions by 100 million tons, and will The meeting was attended by most framework to develop and launch its performance during the previous obtain some of those emission reductions of the APDF donors, who approved new initiatives. The Partnership fiscal year and presented a series of through projects in developing countries. In the APDF work plan for FY2003. launched the first project included new initiatives related to knowledge late 2000 the Dutch Ministry of Housing, Also discussed were the operational under this new agreement, the Russian management, project documentation, Spatial Planning and Environment report and results for FY2002, in Far East Business Development and the design of new products approached IFC to explore whether IFC which the donors expressed their Program, in February 2002. focusing on FDI and corporate social could assist it in procuring emission satisfaction, particularly regarding responsibility as well as competition reductions under the Clean Development the new work in SME, consultant policy. Donors welcomed these Mechanism (CDM) of the Kyoto Protocol. In and financial institution training, June 2002 ­ Finnish initiatives and appreciated the January 2002, Minister Pronk, the Minister and business linkages. Delegation Seminar availability of more detailed for Environment and Mr. Wolfensohn, information at the project level. president of the World Bank Group, signed Mr. Erkii Palmqvist, Deputy Director the IFC­Netherlands CDM Operating Private Enterprise General of the Finnish Ministry of FIAS's Asia-Pacific Regional Office Agreement and a separate Trust Funds Partnership Trade and Industry, attended the first (APRO) in Sydney has been in con- Agreement. The agreements provide for the steering committee meeting of the tact with its bilateral donors, establishment of the IFC­Netherlands September 2001 - Signing of Partnership's Northwest Russia Leasing Australia and New Zealand, on a Carbon Facility (INCaF) with 44 million to Agreement with the Swiss State Development Project in St. Petersburg number of occasions, including a purchase emission reductions from eligible Secretariat for Economic Affairs in June 2002. Following the committee visit to Canberra in December 2001 projects in developing countries and some (seco) meeting, Mr. Palmqvist declared the by FIAS Manager Joseph Battat and additional funds to cover IFC's project opening of the leasing seminar, Regional Manager Andrew Proctor. processing costs. At the time of writing, The Partnership signed a three-year organized by the Partnership. The In addition, APRO has provided its the facility was processing projects to agreement with seco establishing seminar was attended by more than donors with a biannual report detail- purchase emission reductions from four cooperation in Central Asia, Russia, 60 representatives of Russian and ing the current status and expected projects, including a biogas energy project and Ukraine. Representatives from Finnish companies. developments of FIAS activities in in Southeast Asia, a biomass cogeneration seco visited the Partnership's opera- the region. project in Central America, a switch to tions in Moscow in April 2002 for a cleaner fuels in an industrial project in briefing on results achieved thus far. South America, and a waste-to-energy 13 project in South Asia. D O N O R R E P O R T 2 0 0 2 IFC's Technical Assistance Trust Funds Program 14 D O N O R R E P O R T 2 0 0 2 2 U nder IFC's Technical Assistance Trust Funds (TATF) program, 137 technical assistance assignments valued at US$14.9 million were approved in FY2002. Highlights of program activity during the year were: TATF acts as an idea · NEW TRUST FUNDS. Three new trust funds were signed this fiscal year with the State of Bavaria, Germany; the Italian Ministry of Economy and Finance (trust fund for the Federal Republic of incubator, as a front-end Yugoslavia); and Swedish International Development Cooperation Agency (Privredna Banka Sarajevo Trust Fund). for TA programs. · RENEWAL OF TRUST FUNDS. Two existing trust funds--with the Netherlands Ministry of Economic Affairs and with the Netherlands Ministry of Foreign Affairs--were extended through the signing of a Partnership Arrangement. · COUNTRY COVERAGE. TA work was carried out in more than 60 countries and included individual country, multicountry, and global assignments. · POVERTY AND LOW-INCOME FOCUS. Overall, more than 90 percent of TA assignments were in low- and lower-middle-income countries. Eighteen TA assignments, with a value of US$2.2 million, were carried out in countries with a high incidence of extreme poverty (more than 25 percent of the population living on less than US$1 a day). · COUNTRY RISK FOCUS. Eighty-nine TA assignments were carried out in countries with very high country risk ratings.1 · CONTRIBUTIONS TO THE PROGRAM. New commitments of funds by donors to TATF totaled US$22.9 million in FY2002 compared with US$14 million in FY2001 (that is an increase of about 65 percent over FY2001). The three new trust funds established this year account for the bulk of the increase: US$6 million with the government of Italy, US$2.3 million with the State of Bavaria, and US$1.2 million with the government of Sweden. In addition, IFC continued its annual contribution of Left: IFC Executive Vice President US$2.0 million to the TATF Program. Peter Woicke and Bavarian State Minister of Finance Dr. Kurt Faltlhauser. 1 As defined by the World Bank Development Indicators and Institutional Investor Magazine. 15 D O N O R R E P O R T 2 0 0 2 Trends in TA Assignments In FY2002 a total of 137 new TA assignments (US$14.9 million) were approved. A complete listing and description of all the TA assignments approved under the program in FY2002 are presented in Annex 1 to this chapter (p. 32). IFC's TATF Team FY2002 saw a modest increase of about seven percent in number and a small decrease in terms of value between FY2001 and FY2002 approval numbers. The average value of TA assignments approved in FY2002 was US$109,000, compared with an average value of US$122,000 in FY2001. In FY2001, there Program Overview were 23 TAs in excess of US$200,000, compared with 17 in FY2002. The smaller assignments accounted for more than 60 percent of the value of approvals in The TATF program was instituted by IFC in 1988 to manage technical FY2002, compared with about 55 percent in FY2001. assistance programs funded by bilateral and multilateral donors. At the end of FY2002, the program comprised 40 trust funds established through The IFC Role agreements signed between IFC and 22 governments.2 invoices and expense statements; financial accounts management; and in the TATF Included in TATF FY2002 cumulative contributions (totaling US$169 million) is legal clearances. IFC's Trust Funds additional funding totaling some US$7.9 million earmarked for new initiatives Department, which has overall approved toward the end of FY2002 or being proposed to the IFC Board. These Program responsibility for management of include two new global initiatives (Global Microfinance Credit Enhancement the program, is funded through Facility, US$1.09 million, and Social and Environment Facilities,3 US$2.66 administrative fees charged to million); SME programs, US$2.69 million; and the Indonesia Enterprise The technical assistance individual trust fund accounts under Development Facility, US$0.87 million. Of the US$7.9 million, US$7.3 million assignments carried out under the agreements with donors. Close was contributed by the Netherlands Ministry of Foreign Affairs, and TATF program are developed and liaison is maintained between IFC's US$0.6 million by IFC for the Social and Environment Facilities. Thus, total task-managed by IFC staff. The TA Trust Funds Department, IFC's cumulative contributions to the TATF program since its inception amount to assignments cover a wide range of Controllers & Budgeting Department, some US$162 million. This total includes contributions made both by donor activities and may be linked directly and units of the World Bank respon- governments (the largest contributors) and by IFC through its allocations to to a prospective IFC investment sible for donor-funded programs and the IFC TA Fund. (see Cumulative Financial Support tables, pp. 88-89) project or targeted toward broader trust fund accounting. In addition, IFC groups such as SMEs or government and World Bank staff work closely in Australia, Austria, Canada, Denmark, Finland, France, State of Bavaria (Germany), Greece, India, 2 agencies. In all assignments, IFC the design and implementation of Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Spain, Sweden, staff are directly involved in the many TA assignments, particularly Switzerland, United Kingdom, and the United States. supervision of TA; the identification, where the TA is related to broader The Corporate Citizenship Facility, the Sustainable Financial Markets Facility, and the 3 selection and hiring of consultants; policy dialogue involving a Environmental Opportunities Facility. For details, see Chapter 6. the processing of consultant government and the Bank. 16 D O N O R R E P O R T 2 0 0 2 Number of TA Assignments Approved Annual Contributions Total annual disbursements in FY2002 were US$12.2 200 25 TA ASSIGNMENTS million, up by about US$0.4 million from FY2001. APPROVED & 20 CONTRIBUTIONS, 150 The average size of TA assignments shows a decrease FY1998-FY2002 15 over the last five years. This should, however, be seen 100 in the overall context of donor-funded operations 10 in IFC which have been increasing year-by-year. 50 5 TATF acts as an idea incubator, as a front-end 0 0 for TA programs. After a small number of TA 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 assignments show promise, IFC is able to take that experience and expand it into stand-alone programs. Feasibility studies for SME facilities, trial training programs for financial intermediaries, Fiscal Year 1998 1999 2000 2001 2002 and community development assignments around TA projects approved 138 153 160 128 137 mining projects are good examples of this role. Value of approvals (US$ m) $21.4 $19.8 $20.2 $15.6 $14.9 Average TA project value (US$ m) $0.155 $0.129 $0.126 $0.122 $0.109 Typically there is a lag between approval of a TA Number of large approvalsa 37 29 26 23 17 assignment and payments to consultants. In addition, Annual contributions (US$ m) $16 $25 $14 $14 $22.9 reduced costs of TA assignments and droppages Annual disbursements (US$ m) $8.4 $13.2 $13.0 $11.8 $12.2 (that is, withdrawal of approved TAs) contribute Number of main trust funds 27 34 35 37 40 to disbursement levels being lower than approvals. Annual disbursements are relatively stable, while total approvals have shown a slight decline. aLarge approvals are defined as those in excess of US$200,000. TA assignments were carried out in more than Number of Amount 60 countries in FY2002. The ten countries that TEN LARGEST Recipient Country TA Approvals (US$ Millions) were the largest recipients accounted for about RECIPIENT COUNTRIES FR Yugoslavia 16 2.06 41 percent of the number of assignments and some OF TAs IN FY2002 Russian Federation 12 1.77 57 percent of the value. The Federal Republic of China 11 1.47 Yugoslavia had a share of 12 percent in numbers Lao People's Democratic Republic 2 0.60 and 14 percent in value terms, due in part to the Philippines 2 0.52 establishment of two trust funds (established by Ukraine 4 0.49 the governments of Italy and Sweden) earmarked Mozambique 2 0.43 for TA in that country. Kenya 1 0.40 Bulgaria 2 0.38 Bangladesh 3 0.36 17 D O N O R R E P O R T 2 0 0 2 TA in Poorer and Riskier Countries COUNTRY RISK RATING NUMBER (%) OF APPROVALS IN FY2002 IFC's strategy for technical assistance 60 IFC Investment IFC TAa is for TA to "lead" investment 50 activities by focusing efforts in Country income countries where the circumstances 40 Low 40 (21%) 46 (40%) facing private businesses are more difficult. A relatively high proportion Lower-middle 93 (48%) 60 (52%) 30 of IFC's TA work is thus undertaken Upper-middle 59 (31%) 9 (8%) 20 in poor countries with high-risk economies. The table and charts on Country risk rating 10 this page show this clearly. In <30- Not Rated 50 (26%) 64 (56%) FY2002, more than 90 percent of 0 30-45 92 (48%) 25 (22%) <30 - Not Rated 30-45 45-60 >60 IFC's TA assignments (both in number and value) were undertaken 45-60 44 (23%) 26 (23%) Source of country income and risk classifications: World Bank Development Indicators and Institutional Investor Magazine in countries classified as being low- >60 6 ( 3%) 0 ( 0%) or lower-middle income, with about COUNTRY INCOME 40 percent in low-income countries. aExcluding TAs carried out in Global / Multi Regions 60 These percentages for TA work were slightly higher than the proportion of 50 IFC investment activity. Mali, Mozambique, Nigeria, and 40 A total of 18 assignments worth Pakistan. Private sector­oriented TA 30 US$2.2 million were carried out in in these countries takes on a special nine countries identified by the significance, given that all except one 20 World Bank as having a high inci- currently have limited or no access dence of extreme poverty (more than to international financial markets. 10 25 percent of the population living 0 on less than US$1 per day). The Overall, 56 percent of IFC's TA in Low Lower-middle Upper-middle countries involved were Bangladesh, FY2002 was carried out in the India, Kenya, Lao People's higher-risk countries, compared with Democratic Republic, Madagascar, 65 percent in FY2001. IFC Investment Activity IFC TA Activity 18 D O N O R R E P O R T 2 0 0 2 TA Activity by Region APPROVALS BY VALUE APPROVALS BY NUMBER (PERCENT) (PERCENT) Two regions benefited from substantial Global Global increases in TA work compared with Sub- Sub- Saharan Saharan 8% FY2001: the Central and Eastern Europe 10% Asia and Asia and Africa Africa Pacific Pacific 29% 11% 27% and Asia and Pacific regions, accounting 10% MENA 2% MENA 4% for 63 percent of FY2002 TA approvals. LAC 4% LAC 4% Europe saw a sharp increase in both the 5% Central 10% Central Asia number of projects (up 32 percent) and the 40% Asia Europe 36% Europe value (up 28 percent). The large increase was especially visible in Yugoslavia, the largest single beneficiary of TA in FY2002. The Asia and Pacific region experienced a 16 percent increase in funding approvals TA ACTIVITY BY DONOR COUNTRY AND REGION and a nine percent increase in the number of TAs compared with the previous year, with Donor Asia and Central Sub-Saharan China being the region's major recipient of Country Pacific Asia Europe LAC MENA Africa Global Total TA. Sub-Saharan Africa continued as the Australia 436 ­ ­ ­ ­ ­ ­ 436 third largest recipient with almost the same Austria ­ ­ 145 ­ ­ ­ ­ 145 numbers in both projects and funding as in Canada 419 67 219 ­ ­ 29 300 1,034 the previous year. The largest decrease was Denmark 117 ­ 303 ­ 30 80 ­ 530 in Central Asia, where 65 percent less fund- Finland 119 190 ­ ­ ­ ­ ­ 309 ing was approved and 18 percent fewer Greece ­ ­ 560 ­ ­ ­ ­ 560 projects were implemented. This region IFC TA Fund 299 396 560 151 134 264 170 1,974 remains a very difficult region for business, Ireland 45 ­ ­ ­ 99 ­ 240 384 and the situation was exacerbated by the Italy 400 ­ 369 ­ ­ ­ ­ 769 war in Afghanistan, which had a profound Japan 1,716 83 ­ ­ ­ ­ 737 2,536 effect on other countries in the region. The Luxembourg ­ ­ ­ ­ ­ 47 ­ 47 Latin America and Caribbean (LAC) region, Netherlands 90 ­ 165 ­ ­ 80 ­ 335 traditionally a small recipient of TA, saw a New Zealand ­ 36 ­ 45 ­ ­ ­ 81 decrease in projects. The continuing volatile Norway 311 ­ 890 ­ ­ 350 ­ 1,551 situation in the West Bank and Gaza had Sweden 60 ­ 1,630 ­ 31 636 ­ 2,357 an effect on the use of funds in the Middle Switzerland 221 ­ 330 ­ ­ 50 ­ 601 East and North Africa (MENA) region. United Kingdom 50 70 218 81 ­ ­ ­ 419 United States 38 509 252 ­ ­ ­ 799 Highlights of the projects in the different TOTAL (US$ thousands) 4,283 880 5,898 529 294 1,536 1,447 14,867 regions follow (details of individual TA proj- ects can be found in Annex to this chapter). Number of Approvals 37 14 49 6 5 15 11 137 19 D O N O R R E P O R T 2 0 0 2 ASIA AND THE PACIFIC: 37 assignments, US$4.3 million in funding (United Kingdom, IFC TA Allocation). Another project conducted a market survey and technological review to help Uzbekistan make the transition Thirteen donors are active in the region. Japan is the most active donor from being a cash-based society to a credit card payment system (Finland). (US$1.72 million) followed by Australia, Canada, and Italy (US$0.4 million IFC provided strategic advice to the Kyrgyz Government to help create the each). Approximately a third of all TA in Asia was devoted to China, including enabling conditions for greater private investment in the information, two large corporate governance projects that are being undertaken in collabo- communications, and technology sector. Japan ration with the China Project Development Facility (CPDF). The financial sector, a key for private sector development, saw substantial TA work on training for EUROPE: 49 assignments, US$5.9 million in funding banks and insurance companies. An important TA was a large gold and copper mine in Lao PDR, where significant environmental and social issues needed to Europe was the largest recipient of TA, with 49 projects reflecting a need for be addressed; the TA will help the mine operators go beyond the minimum TA in most of the transition economies. Twelve donor countries provided the requirements of the World Bank Group guidelines (Australia, Japan). Several funding for these TA projects. The four largest donors were Sweden (US$1.63 environmental projects carried out in China, India, and the Philippines sought million), Norway (US$0.89 million), Greece (US$0.56 million) and IFC TA to ensure that international standards are observed or to develop the capacity Allocation (US$0.56 million). Yugoslavia this year was the largest recipient overall and skills of domestic consultants and specialists to undertake environment for funding in Europe through the TATF program, with more than US$2 mil- review and mitigation work. Denmark, Finland, United Kingdom lion in TA. Most of the 16 Yugoslav TA projects were conducted through the Swedish Yugoslavia Trust Fund and supported work in a variety of sectors, CENTRAL ASIA: 14 assignments, US$0.9 million in funding including shipbuilding, steel, solid waste services, rubber, and fruit juice. The privatization of municipal solid waste services in Belgrade was supported by TA activities in this "frontier" region dropped in comparison with FY2001. experts from Denmark, Greece, Norway, Sweden, and the IFC TA Allocation. With the political unrest and the recent change of government in Afghanistan, These experts helped on all aspects of the privatization from determining the it became clear that basic economic infrastructure was missing and that optimal structure of the company to the conduct of the competitive interna- significant inputs of TA were required to address the situation. Given the lack tional tender process. Russia was another major recipient of TA, with total of hotels to accommodate visiting aid agencies, international organizations, funding of US$1.77 million. An innovative TA project assisted a large coal and potential investors, IFC coordinated a study for hotel development in mine and associated power plants in the region of Krasnoyarskugol. Funded Kabul (USTDA, IFC TA Allocation) and did feasibility work on eco-friendly by Norway, the United Kingdom, and IFC TA Allocation, this TA included tourism in Tajikistan and on the potential for developing a new hotel in the environmental, financial, and social audits as well as an analysis of potential capital, Dushanbe (IFC TA Allocation). Another study assesses the financial trading of greenhouse carbon credit emissions. Other notable TA assignments service needs of micro and small entrepreneurs and the feasibility of establishing included a project to help auto component suppliers in Russia improve the microfinance institutions, in particular in Tajikistan and the Kyrgyz Republic quality and quantity of production to international levels (USTDA); a potato (Canada, IFC TA Allocation). Targeted assistance was given to various SMEs and dairy production project in Russia (Canada); and a fruit farming initiative in the Kyrgyz Republic, Tajikistan, and Uzbekistan on, for example, instituting in Bulgaria to implement a program to support economic fruit production and appropriate management information systems to help strengthen operations sustain an indigenous fresh and processed fruit industry in Bulgaria. Greece 20 D O N O R R E P O R T 2 0 0 2 LATIN AMERICA AND CARIBBEAN: 6 assignments, SUB-SAHARAN AFRICA: 15 assignments, US$1.5 million in funding US$0.5 million in funding TA work in Sub-Saharan Africa remained at about the same level as FY2001. Examples of TAs undertaken include support for a regional pilot project to The single largest project in Africa was in support of the privatization of promote and develop "cleaner production" investments (more efficient use of Petromoc, the national oil and natural gas distribution company in materials, energy and water) in Latin America (USTDA). Two notable TAs Mozambique (Norway, IFC TA Allocation). Other large TA efforts to support were undertaken in Mexico. The first helped establish a new weather risk privatizations involved Kenya Railways (Sweden) and Air Tanzania (IFC TA management company with the aim of launching weather index insurance Allocation). TA work to strengthen the important SME sector was supported products (United Kingdom). This would be the first company to systematically through the trust funds of Canada, Denmark, Luxembourg, and Switzerland. sell weather index insurance on a large scale to farmers in Mexico, thus bringing to developing countries an agricultural product that is widely available to Other examples of activities in this region include a range of advisory services other countries. The second TA provided expert advice to the Government of and training projects with small- and medium-size entrepreneurs, business Mexico to assist in the development and implementation of its program to associations, and NGOs in Mali and Nigeria (Luxembourg, the Netherlands); increase private sector involvement in the provision of public services through an innovative project assessing the feasibility of constructing a model Public-Private Partnership Projects. United Kingdom, IFC TA Allocation "eco-village" and the designs for sustainable low-income housing and services in South Africa (the Netherlands); a study of the primary and secondary education market in South Africa (Sweden); and a market analysis of the MIDDLE EAST AND NORTH AFRICA: 5 assignments, information technology and Internet sectors and investment outlook in Côte US$0.3 million in funding d'Ivoire, Ghana, Nigeria, and Senegal. Sweden Five projects were initiated in this region, making it the smallest recipient of GLOBAL PROJECTS: 11 assignments, US$1.4 million in funding IFC TA, a dramatic change from two years ago when the West Bank and Gaza was the largest single recipient of new TA. The continued civil strife in the Global or multiregional assignments undertaken through funding provided by region made any new TA projects in the West Bank and Gaza impossible Canada, Ireland, Japan, Sweden, and the IFC TA Allocation accounted for despite the need for expert assistance in many parts of the economy. In FY2002, about 10 percent of total TA funding. Activities conducted were often related the largest project in the MENA region involved the use of partnerships to technologies that can be applied globally. Examples are analysis of the between the private sector and nongovernmental institutions (NGOs) in Egypt "business case" for corporate social and environmental sustainability in to provide on-the-job training for individuals from impoverished regions of emerging markets (Ireland); assessments of the technology needs of industrial Cairo (IFC TA Allocation). Other TAs include a market assessment project for manufacturing companies, and on developing global competitiveness and the financial services industry in the Islamic Republic of Iran, the first IFC productivity improvements (Ireland); development of tools and mechanisms TATF involvement in that country (Ireland), and an insurance industry sector for mining companies and mining communities in developing countries that study in Syria. Sweden would help them to become effective partners in the prevention and treatment of HIV/AIDS (Canada); and development of an SME-Toolkit (Japan). The objective of the SME-Toolkit is to use technology to bring SMEs information on products and services needed throughout their business development cycle, thereby increasing their productivity, efficiency, and capacity as well as improving their access to capital and new markets. 21 D O N O R R E P O R T 2 0 0 2 Types and Sectors of TA Assignments Number of NUMBER OF ASSIGNMENTS, BY TA TYPE* Type of TA* Assignments IFC project-related 51 Consistent with its strategy, the SME support 36 IFC project-related TATF program supported TA Sector reviews / identification 38 SME support assignments with broad-based Enabling environment 31 Sector reviews/ development impacts. A majority of identification Training and capacity strengthening 25 TA assignments contributed to one Enabling environment Privatization / corporate advisory 29 or more types of TA; for example, a Training and capacity Postprivatization 4 strengthening TA evaluating a specific project risk Privatization/ Others 29 may also have components that corporate advisory enhance the legislative and regulatory Postprivatization *These categories are not mutually exclusive enabling environment for the project Others or sector or improve the management 0 10 20 30 40 50 60 or environmental capacity of the *These categories are not mutually exclusive TA beneficiary. The main sectors in which IFC TAs Number of were carried out during the year were NUMBER OF ASSIGNMENTS, BY SECTOR Sector name Assignments Amount (US$) financial services, manufacturing and Financial services 41 3,804,864 industry, and infrastructure (which Financial Manufacturing and industry 34 3,675,700 services includes power, telecoms, water, and Food and agribusiness 6 846,138 Manufacturing transport sectors). and industry Infrastructure 18 2,872,410 Food and Health care and education 3 335,300 agribusiness There were also a large number of Multisector TA 35 3,332,776 multisector TA assignments. Infrastructure Total 137 14,867,188 Health care and education The following paragraphs highlight TA assignments by sector, many of Multisector TA these have been previously noted in 0 10 20 30 40 50 the regional review paragraphs. 22 D O N O R R E P O R T 2 0 0 2 Small- and Medium-sized · BUSINESS ENVIRONMENT-- business environment reforms at · A country mapping study in Papua Enterprises developing business environments both the national and local level. New Guinea (Australia) and the through TA that addresses govern- During the past year, IFC, with the preparation of a country map for Small- and medium-sized enterprises ment policies, public and private assistance of donors, has supported: Egypt. IFC TA Allocation are an increasingly recognized source sector institutions, and physical · In collaboration with the Mekong of job creation and in many countries infrastructure; · A forum in Nigeria on competi- Project Development Facility, form the bulk of the private sector. · CAPACITY BUILDING--building tiveness and private sector growth. preparation of a major domestic Thus, they often represent the foun- the skills and capabilities of entre- Canada private enterprise study for dation of the local economy, serving preneurs, financial intermediaries, · In coordination with the CPDF, Vietnam. Australia as the main source of private sector and SME support agencies; IFC is working on corporate · A series of annual surveys of the development, and are one of the keys · ACCESS TO FINANCE--develop- governance issues in China. Italy, SMEs in the Ukraine. This year to reducing poverty. In FY2002, 25 ing new or supporting existing Canada the work will also include an percent of TA assignments funded financial intermediaries to help · A review of the legal and regulatory in-depth analysis of a particular under the IFC TATF program were address direct financing needs; and environment was conducted as subsector. Norway activities that directly or indirectly · ACCESS TO INFORMATION part of a leasing market and focused on SMEs in developing TECHNOLOGY (IT)--developing investment assessment survey in SMEs also need substantial direct countries. These TAs ranged from IT options for SMEs to build Albania. Italy and indirect TA for capacity building fairly small interventions such as knowledge, open new markets, if they are to remain competitive and US$8,000 to develop SME financing and find cost-effective financing To better understand the business grow. This work falls into two broad options in Papua New Guinea to as options. environment for SMEs, the World categories: support to local business much as US$475,000 for the global Bank Group has developed a country organizations and local SME service development of an Internet-based A balanced and fair business envi- mapping tool. These country maps, providers; and direct TA for specific SME-Toolkit technology platform. ronment is key to the creation and sector studies and surveys all involve businesses in which IFC may invest growth of SMEs. IFC's work with a wide range of SME stakeholders directly or indirectly through a This section highlights the TATF SMEs has found that they are at a and will help the Bank Group financial intermediary. Some good activities that support IFC's SME considerable disadvantage compared highlight the importance of the examples include: initiatives in developing countries.4 with larger companies; rarely are SME sector in the development of These activities are often carried out SMEs given equal business opportu- Poverty Reduction Strategy Papers · In Mali IFC partnered with an in conjunction with field-based SME nities. Good legal and regulatory and Country Assistance Strategies as international NGO to establish facilities. They cut across the four structures, including modern well as influence governments to an SME development program. strategic pillars that the World Bank corporate governance standards, are reduce barriers to SME growth. Luxembourg Group has identified as critical for a necessary but not sufficient condi- For example, IFC has supported: · In Nigeria IFC carried out a SME development: tion for the development of the SME business associations' needs sector. The local business community assessment, sponsored a workshop 4For more comprehensive information on the must also have a voice in promoting to help build strategic alliances World Bank Group's SME-related work, see the separately issued "Report ­ World Bank Group Review of Small Business Activities" and also Chapter 3. 23 D O N O R R E P O R T 2 0 0 2 among SMEs, funded more Examples of company-specific helping to assess and strengthen in-depth TA for the strategic capacity building for SMEs are: SME lending practices in private development of the Manufacturing financial institutions. Norway Association of Nigeria, and · Support for Asian wood suppliers · In China IFC is working to provided TA to a local NGO to to improve their environmental strengthen a city commercial bank strengthen its entrepreneurship management systems. Finland in Chengdu, Sichuan Province, program for the informal sector. · Assistance to several Central Asian that serves local SMEs. Norway IFC provided TA to develop SMEs to improve their accounting · In the Pacific Islands of the Asia designs for sustainable low-income and management information sys- region IFC is investigating the housing and services in South tems. United Kingdom feasibility of establishing a regional Africa. Netherlands · Assistance to a garment manufac- credit enhancement facility for risk · In China, working with the CPDF turer in Yugoslavia to help prepare mitigation in SME lending. Australia in Sichuan Province, IFC provided a marketing strategy and business · In Papua New Guinea, in collabo- capacity-building TA to develop plan for the modernization and ration with SPPF, IFC is assessing some best practice initiatives for expansion of its facilities. Italy the availability of indigenous the delivery of enterprise-specific financing for SMEs; IFC is also assistance to SMEs (Switzerland). Entrepreneurs typically say their working with SMEs that have been IFC also helped develop the capacity top business need is financing. financed by the PNG Rural and skills of local consultants and However, many established financial Development Bank to assess their specialists in Sichuan to undertake institutions are reluctant to lend to current financial situation. Australia environmental review and SMEs they do not know, so growth mitigation work. Denmark of new SMEs is constrained by a In the important area of microfinance, · In Papua New Guinea, working dependence on their own cash flows IFC has supported feasibility studies with the South Pacific Project or less reliable informal sources of for the creation of microfinance Facility, IFC investigated the capital. To address this financing banks in Tajikistan and Afghanistan replicability and expansion constraint, IFC and the World Bank (Canada, IFC TA Allocation). IFC is options for a successful SME are focusing on helping local banks, also providing assistance to the scheme. Australia leasing companies, equity investors, Kyrgyz Republic to develop a · In Thailand IFC is investigating and others see the bottom-line legislative framework for microfinance options to assist local SMEs in benefits that can come from making institutions. IFC TA Allocation capturing more of the value added SMEs a target market. in the supply chain of global man- In the area of access to information ufacturing firms with operations · In Bangladesh, in collaboration technology, IFC is working at both in Thailand. Japan with the SouthAsia Enterprise the global (Japan) and country or Development Facility, IFC is regional level (Norway, IFC TA 24 D O N O R R E P O R T 2 0 0 2 Allocation). Globally, IFC is These assignments also included · IFC supported a conference to The project also aims to help a tar- developing an Internet platform to providing advice to local communities promote private sector development geted group of Russian component be known as the "SME-Toolkit" surrounding IFC's investment projects. and foreign direct investment in suppliers improve their manufac- (www.SME-Toolkit.com), which the non-oil sectors in Azerbaijan turing processes, product quality, would be accessible globally. At the As in previous years and reflecting (Switzerland). The conference will operational efficiencies, and selected country or regional level, IFC plans IFC's strategic focus, most enabling develop recommendations for the management practices. USTDA to develop customized versions of environment TATF assignments were government and the private sector, · IFC supported a Public-Private this platform and in the last year, for the financial sector and for SME and IFC will follow up in assisting Partnership (PPP) program, estab- it started work on a version in the development. In addition to that the government in implementing lished by the Mexican Government, Ukraine that will provide e-business work, a number of TA assignments the work plan and solutions to increase private sector involvement tools to SMEs and help connect addressed other business sectors: agreed at the conference. in providing public infrastructure SMEs to sources of financing · In Nigeria, IFC organized a forum services and government services. (http://www.sme-toolkit.org.ua). · IFC supported capacity building in on competitiveness and private The project will review existing laws the Vilabouly district, Savannakhet sector growth (Canada) and also and institutional and policy environ- Province, Lao PDR, where the helped the Support and Training ments, including legislation at the Enabling Environment Sepon gold and copper mine is Entrepreneurship Program (STEP), federal and municipal level. The TA located. IFC is an investor in the a nongovernmental organization will focus on creating an appropriate The enabling environment, or mine, and the TA will provide based in Lagos, to prepare a busi- policy framework, institutional investment climate, for private sector advisory services to the local ness plan to scale up its assistance arrangements, and enabling environ- investment is an essential element for authorities and communities on to the informal sector in the south- ment to increase private sector economic growth. IFC is continually how to manage the environmental ern part of Nigeria. Switzerland investment, and will help identify strengthening its investment, TA, and social impact of the mine's · In Russia, in collaboration with and develop a few demonstration and advisory work to improve the development. Australia, Japan the Private Enterprise Partnership, PPP projects. United Kingdom, environment for private sector · IFC financed a study to explore IFC supported a pilot project to IFC TA Allocation development in member countries. investment opportunities in the IT help develop the automotive · Assistance was provided to help and Internet sectors in Côte component industry (USTDA). finance the domestic private enterprise Many TATF assignments were d'Ivoire, Ghana, Nigeria, and The TA includes an in-depth market study in Vietnam. Private enterprises carried out in various sectors, such Senegal (Sweden). The TA will analysis and policy review of the have been thriving in Vietnam even as advising governments on changes assist the governments in automotive sector that will be though state enterprises have long in and implementation of laws and developing policies relating to used as a basis for policy reform assumed a predominant position. regulation affecting the investment these sectors and in helping their efforts, particularly those targeted The study is expected to identify climate. IFC works closely with the industry associations make at reducing administrative and constraints that private enterprises World Bank and the regional appropriate investment decisions. regulatory barriers to market entry face and to advise the government development banks to strengthen the A similar study for East African and expansion for both local firms on how to improve assistance to the overall impact of the international countries is envisaged. and Western parts manufacturers. private enterprises. Australia financial institutions in this area. 25 D O N O R R E P O R T 2 0 0 2 · IFC also completed a unique study 10 public-private partnership on Sustainability: to identify how transactions for public hospitals in corporations in developing coun- Bucharest. Switzerland tries become financially, socially, · A study to identify investment and environmentally sustainable opportunities that may now be (Ireland). Similar studies already financially viable given the broad exist for corporations in developed range of reforms being undertaken countries, and the new Report: in the health sectors in China and Developing Value: The Business Russia. The proposed study is Case for Sustainability in Emerging expected to facilitate the develop- Markets reveals critical elements of ment of the private pharmaceutical sustainability in IFC's client drug production and distribution companies and other corporations systems in the two countries. in developing countries. Ireland · In South Africa a market study, undertaken jointly by the Standard Social Sectors Bank of South Africa and IFC, involved the collection and analysis Improved health and increased human of data regarding the primary and capacity are essential to sustainable secondary education market. The development and economic progress. results of the findings will be used IFC's health sector strategy focuses on to develop a funding package to reducing poverty through improving support the growth and develop- the quality and efficiency of health ment of independent primary and delivery and providing affordable secondary schools. Sweden medications to the poor. Examples · A study in Russia aims to identify of TAs undertaken this fiscal year specific investment opportunities include: in the private higher education and vocational education sector, · Provision of advisory services to and to assess the potential for assist the Romanian Ministry of developing the market for student Health in developing a national loans. The assistance will also strategy for private sector partici- include a conference to discuss pation in the country's public issues affecting the private hospitals and in implementing education sector. Sweden 26 D O N O R R E P O R T 2 0 0 2 Financial Markets Range of FMTA Activities A recent reorganization in IFC has led to the centralization of all of IFC's IFC's financial markets technical assistance (FMTA) financial operations under one department, the Global Financial Markets activities are organized under three global themes, Department. This centralization reflects IFC's strategic emphasis on developing or programs: viable financial markets as an essential condition for the growth of the private sector and for sustainable reduction in poverty. The range of financial markets technical assistance (FMTA) spans three broad global themes or program areas: · INSTITUTION BUILDING for mainstream financial institutions such as banks. Projects address core · Institution building for mainstream financial institutions banking operations (credit, asset-liability manage- · Diversification of financial services for nonbank financial services ment, corporate governance). Most projects are · Financial support for SMEs (see box, this page) institution-specific and linked to an IFC investment, but some are stand-alone and some provide These programs reflect IFC's strategic directions for financial sector development broad-based training to the banking industry. and the assistance most needed by IFC's client countries. As of FY2002, a cumulative total of 121 technical assistance projects for financial markets, · DIVERSIFYING FINANCIAL SERVICES to support worth US$23.4 million, were under way in 77 countries and regions. new, nonbank financial services, such as leasing, Diversifying financial services represented the largest program, or 60 percent housing finance, securities markets, insurance, of total FMTA activities. Key sectors within this program were insurance and and pensions. This program includes feasibility pensions (21 percent), securities markets (17 percent), and nonbank finance studies, helping to create enabling business (mostly leasing, 15 percent). The remaining 40 percent of FMTA activities environments, and institution building for specific were about equally divided between the other two programs, institution financial institutions. building and financing for SMEs, although the SME program typically involves institution-building activities for smaller banks, which specifically · PROVIDING FINANCE FOR SMEs has three target SME clients. components: institution building to create profitable SME financiers (that is, supporting IFC investments); IFC's FMTA programs also operate to varying degrees and with different strengthening the ability of local training institutes emphases across regions and sectors. In FY2002 the East Asia region carried to provide bank training; and developing out most of the institution building work for banks; the Southern Europe and partnerships with best practice practitioners and Central Asia region focused on financing for SMEs, namely in banking, providers to replicate successful models worldwide. microfinance and leasing; and the Central and Eastern Europe region supported the development of innovative financial services, mostly in leasing and securities markets. These three regions were the recipients of about two-thirds of all financial markets TA activities. The major sectors overall were insurance and pensions and SMEs, with each sector representing 21 percent of total projects, followed closely by banking (20 percent). 27 D O N O R R E P O R T 2 0 0 2 NUMBER OF PROJECTS BY REGION PERCENTAGE OF PROJECTS BY PROGRAMS AND SECTOR 20 25 Institution Building Diversifying Financial Services 20 15 Financing for SMEs 15 10 10 5 5 0 0 East SECA CEE MENA AFRICA LAC South Global Banking Insurance Securities Nonbank Housing Other SMEs Asia Asia & pensions finance finance Institution Financing building Diversifying financial services for SMEs Within the theme of institution building for mainstream financial institutions, · In Russia, in collaboration with the Private Enterprise Partnership, IFC most of IFCs support through the TATF program was either for bank training provided TA to two commercial banks for training programs to strengthen or for strengthening specific banks in which IFC was investing. internal audit and credit officer functions as well as for improving management information systems. Norway Following are examples of the TATF activities initiated in FY2002 that · In Sri Lanka IFC is providing TA to the National Development Bank of Sri contributed to the various thematic FMTA programs: Lanka to help develop a detailed strategy for transition from a development financial institution to a universal banking institution. Canada · In China IFC supported a commercial bank training program for the Bank of Shanghai to help introduce international best practices. Japan In most developing countries the insurance markets and pension systems are · In the East Asia region IFC investigated the viability of establishing a bank inadequate for the needs of the private sector and the public at large, and holding company that would take minority stakes in small local or regional several TA projects are working to address these shortcomings. These include: banks. The Netherlands · In the Philippines IFC undertook a study to evaluate the prospects for · Capacity-building TA for a major Chinese life insurance company to help it establishing a rural and small business finance wholesale facility. The adopt international best practice as the insurance sector opens up to Netherlands foreign competition. Switzerland · A seminar on insurance and contractual savings in Sri Lanka. IFC TA Allocation 28 D O N O R R E P O R T 2 0 0 2 · Development of pension-related insurance and annuity sectors in · An assessment of the market demand for a plastic card payment system in Kazakhstan, and a diagnostic study of the Kyrgyz pension system. Uzbekistan. Finland IFC TA Allocation · Assessment of the insurance market in the Syrian Arab Republic that will For a summary of the types of activities being undertaken in financial markets also assess the options for IFC investment. Sweden in support of SMEs, please refer to the SME section. · A pre-investment study for the introduction of weather index insurance in Mexico. United Kingdom Privatization and Postprivatization Leasing industries are an important source of financing for capital investments that are often not present in developing countries. Several leasing studies have The TATF program is of vital importance for IFC's privatization activities. been carried out in Iran, Albania, Ukraine, and the Middle East and North It supports a range of activities helping governments in the complicated Africa region (Denmark, Ireland, Italy, the Netherlands). Some of these studies process of converting state companies to private entities. It also provides are expected to lead to IFC investments. postprivatization support for recently privatized companies. Examples of TAs undertaken include the following: Housing shortages are another critical problem in developing countries and IFC is increasing its efforts to develop housing finance options. These projects · The largest privatization project in FY2002 was the assistance provided to include, for example, a housing finance sector review in Bangladesh (Sweden, Belgrade, the Yugoslav capital, to privatize the municipal solid waste IFC TA Allocation) and an investigation of low-cost housing services in South company. All aspects of the privatization were covered, from determining Africa. The Netherlands, IFC TA Allocation the optimal structure of the company to the conduct of the competitive international tender process. Legal, technical, public information, audit, Effective capital markets are also a necessary condition for a competitive regulatory, and social experts were also provided for the successful private sector. Examples of TAs undertaken in this area include: implementation of the project. Denmark, Greece, Norway, Sweden, IFC TA Allocation · A regional seminar on capital markets development in Latin America. · The privatization of the Kenya Railways Corporation by the Kenyan IFC TA Allocation government and appointment of technical experts needed to address opera- · A study of the feasibility of creating a money market mutual fund in tional issues, which include inputs on privatization strategy, technical aspects Madagascar. IFC TA Allocation of railway regulation, transaction structuring, and company valuation. Sweden · A global market survey of private equity and venture capital industries in · Another important privatization in Africa was the privatization of Petromoc, developing countries. Japan the natural gas and oil distribution company in Mozambique. Norway, IFC · An evaluation of the readiness of the capital markets to introduce derivatives TA Allocation products in Pakistan. New Zealand · The privatization of Air Tanzania, which started in FY2001 (Denmark), · A study investigating the potential for developing a factoring industry in advanced into a second phase in FY2002 (IFC TA Allocation). Transition Yugoslavia. Austria management consultants were required to develop a business plan and to · Support for the securities exchange in laying out rules and procedures for implement cost-cutting measures. creating a more organized over-the-counter bond market and learning how · IFC assisted the Romanian Ministry of Health in developing a national to effectively supervise a bond market in Thailand. Japan strategy for private sector participation in the country's public hospitals and in implementing Public-Private Partnership transactions for public hospitals in Bucharest. Switzerland 29 D O N O R R E P O R T 2 0 0 2 SUCCESS Uganda: STORY Electricity for Rural Consumers · A postprivatization project supported a Macedonian textile In Uganda, 90 percent of the rural population has no access to electricity. At the beginning of 2000, company in sizing its work force the government of Uganda requested assistance from IFC to develop rural electrification projects in a humane and socially that could serve as a model for attracting private capital and strategic investors into the business of responsible manner. The project providing electricity to rural areas. will seek to create new employment opportunities for laid-off workers. To this end, IFC supported an assessment of the commercial viability of private rural electrification Norway initiatives in western Uganda. The assessment consisted of three phases: identifying and developing high-impact, high-priority rural electrification projects in collaboration with the Uganda Ministry of The Private Sector Advisory Service, Energy, local community leaders, and other stakeholders in Uganda; appraising the first set of projects a department jointly managed by the identified for funding and negotiating concession agreements and required subsidies, if any; and World Bank and IFC, not only finalizing project design work for the construction of the project. provides privatization transaction support but also advises on policy The initial work concluded that a commercially viable rural electrification system was possible in and transparency issues and foreign Bushenyi and Rukungiri districts, some 200 to 250 miles southwest of the capital city of Kampala. direct investment. The study identified the need for a distribution network to serve commercial trading centers, as well as residential households close to the network. As demand builds, the network will be extended to more residential customers. Technology The study also identified the need for a small hydroelectric generation plant to ensure a reliable and To increase sustainable economic affordable supply of power to the distribution system. An initial grant was also needed to make the growth and investments in the project attractive for private participation. information technology sector, IFC conducted several studies, including: IFC expects to close the financing for the project, which is contingent on reaching an agreement with the Ugandan authorities on the terms of the power purchase agreement, the amount of grant funding · A study analyzing the market from donor sources for the project, and negotiation of the distribution concession agreement with the investment outlook for the Electricity Regulator, which would include the tariff rates to be charged to commercial and residential information technology and users for the project's electricity services. Internet sectors in Côte d'Ivoire, Ghana, Nigeria, and Senegal. The This TA has resulted in substantial progress in laying the groundwork for the participation of the study will also focus on identifying private sector in Uganda's rural electricity sector. The draft power purchase agreement and the specific investments that can be concession contract (which provides for the tariff structure and performance standards for the rural made and will develop policies to distribution company) await the Ugandan government and Electricity Regulator's approval. This project, improve the enabling environment once completed, will serve as a model for other private rural electrification projects in Africa and for the IT and Internet sectors. other developing regions. USTDA, IFC TA Allocation Sweden 30 D O N O R R E P O R T 2 0 0 2 Administrative Updates Partnership Programs In FY2002, the Netherlands Ministry of Foreign Affairs and the Netherlands Ministry of Economic Affairs decided to set up separate "Partnership Programs" that bring all of IFC's technical assistance programs under "umbrella" agreements with streamlined structures and procedures. These Partnership Programs are expected to help reduce donors' management costs by specifying standardized administrative procedures and providing for regular policy consultations. · A study to assess the opportunities and constraints facing the information, communications, and technology (ICT) sector and a study to develop an The Netherlands Ministry of Foreign Affairs signed the first Partnership action plan for removing the identified bottlenecks to investments in the Program, on November 29, 2001, with an allocation of 11.4 million for the ICT sector in the Kyrgyz Republic. Japan calendar year 2002. The Partnership Program currently supports 11 current · Reports on the oil, mining, and ICT sectors. These reports will be used to and planned activities, including: Netherlands Technical Assistance Trust provide key information and outline possible business opportunities for the Funds, Foreign Investment Advisory Services, African Management ICT sector for foreign investors who will be attending an Investors Forum Services Company, African Project Development Facility, SouthAsia in September 2002, organized jointly by the World Bank, IFC, and the Enterprise Development Facility, Indonesia Business Support Program, SME Government of Mongolia. The report will also address ways to make the Pilots and Partnerships, SME Linkages Program, SME Business Enabling ICT sector more attractive to investors in Mongolia. Norway, Ireland Environment Program, Social and Environmental Facilities, and Global · A market study to determine the demand for making payments by plastic Microfinance Credit Enhancement Facility. card in Uzbekistan and, if the study confirms the demand for such a system, a further study to assess the needed software and hardware for The Netherlands Ministry of Economic Affairs signed the second implementing a national plastic card payment system. Finland Partnership Program on April 23, 2002. This Partnership Program includes · Support for the development and initial operation of an Internet-based support to the Netherlands Trust Fund for Emerging Markets and Countries SME-toolkit which, when operational, will provide Ukrainian SMEs with in Transition, and for the Private Enterprise Partnership. A total of e-business tools and resources. The toolkit will help Ukrainian SMEs find 6 million has been made available through the transfer of balances from on-line the financing they need as well as learning resources and local old agreements as well as additional contributions. business assistance providers. The toolkit will also provide participating financial institutions with an expanded market base of more qualified Several other donors have shown an interest in setting up similar applicants who can be served at a lower cost. Norway partnership programs with IFC. · The development of an Internet-based platform known as the SME-Toolkit, which would be accessible globally and serve as the foundation for other community or regionally based SME Internet sites. Japan 31 D O N O R R E P O R T 2 0 0 2 Chapter 2 Annex 1 TATF: TA Projects Approved for Support in FY2002 Asia & the factors, target income groups, urban CORPORATE GOVERNANCE Pacific Region versus rural development, and product CAPACITY-BUILDING PROJECT: differentiation; an assessment of the SICHUAN PROVINCE. The objec- Bangladesh current status and need for legal and tives of this assignment are to extend regulatory reform highlighting issues understanding and adoption of sound STRENGTHENING SME LEND- that need to be addressed to help the corporate governance practices in ING PRACTICES OF PRIVATE companies grow; and an assessment companies in Sichuan Province, FINANCIAL INSTITUTIONS. This of the needs of the various income China. The idea is to help ensure TA project assignment will assist segments and development of longer-term viability and increase the private sector commercial banks in housing finance products. Sweden, companies' access to investment Bangladesh in strengthening their IFC TA Allocation capital to support future expansions operations and help them better and modernizations. The TA project serve the financing needs of SMEs. China also addresses development of a The TA will include SME finance Sichuan-based capacity for supporting diagnostics and skill gap analysis as IMPROVING THE INVESTMENT and applying international standards well as a banking symposium on CLIMATE FOR SUSTAINABLE of corporate governance. Canada SME lending. Recommendations MINING. This TA assignment that come out of the SME finance supports a conference of mining SICHUAN ENVIRONMENT seminar will be followed through by investors held in Xian, Shaanxi CAPACITY-BUILDING PROJECT. IFC's SouthAsia Enterprise Province, China. In addition to This TA supports environmental Development Facility (SEDF) in the presentations, the conference experts in developing the capacity form of concrete bank strengthening includes a capacity-building program and skills of domestic consultants work with selected partner private in two areas that need to be and specialists in Sichuan Province sector financial institutions. (SEDF addressed to improve the investment to undertake environmental details, p. 57) Norway climate for sustainable development review and mitigation work in of mining in China: disclosure of accordance with international REVIEW OF HOUSING FINANCE geological information for private standards. Denmark SECTOR. This assignment consists investors and environmental of an assessment of the housing management systems for mining market focusing on, among other projects. Australia, IFC TA Allocation 32 D O N O R R E P O R T 2 0 0 2 DEVELOPMENT RESEARCH FINANCIAL REVIEW AND PROGRAMMATIC ASSISTANCE India COUNCIL: CORPORATE GOVER- ADVISORY SERVICES FOR TO SMEs ON GOOD PRACTICE NANCE DIAGNOSTIC WORK. CHENGDU CITY COMMERCIAL AND CAPACITY BUILDING. This SAFE MANAGEMENT OF AGRO- This TA effort involves a study of BANK. This TA assignment involves grant supports the establishment and CHEMICAL PRODUCTS. This TA corporate governance in China, to be helping Chengdu City Commercial first year of operation of IFC's project will assess the suitability of conducted jointly by the World Bank Bank (CCCB) in Sichuan Province to China Project Development Facility agrochemicals proposed to be and IFC. The work has been requested strengthen its financial management (CPDF). The facility has two closely marketed through the proprietary by the government of China. The capabilities. Activities involve a linked and complementary programs: Farm Service Centers being established Chinese counterpart in this TA review of CCCB's financial Enterprise Level Support and by a major Indian agribusiness initiative is the Development performance and advisory assistance Capacity-Building and Private Sector group. The idea is to ensure that the Research Council under the State to improve the bank's credit and Policy Work (CPDF details, p. 55). chemicals sold through the centers Council (the cabinet). The report risk management policies and Switzerland reflect appropriate range and formu- will include a review of key legal procedures. Norway lations and to suggest mechanisms to statutes pertinent to the exercise of BUSINESS ADVISORY SERVICES keep the sponsor and local farmers corporate governance in China. Italy NEW CHINA LIFE INSURANCE FOR ENVIRONMENTAL PROD- informed as to suitable uses, good COMPANY: CAPACITY-BUILDING UCTS MANUFACTURER. This TA practice, and banned and restricted COMMERCIAL BANKING PROJECT. This TA project helps project provides business advisory pesticides. The work involves review TRAINING FOR THE BANK OF New China Life Insurance Company services to the management of a of existing Indian (national and SHANGHAI. This TA supports in three main areas: adopting company that fabricates specialty state) regulations and controls, experts in conducting of work on the international best practices for environmental equipment in analysis of regulations and practices, third (and final) stage of a long-term, financial planning and management Shenyang, Liaoning Province, China. and preparation of a draft pesticide comprehensive TA initiative to control systems; developing and The firm is an integrated builder, management plan. Denmark upgrade and strengthen the Bank of strengthening the company's supplier, and operator of water and Shanghai. The overall TA effort is operational manuals, policies, and wastewater treatment systems. TA STRENGTHENING FINANCE aimed at helping BOS introduce guidelines; and training staff in work includes a thorough review of PRACTICES OF SME-ORIENTED international banking best practice management information skills and the company's current business capa- BANKS AND FUNDS. This grant and to build itself into a model for tools and in evaluating actuarial bilities and practices, an assessment supports the cost of retaining banking emulation by other banks in China. risks, managing investment portfolios, of its markets, analysis of a direction and fund management experts to This final stage of TA work is focused and developing front and back office for future growth, and preparation advise CEOs of Indian banks and on training to improve BOS's credit capabilities. Switzerland of business and marketing plans. fund management companies on analytical skills as well as its credit United Kingdom, IFC TA Allocation international best practices in SME policies and procedures. Japan finance. These financial specialists will take part in a symposium on SME finance covering issues related to banking and equity financing of SMEs. IFC TA Allocation 33 D O N O R R E P O R T 2 0 0 2 SELF-EMPLOYED WOMEN'S Mongolia for local financial markets and to ASSOCIATION: ADVISORY improve risk management capabilities ASSISTANCE. This TA project INDUSTRY PROFILES FOR for local institutions. General provides high-level assistance on the INVESTORS' FORUM: OIL AND recommendations will be provided organizational and managerial MINING SECTOR AND INFOR- to the PSEC, for its consideration, structure of a new Trade Facilitation MATION, COMMUNICATIONS, about products that might be intro- Center that would commercialize the identifying areas for improvement. AND TECHNOLOGY (ICT) SECTOR. duced and areas in which changes Self-Employed Women's Association Training for staff will be provided in This Investor's Forum is supported may be required in the institutional (SEWA), an Indian nongovernmental all these critical functions. by the governments of Ireland (oil and regulatory infrastructure in organization mainly involved in Switzerland and mining sector) and Norway order to support the market for producing embroidery products. (ICT sector). Under these grants, derivatives products. New Zealand The consultant would also provide Lao People's Democratic experts from Ireland and Norway, advice on potential commercialization Republic together with local consultants, will Papua New Guinea opportunities for SEWA's salt and work together to prepare two separate gum production activities. IFC TA GOLD AND COPPER MINE sector profiles. These profiles will ASSISTING INDIGENOUS SME Allocation PROJECT: MANAGING help support the Investors' Forum FIRMS ON BUSINESS MANAGE- ENVIRONMENTAL AND SOCIAL being held by the Government of MENT. This TA effort will assist Indonesia IMPACTS. This TA effort aims to Mongolia in September 2002. The selected indigenous SME operators create a base for sustainable economic forum is aimed at encouraging in identifying current or potential STRENGTHENING INSTITU- development in a region where a discussion on ways to improve the problem areas within their enterprises TIONAL CAPACITY OF PT NISP gold and copper mine project is country's investment environment and and putting in place suitable correc- BANK. The objective of the project proposed to be located--the country's to attract foreign direct investment. tive measures on a timely basis. The is to help NISP Bank to become a largest to date. The idea is to help The World Bank is cosponsoring this goal is to help ensure the firms' well-managed commercial bank, build the administrative capacity of event. Ireland, Norway longer-term viability. Target SME through adopting international best the Vilabouly District and Savannakhet operators involved in this project are practices for its management and Province decisionmakers and regula- Pakistan to be drawn primarily from among corporate governance, and to tors, so that the region will be able clients of the PNG Rural and strengthen its institutional capacity to manage impacts from the mine in FACT-FINDING STUDY ON Development Bank. Australia in key areas. These include helping the mid- to longer term. The main DEVELOPING DERIVATIVES management to review current trends thrusts of the TA assignment will be PRODUCTS AND MARKET. This COUNTRY MAPPING STUDIES: in Indonesia's banking sector, includ- to build local capacity, establish a assignment will assist the Pakistani ASSESSING OPPORTUNITIES FOR ing discussing regulatory changes community development plan, Securities and Exchange Commission SME FIRMS. The assignment is built and issues; helping the bank manage expand the health system and malaria (PSEC) to identify potential derivatives around IFC's SME country mapping credit risk; and reviewing current control, and improve water supply products that may be appropriate program and guidelines. It will corporate governance processes and and sanitation. Australia, Japan risk management or hedging vehicles produce a series of brief studies that 34 D O N O R R E P O R T 2 0 0 2 SUCCESS Samoa: identify issues affecting the develop- help improve their chances for STORY ment and sustainability of SMEs in successful operation. The assignment Funding CEOs Papua New Guinea. The idea is to will assess the opportunities and for Samoan obtain a clearer picture of the risks likely to be involved in expand- Companies domestic business environment for ing the RMS approach into a wider SMEs, including detailed services, market segment. Australia needs, and infrastructure gap In Samoa, as in many of the Pacific analysis. Australia Philippines islands, the private sector has not been a successful breeding ground STUDY OF AVAILABILITY OF PHILIPPINES BANK: CAPACITY for chief executive officers. This FINANCE FOR SME COMPANIES. BUILDING TO SUPPORT LENDING project supports the sourcing, This assignment assesses indigenous TO SME CLIENTS. This TA project recruitment, installation, and training sources and options for financing is designed to assess the strategic structure would focus on the financing of Samoan nationals from either available to SMEs, with an aim of plan of the Philippines Bank, which of rural and small businesses. The Samoa or the Samoan community in identifying and quantifying gaps in provides services nationwide, and to consultant for this assignment will New Zealand for three critical private availability of financing on suitable provide expert commentary on this also work closely with the Central sector Samoan companies at the CEO terms, such as regional and locational plan for consideration by manage- Bank of the Philippines to review level. Phase I of the project focused limits and debt security issues. ment. The aim is to help the bank and discuss prospects for removing on sourcing and recruitment and was Australia strengthen itself as an institution previously identified legal impediments completed successfully. In addition to and better serve its target market-- and to ensure the viability of the selecting and recruiting CEOs, the PNG RURAL DEVELOPMENT mainly SMEs. Japan concept from a legal and regulatory TA has led to a proposal to create a BANK: RETAIL MANAGEMENT standpoint. The Netherlands joint venture company in the Pacific SERVICES INITIATIVE. This TA ESTABLISHMENT OF FINANCING to recruit management skills on local assignment focuses on strengthening ENTITY TO SERVE RURAL AND Sri Lanka terms throughout the Pacific. A second SMEs through use of the retail SMALL BUSINESS COMPANIES. phase may be required to carry out management services (RMS) This TA Assignment supports the ADVISORY ASSISTANCE TO the training and mentoring aspects of approach that has had some success cost of retaining a consultant to NATIONAL DEVELOPMENT the CEO program, and IFC anticipates as implemented by the PNG Rural advise IFC, which, along with BANK. This TA project aims to that an additional small TA will be Development Bank. The RMS several other international financial help the management of the required to bridge a skills gap with approach, which borrows heavily institutions, about the feasibility of National Development Bank of Sri one of the three appointments. from franchising concepts, provides establishing a "Finance Wholesale Lanka to develop a detailed strategy New Zealand client SMEs with a heavy input of Facility" or bank holding company to support the bank's transition from "outside" management assistance that would invest in substantial operating as a development finance and of business operational surveil- minority stakes in local and regional institution to offering universal lance, particularly in early years, to rural banks in the Philippines. Either banking services. Canada 35 D O N O R R E P O R T 2 0 0 2 SUCCESS Vietnam: STORY SEMINAR ON INSURANCE Thailand Providing More Opportunities for Tertiary AND CONTRACTUAL SAVINGS SECTORS. This grant provides STRENGTHENING SUPPLY Education ­ the RMIT International University funding for a symposium on the role CHAIN LINKAGES FOR SME Vietnam (RIUVN) and prospects for developing two FIRMS. This assignment focuses on key areas of the country's financial identifying opportunities for SMEs in Thousands of Vietnamese students go abroad every year for tertiary studies, sector institutional infrastructure-- Thailand to capture more value most financed by bilateral aid programs. Responding to this acute shortage of insurance and contractual savings. added in the supply chain of global tertiary education in Vietnam, RMIT University, the largest university in Topics to be addressed include manufacturing firms based in Australia, worked with leading universities in Vietnam, offering joint degree opportunities for growth of the Thailand. The idea is to emphasize programs in engineering and business management. With the government's insurance and contractual savings pooling of resources of SME compa- encouragement of foreign investment in the education sector, RMIT decided to sectors; trends in local and interna- nies to make possible technology open a campus in Ho Chi Minh City. This is the first Western-style university in tional markets toward consolidation upgrading, information technology Vietnam and will eventually accommodate 12,000 students. of financial services; and the type of support, and management and regulatory framework required for technical training. Japan Through the TATF program, two pieces of work facilitated its implementation. building a transparent and sound financial sector. The conference will STRENGTHENING MANAGE- · The people who lived on the planned 60-hectare site needed to be bring together as participants a MENT OF BOND MARKETPLACE resettled. Resettlement was a relatively new concept in Vietnam, and the range of leading academics, (THAI BOND DEALING CENTER). RMIT asked for outside help. One TA assignment helped prepare development practitioners, private The project will assist a licensed a Resettlement Action Plan for the main campus to mitigate adverse sector leaders, and public policy securities exchange in Thailand--the effects of resettlement; maintain or improve the living standards of those experts. IFC TA Allocation Thai Bond Dealing Center--in laying affected; provide development opportunities to the directly affected and out rules and procedures for creating subsequent host communities; and ensure transparency in the implemen- ASSISTANCE ON RATIONALIZING a more organized over-the-counter tation of the resettlement. AND EXPANDING DAMBULLA bond market and in developing skills · The other TA did a diagnostic review of the legal, business and banking DEDICATED ECONOMIC CENTER. to supervise the activities of the sector environment to prepare for developing a Student Loan Program. The project will develop a business operation more effectively. Japan More TA work will be needed to develop the program. plan for consolidating operations and expanding the range of services Vietnam Both assignments have been completed successfully. In addition to the direct offered at the Dambulla Dedicated value to the RIUVN, the features of the resettlement could be replicated in Economic Center, a wholesale STUDY OF BUSINESS ENVIRON- other cities in Vietnam and in other countries. IFC has now invested a total of market for fruits and vegetables MENT FOR DOMESTIC PRIVATE US$7.25 million in the RIUVN in support of the first phase, which is estimated established in 1999 by the ENTERPRISE. This study addresses to cost US$33.6 million. The RIUVN opened its City Campus in September Government of Sri Lanka in the key aspects of the business climate, 2001 to offer foreign language and IT training as well as selected postgraduate city of Dambulla in the country's including prospects for growth and programs. It plans to open its main campus in early 2004. Australia Central Province. Japan investment in the domestic private 36 D O N O R R E P O R T 2 0 0 2 sector in Vietnam, along with review This work contributes to a pilot STUDY OF HOTEL DEVELOP- Kyrgyz Republic of relevant government policies and initiative by IFC to help extend MENT OPPORTUNITIES. This TA main constraints to private sector financing denominated in local assignment will study the environment EXPERT ASSISTANCE ON LEG- activity. Australia currency to SMEs via in-country for developing the hotel sector in ISLATIVE FRAMEWORK FOR intermediaries. Australia Afghanistan, particularly in the MICROFINANCE INSTITUTIONS. Asia Region country's capital, Kabul. The study This assignment will provide expert East Asia Regional will address market factors, current assistance to the government of the ENVIRONMENTAL MANAGE- supply and condition of facilities, Kyrgyz Republic on developing an MENT SYSTEMS: TRAINING FOR STUDY ON HOLDING COMPANY environment (including identification effective legislative framework for FINANCIAL FIRMS AND WOOD FOR SECOND-TIER BANKS. This of constraints), capabilities of the microfinance lending in the country. PRODUCTS MANUFACTURERS IN allocation supports a study on the construction industry, infrastructure, The aim is to support the growth of SME SECTOR. This TA assignment feasibility of, and interest of relevant and legal and regulatory framework. the Kyrgyz microfinance market on a assists manufacturers in the wood institutions in, establishment of a The project will also attempt to commercial basis while fostering products sector and the financial bank holding company that would identify potential strategic partners further innovation. IFC TA Allocation institutions that lend to them in invest in minority stakes in small for hotel investments. USTDA, IFC developing environmental manage- local and regional banks and possi- TA Allocation BUSINESS ENVIRONMENT FOR ment systems for their manufactur- bly microbanks as well. The banks INFORMATION, COMMUNICA- ing and lending operations, respec- targeted for possible participation Kazakhstan and Kyrgyz TION, AND TECHNOLOGY tively. A key objective of the project are those that provide financial Republic COMPANIES. This TA project is to help staff of the lending institu- services to SMEs in rural and involves conducting a fact-finding tions develop appropriate tools for semi-rural areas. The Netherlands STRENGTHENING INSURANCE study of the business environment evaluating the environmental and SECTOR: ANNUITY AND PEN- for the information, communications, social performance of their wood SION-RELATED INSTITUTIONS. and technology (ICT) sector in the sector clients and suppliers and to Central Asia Region This TA project will identify specific Kyrgyz Republic and providing train staff in applying these tools to potential business opportunities in strategic advice to the Government lending transactions. Finland Afghanistan the areas of pensions and insurance. on creating the enabling conditions It will promote dialogue with the for greater private investment in the East Asia and Pacific FEASIBILITY STUDY FOR governments of Kazakhstan and the sector. The study focuses on three ESTABLISHING A MICROFINANCE Kyrgyz Republic regarding these main areas: the specific constraints STUDY ON SETTING UP CREDIT INSTITUTION. This allocation industries and provide recommenda- to private investment in the ICT ENHANCEMENT FACILITY FOR supports an assessment of the financial tions on establishing a legal and companies in the Kyrgyz Republic; PACIFIC REGION. This TA project service needs of micro and small regulatory framework to create a steps the Government can take to will assess the financial and legal entrepreneurs in Afghanistan and the favorable environment for developing remove these constraints and to pro- feasibility of offering a range of new feasibility of setting up one or more these components of the countries' mote investment; and opportunities risk mitigation products focused on microfinance institutions to serve financial sector infrastructure. IFC to interest foreign investment partners lending to the region's SME sector. these businesses. IFC TA Allocation TA Allocation in this sector. Japan 37 D O N O R R E P O R T 2 0 0 2 Tajikistan Europe Region Bosnia and Herzegovina FEASIBILITY STUDY FOR THE Albania "WILLINGNESS TO PAY" AND CREATION OF A MICRO- "ABILITY TO PAY" STUDIES FINANCE INSTITUTION. This TA LEASING MARKET AND INVEST- FOR REGIONAL WATER SUPPLY project will assess the feasibility of MENT ASSESSMENT STUDY. This PROJECT. This TA project involves providing microfinance services to TA assignment will assess the market conducting studies on customers' Tajikistan, with a focus on the largely potential for leasing in Albania. It ability and willingness to pay higher underserved population of the will survey the legal and regulatory prices in order to secure a more Ferghana Valley. The overall strategy environment for the leasing industry reliable and safer source of water. is to establish a specialized micro- and recommend to the government The prospective investment project finance bank designed to operate on Company (PECO). Among other for its consideration steps regarding involves an Austrian company inter- sound commercial principles. noteworthy features, the PECO legislation and regulation of the ested in setting up a build-operate- Canada, IFC TA Allocation initiative demonstrates how public- sector that could encourage its transfer bulk-water supply project in private partnerships can efficiently development. The feasibility of Bosnia-Herzegovina that would pro- ASSISTANCE IN DEVELOPING provide basic public services to poor setting up a leasing company at this vide water supply services to several TOURISM SECTOR. This TA and remote areas that normally time will also be explored. Italy communities in the Zenica-Doboj project helps the government of would not be served by private and Middle Bosnia cantons. Austria Tajikistan in assessing the market sector providers. IFC TA Allocation Azerbaijan for developing its first four-star Bulgaria international hotel, in Dushanbe, Central Asia Region FOREIGN DIRECT INVESTMENT and evaluating the feasibility of CONFERENCE. This allocation TECHNICAL SUPPORT FOR establishing one or more eco-friendly ACCOUNTING AND MIS SUP- helps to fund a conference on foreign STRENGTHENING DECIDUOUS tourism resorts in northern PORT TO SELECTED SMEs direct investment in Azerbaijan. The FRUIT FARMING (PHASE II). Tajikistan. This TA effort also will (PHASE II). This assignment assists conference is intended to help the This TA assignment focuses on help the government formulate current and potential IFC SME government of Azerbaijan promote implementing a program of technical detailed business plans and strategy clients by providing advice and oper- its privatization program to foreign assistance to support economical and potentially put together an ational help on appropriate accounting direct investors, to help increase fruit production (mainly peaches and investor group and management and management information systems FDI flows to Azerbaijan, and to apricots) and to sustain indigenous teams. IFC TA Allocation (MIS) to help them strengthen their build on the conference as a starting fresh and processed fruit industries operations. The assignment is a point for a coordinated effort by in Bulgaria. Initially this program LEGAL ASSISTANCE ON PAMIR follow-up to the MIS accounting TA the government and the business will support a nucleus of out-growers ENERGY PROJECT (PHASE II). (Phase I) supported by the Dutch community to consult on private supplying Florina, a newly established This allocation supports the continu- Trust Fund. Initial companies targeted sector development issues in the processor of pure fruit juices. It will ation of services of legal experts to for assistance are in the Kyrgyz future. Switzerland, IFC TA Allocation then be expanded to other growers advise the government of Tajikistan Republic, Tajikistan, and Uzbekistan. on development of the Pamir Energy United Kingdom, IFC TA Allocation 38 D O N O R R E P O R T 2 0 0 2 Croatia: and processors in the sector through Lithuania direct assistance, promotion of grow- SUCCESS ers associations, and demonstration INTRODUCING DOMESTIC STORY effect. Greece FIRMS INTO SUPPLY CHAINS OF Developing the EUROPEAN MANUFACTURERS. Factoring Industry ASSISTANCE ON MARKETING This TA project aims to help promote AND BUSINESS PLANNING FOR the integration of Lithuanian manu- Intermarket, an Austrian factoring company, asked IFC FURNITURE MANUFACTURERS. facturing companies into the supply for help in conducting a feasibility study for factoring company This TA project helps three Bulgarian chain of European producers. Sectors in Croatia. IFC decided to help the Croatian government in furniture manufacturers in developing addressed by the study include identifying regulatory and legislative issues that inhibit the business plans for modernizing and machine building, instrument making, development of the factoring industry in Croatia and drafting expanding operations. A key aim of metal products, machinery, equipment, needed amendments to the legislative and regulatory frame- the TA work is to help the three electronics, electrotechnics, and work to solve some of the problems that came to light. firms diversify their sales away from transport. Sweden relying on a single buyer through IFC presented and discussed the consultant's findings with identifying new export markets and Macedonia, the Croatian Ministry of Finance and the National Bank of developing strategies for entering Former Yugoslav Republic of Croatia. Based on these discussions, the National Bank of these new markets. Sweden Croatia issued a regulatory decree reducing the starting PREPARATORY WORK ON capital requirements for factoring from US$10.5 million to Croatia LISTING A MACEDONIAN US$2 million, in line with international factoring associations. COMPANY ON THE ATHENS A new ruling allows other financial institutions, such as FEASIBILITY STUDY FOR STOCK EXCHANGE. This TA leasing companies, to establish factoring operations, thus EXPANDING SHIPYARD. This project will conduct financial and opening the sector up further. Austria assignment consists of a study of a marketing due diligence and prepare Croatian shipyard--currently a other listing particulars of a state-owned enterprise--with the Macedonian company so that it can aim of identifying the possibilities be listed on one of the five component and conditions of privatization and markets of the Athens Stock Exchange. restructuring of the shipyard so that The company, which is engaged in it can compete profitably in the extraction, processing, and trading international marketplace. In of Sivec white marble and products, particular, the consultant will conduct is a major earner of foreign a technical analysis for a prospective exchange, and its listing on the strategic investor, itself a successful Greek Market for Emerging Capital medium-size shipyard. IFC TA Markets would give it access to EU Allocation capital markets to help meet its future funding needs. Greece 39 D O N O R R E P O R T 2 0 0 2 CORPORATE CITIZENSHIP Poland envisaged that this advisory effort CARBON TRADING FOR COAL- INITIATIVE FOR TETEKS A.D. could result in implementation of up FIRED GENERATING PLANTS. The principal objective of this STUDY OF CONSTRAINTS TO to 10 public-private partnership This assignment will assess the assistance is to help Teteks A.D., DEVELOPMENT OF EFFECTIVE transactions involving public hospitals greenhouse gas (GHG) emissions a leading Macedonian textile CAPITAL MARKETS. This assign- in Bucharest. Switzerland from three generating plants company, to implement a Corporate ment will assess practices of Polish associated with a proposed IFC coal Citizenship Initiative (CCI) that will business in the areas of transparency, Russian Federation mine investment in the Krasnoyarsk enable the company to "right size" treatment of minority shareholders, Region, Russia, and determine the its work force in a humane and and internal governance, and TECHNICAL CAPACITY BUILD- potential reductions of GHG socially responsible manner. compare these practices with those ING FOR DMITROV POTATO emissions that may be achievable Specifically the TA will help the prevailing in other major emerging AND DAIRY FARMERS. This TA, through improved plant efficiency. company to develop and adopt markets and with European Union in association with the Canadian- The assessment will include an over- operating policies and procedures for standards. The results of the Russian Joint Venture DokaGene, all environmental audit of the three the CCI (which seeks to create job assignment are expected to be will help farms in the Dmitrov plants, including evaluation of current opportunities for Teteks A.D.'s laid-off considered as input to the Corporate district of Moscow Region to emission levels for all pollutants, employees); develop the institutional Governance Code of Good Practice improve their production of dairy identification and preliminary costing capacity of the banking institution being proposed by the Warsaw Stock products and potatoes. Canada of investments to increase efficiency managing the Teteks CCI program; Exchange. The Netherlands and reduce emissions, and preparation and train former employees of Teteks PROJECT FOR DEVELOPMENT of a prefeasibility study addressing A.D. who wish to establish viable Romania OF THE FURNITURE MANUFAC- potential for carbon emissions microenterprises. Norway TURER SECTOR. The goal of this trading. Norway PUBLIC­PRIVATE HEALTHCARE TA assignment is to help ensure the Moldova PARTNERSHIP PROGRAM. This sustainable growth of two Russian NBD BANK RE-ENGINEERING TA supports specialized health furniture manufacturers, Domostroitel PROGRAM. The project involves STUDY OF GARMENT SECTOR. consultants in assessing the physical and Styling. Responding to requests the provision of technical assistance This assignment will study the garment and operational aspects of selected from the companies, IFC has engaged to a commercial bank in Nizhniy sector in Moldova, to identify public hospitals in Bucharest and in consultants to help the companies Novgorod to enable the bank to individual enterprises with potential helping define the responsibilities improve the energy efficiency and improve its internal audit function for growth and commercial viability and performance obligations for environmental conditions of their and management information systems and with the management, skills, private sector partners. IFC is helping operations and to identify potential utilization. Norway and financial potential to receive the Romanian Ministry of Health new market opportunities so that further investment or technical develop a national strategy for private they can diversify their customer CENTER-INVEST RE-ENGINEERING assistance. Sweden, IFC TA Allocation sector participation in providing base away from reliance on a sole PROGRAM. This allocation supports health care services (particularly in buyer. Norway, IFC TA Allocation specialists to help a commercial bank currently public hospitals). It is 40 D O N O R R E P O R T 2 0 0 2 in Rostov (in Russia's southern FINANCIAL, ENVIRONMENTAL, DEVELOPMENT OF AUTOMO- Ukraine region) to improve the profitability AND SOCIAL AUDIT AND ACTION TIVE COMPONENTS SUPPLIERS of its operations, train credit officers, PLAN FOR COAL COMPANY. This PROJECT. This project supports an TECHNICAL OPERATIONAL and strengthen its internal audit TA assignment will help a major coal effort to strengthen the capabilities ASSISTANCE FOR LEASING functions. The assistance is provided company prepare an environmental of a group of automotive components COMPANY. This assignment by a shadow CEO with support and social action plan that meets suppliers in Russia, through a TA supports technical assistance in from one or more consultants on a World Bank Group standards. The program that focuses on improving several areas to a start-up leasing short-term basis. Norway assignment also provides capacity- their manufacturing, quality control, company. These areas include building services to the company's operational efficiencies, management, work on integrating information STUDY OF INVESTMENT local environmental and social staff financial, and corporate governance technology into the firm's back OPPORTUNITIES IN THE PRIVATE on the implementation of the plan. In practices. A separate part of the office operations, developing new EDUCATION SECTOR. This assign- addition, this assignment will provide overall TA program will address the products, implementing a leasing- ment will conduct a baseline survey for an international accounting administrative and regulatory barriers oriented accounting system that of private sector higher education in standards (IAS) audit and assist the to market entry and expansion both meets international accounting the Russian Federation. The survey company in the development of an for local firms and for Western standards, training management, seeks to identify specific areas in accounting system consistent with component manufacturers. USTDA and conducting a market survey for which the provision of technical IAS. The TA will also provide an leasing in Ukraine. The Netherlands assistance can improve the develop- external validation of the company's Turkey ment of educational opportunities; cost structure, planned rehabilitation, SME-FINANCE TOOLKIT. This the survey may lead to potential and expansion of its facilities. United FOREIGN DIRECT INVESTMENT allocation supports the development investment opportunities. Sweden Kingdom, IFC TA Allocation CONFERENCE. IFC assisted the and initial operating costs of an government of Turkey in organizing Internet-based SME toolkit in Ukraine. DEVELOPMENT OF LOCAL FEASIBILITY STUDY FOR and conducting a two-day conference The toolkit provides Ukrainian SMEs FORESTRY OPERATIONS IN AGRIBUSINESS COMPANY. This to identify ways to attract foreign with the following e-business tools NORTHWEST RUSSIA (PHASE I). TA project will assist a diversified direct investment and to draw up and and resources: Learning Center; The initial phase of this TA initiative Russian agribusiness company implement a work plan for increasing Interactive Toolbox; Financial Services focuses on helping local forestry (Agros) in preparing a feasibility FDI flows to Turkey. The conference, ("Get Financing") Center; "Expert" operators (logging and transportation study for an investment program held in Istanbul in mid-2001, was and Resource Center; Community companies, other service providers) in designed to streamline its poultry attended by approximately 200 Business Forums; and News and Leningrad Oblast to improve their operations; enhance efficiencies participants from a cross-section of Events. Norway, IFC TA Allocation business practices and implement sus- along the integration chain, particu- relevant areas in government and the tainable forestry methods, ultimately larly in livestock performance and in local and foreign business community. SME SECTORAL SURVEY. This enabling operators to raise outside slaughterhouses; improve sanitary This was an IFC-led World Bank assignment is a continuation of an financing so that they have resources standards; and increase output. Group sponsored conference in annual survey of the SME sector in to upgrade their assets. Sweden United Kingdom partnership with the Government of Ukraine. Surveys and analytic work Turkey. IFC TA Allocation on the country's SME sector had 41 D O N O R R E P O R T 2 0 0 2 SUCCESSKazakhstan: STORY earlier been conducted in two Best Practice in successive years through grants from Hazardous Waste Disposal the government of Norway. The current grant extends this analysis by Ispat-Karmet is the largest producer and exporter of steel in producing a detailed report on the Kazakhstan. IFC, together with the European Bank for competitiveness of and investment Reconstruction and Development, provided loans to potential for a specific manufacturing Ispat-Karmet during its privatization. These sector. This grant will support the loans were targeted at modernizing the plants production and distribution of at and implementing significant environmental least two SME-related reports and upgrades; the goal was to reduce air pollution includes design, development, and from key units and to improve worker safety. testing of research methodologies During due diligence, the steel plant was found and tools; conduct of field work; to have significant polychlorinated biphenyl expert interviews; data collection; (PCB) oil problems inherited from the Soviet analysis; and publication and era. Although Kazakhstan has not developed a distribution of the report. Norway specific regulation for phasing out PCB oils, both the European Union and the United States Yugoslavia, Federal Republic of have strict regulations to avoid the risks of dioxin formation during accidental fires or final EXPERT ASSISTANCE ON disposal of the oils. PRIVATIZATION OF MUNICIPAL SOLID WASTE COMPANY This TA assignment helped Ispat-Karmet define "GRADSKA CISTOCA." As lead the PCB oil problem, develop a local treatment transaction advisor for the privatiza- alternative to the expensive international tion of Belgrade's solid waste services, options for PCB destruction, and develop IFC will be responsible for all aspects detailed procedures that will allow Ispat-Karmet to eliminate of the privatization, from determining its PCB oil problem without having to export the oils before the optimal structure of the transaction destruction. The delivery of this assistance under IFC's to conducting a competitive interna- support and supervision provided Ispat-Karmet an important tional tender process. Funding opportunity to take part in, and benefit from, the best from the governments of Denmark, environmental practices in hazardous waste disposal Norway, Greece, and Sweden and technology. Denmark the IFC TA Allocation helped support this component. Denmark and the IFC TA Allocation supported the cost of technical and demand 42 D O N O R R E P O R T 2 0 0 2 specialists in performing an including assistance in setting up a retail distribution network. The company hire and train a permanent operational and environmental due contract management unit at the city assignment will also help the company local chief financial officer. Sweden diligence of the solid waste services, level to monitor the performance of identify potential strategic partners carry out a demand study for solid the private operator(s); and providing who can contribute know-how on SURVEY OF COMPANIES IN wastes services in the metropolitan advice on tax and accounting issues clothing design and increase export LIGHT ENGINEERING AND area, advise on the options for intro- related to the transaction. Denmark, potential. Italy MECHANICAL INDUSTRIES ducing private sector participation, Greece, Norway, Sweden, and IFC SECTOR. The aim of this TA assist in defining the service obligation TA Allocation PROJECT COORDINATOR FOR assignment is to improve the of the private operators, and provide SPECIAL TECHNICAL ASSISTANCE competitiveness of the country's advice during the conduct of the FEASIBILITY STUDY FOR FACILITY. This TA assignment sup- light engineering companies and to tender process. Norway supports the COMMERCIAL COMPLEX. This ports the cost of retaining a project identify and help develop selected cost of an expert on social standards TA project involves carrying out a coordinator to manage the Italy/IFC firms in the sector so that they can and related factors regarding urban technical review and market feasibility Trust Fund Facility for Yugoslavia, attract investments to support slums and informally populated assessment of a proposal by an established in November 2001. The efficiency improvements, introduce areas. This expert will perform an existing domestic company to extend coordinator's duties include identifying new products, and retrofit machinery. analysis of the extent of slums and its operations by establishing a potential TA opportunities; managing Sweden informal areas in metropolitan "hypermarket" and a shopping mall the selection, contractual, and financial Belgrade, evaluate the specific situa- in Nis, Yugoslavia. The study will aspects of retaining consultants to ASSISTANCE ON BUSINESS AND tion of solid waste services in such also look at risk factors, current and undertake individual assignments INVESTMENT PLANNING FOR areas, and identify the needs of the projected competition, and prospective funded through the facility; coordi- GARMENT MANUFACTURERS. population living in these areas in requirements for expert advisory nating consultant activities during This TA assignment will help two terms of solid waste service. Greece services that may be required in the the period of the work; ensuring clothing manufacturers in Yugoslavia supported the component of the course of developing and implement- the quality of work products; and prepare business plans required in TA project that conducted opinion ing the investment project. Italy monitoring and reporting on the order for them to be able to attract surveys and focus groups on the implementation of the program. Italy foreign investment needed to concerns and attitudes of Belgrade BUSINESS PLAN AND MARKET- upgrade their operations. Sweden residents and consumers about the ING STRATEGY FOR GARMENT EXPERT ASSISTANCE ON existing solid waste collection services. MANUFACTURER. This TA FINANCE AND ACCOUNTING TA COORDINATOR FOR This component assessed their assignment will help a local clothing FOR FRUIT PROCESSOR. This TA SPECIAL TRUST FUNDS FACILITY. willingness to pay, the affordability company, which makes and assignment involves hiring a financial This allocation supports extension of of improved services, and the possi- merchandises medium- to high-quality advisor for a limited period to help a the contract of the coordinator of bility of private sector participation. garments, to prepare a feasibility juice producer in FR Yugoslavia to the Sida/Yugoslavia Trust Fund Consultants retained through the study and business plan in support establish effective finance and Facility, which has been assisting Swedish allocation will address two of a planned expansion and modern- accounting departments. This expert SMEs in the country in upgrading key areas: providing advice on all ization of the firm's manufacturing will train the company's accounting operations and standards in order to regulatory aspects of the transaction, facilities and a strengthening of its and finance staff and help the attract foreign investors. Sweden 43 D O N O R R E P O R T 2 0 0 2 Yugoslavia's economy (garment- evaluate the environment for, and Latin America and the making, food and food processing, feasibility of, developing the factoring Caribbean and pharmaceuticals). It also provides industry in Yugoslavia. This analysis for appointment of a project is to be used by IFC in its discussions Colombia coordinator to work with other with the government on regulatory consultants in conducting in-depth issues, as well as by an Austrian STUDY OF POULTRY GROWING INDUSTRIAL RUBBER PRODUCTS sector analyses. Sweden factoring company interested in AND PROCESSING COMPANIES. STUDY. The assignment will identify expanding its operations into This TA assignment consists of a the major companies in Yugoslavia FEASIBILITY STUDY AND BUSINESS Yugoslavia (box, p. 39). Austria technical and commercial review of that produce industrial rubber PLAN FOR SPECIALTY STEEL targeted poultry products companies, products and evaluate their product PRODUCTS MANUFACTURER. Central and Eastern Europe with the intention of preparing a range, comparative competitive This TA assignment involves feasibility study and assisting the advantages, economy of production, carrying out a technical, market, and TEST PROJECT FOR REPORTING companies to improve their technical capabilities, and potential commercial assessment of a company ON SUSTAINABILITY. This TA profitability. Included in the for attracting strategic manufacturing steel and stainless steel project will implement, on a pilot assignment are analysis, review, and partners. Sweden industrial specialty products (such as basis, sustainability reporting guide- recommendations for a broad range industrial gas cylinders). Working lines that supplement the financial of organizational, market, operational, TECHNICAL AND FEASIBILITY with the sponsor, consultants will reports issued by private companies and logistic factors. New Zealand STUDY OF SHIPYARD PROJECTS. develop a comprehensive business with information on the firms' This grant supports experts in con- plan to be used as a tool for decision- economic, environmental, and social Dominican Republic ducting of a study of two shipyards making on next steps. Sweden performance, using a standard in northern Serbia that may have evaluation and reporting format. REGIONAL CAPITAL MARKETS potential to be developed as STUDY OF MODERNIZATION Two IFC clients are collaborating in DEVELOPMENT SEMINAR. This investment projects. The assignment OPTIONS FOR LIGHT ENGINEER- this pilot initiative, which also brings grant supports a regional capital is expected to provide technical ING PRODUCTS COMPANIES. This together in this exploratory effort IFC, markets seminar to be held in Santo and market assessment, including grant supports a technical, market, and the Global Reporting Initiative--an Domingo, the Dominican capital. financial feasibility and comparative commercial assessment of two firms outgrowth of work by CERES The Dominican Republic's Central advantage. Sweden that manufacture or assemble light (Coalition for Environmentally Bank and the Bolsa de Valores de engineering products (such as packag- Responsible Economies) and UNEP Santo Domingo (Stock Exchange) APPOINTMENT OF PROJECT ing materials). The companies are (United Nations Environmental are cosponsoring this TA project. COORDINATOR FOR ASSESSMENT contemplating plant modernization Programme)--and the Central Private and public sector officials OF TARGETED KEY INDUSTRIES. and business expansion. Sweden European University (Department of from Latin American and Caribbean This grant supports the cost of Environmental Science and Policy). countries who are active senior players conducting a preliminary scoping EXPERT ASSISTANCE ON IFC TA Allocation in different areas of capital markets study and needs assessment in three PROMOTING THE FACTORING activities will participate in discussions. industries important to growth in INDUSTRY. This TA assignment will The seminar is intended to help foster regional cooperation and may 44 D O N O R R E P O R T 2 0 0 2 lead to specific Country Action PPP projects will be undertaken in a access to capital encountered by services market and identify the role Plans by the World Bank Group to second phase. United Kingdom, IFC SME borrowers and to identify institutions such as IFC can play in develop securities markets in the TA Allocation possible program activities that the facilitating the development of the Dominican Republic and other World Bank Group and external country's financial services sector. countries represented at the seminar. Central America Region partners could pursue to address Ireland IFC TA Allocation these constraints. IFC TA Allocation PILOT WORK ON PROMOTING Syrian Arab Republic Mexico "CLEANER PRODUCTION" PARTNERSHIPS FOR INVESTMENTS. This TA supports COMMUNITY DEVELOPMENT ASSESSMENT OF ENVIRONMENT PREINVESTMENT STUDY OF preliminary work on an IFC pilot (PILOT PHASE). The project aims FOR ESTABLISHING INSURANCE WEATHER INDEX INSURANCE. project to promote knowledge and at using partnerships between private SECTOR VENTURES. This TA This TA assignment will prepare adoption of cleaner production (CP) businesses and nongovernmental work consists of a survey of the an investment project that would approaches by companies in countries organizations in Egypt to train potential market for life and nonlife establish a new Mexican weather with developing economies. Through individuals from poor areas of Cairo insurance in Syria. It involves a risk management company that this TA assignment, an initial CP in skills demanded by the market. review and appraisal of the existing would offer weather index insurance diagnostic review of some 20 selected This is the first program in Egypt to insurance market, with particular products. This company would companies will be undertaken. engage major industrial firms in attention to legal, regulatory, tax, be the first to systematically sell Factors of interest include energy providing and covering the cost of and institutional factors. The idea is weather index insurance on a supply sources, operational efficiency, on-the-job training in cooperation to obtain a clearer picture of the large scale to Mexican farmers. air pollution emissions, water use with the NGO community. The prospects for creating a viable insur- United Kingdom and nature of effluents, and efficient project also hopes to establish a ance company in Syria that would use of raw materials. Among other model of business-NGO partnership offer both life and nonlife insurance PUBLIC-PRIVATE PARTNERSHIPS. potential forums, IFC will share that can be replicated in other coverage. Sweden This project provides technical findings at regional conferences and countries with developing assistance to the government of CP seminars. USTDA economies. IFC TA Allocation Mexico to help develop and Sub-Saharan Africa implement its program to increase Iran, Islamic Republic of private sector involvement in the Middle East and North Kenya provision of public services through Africa Region MARKET ASSESSMENT OF Public-Private Partnerships projects. FINANCIAL SERVICES SECTOR. KENYA RAILWAYS: EXPERT This TA assignment will initially Egypt This project will provide an analysis ASSISTANCE ON PRIVATIZA- focus on creating the right policy of the current financial services mar- TION. In its role as lead transaction framework, institutional arrangements, COUNTRY MAPPING OF SME ket in Iran. The report will highlight advisor to the Government of Kenya and enabling environment SECTOR. This project supports a aspects of the legal and regulatory in privatizing the national railway for a few demonstration projects. review of the SME sector in Egypt to framework that encourage or impede system, IFC must supplement its The implementation of various pilot determine key constraints regarding the development of the financial own expertise by retaining outside 45 D O N O R R E P O R T 2 0 0 2 experts to work on the various International Consortium for Nigeria ices based on best practices. Through disciplines involved in this complex Technology and Its Applications this TA project, one or two associa- undertaking. This allocation supports (ICTA), a nonprofit organization TECHNICAL SUPPORT FOR tions may be identified as potential the cost of retaining technical incorporated in Washington, D.C. FORUM ON COMPETITIVENESS local partners and recipients of experts to address operational issues, ICTA projects would be linked in an AND PRIVATE SECTOR GROWTH. technical assistance from IFC, which which include inputs on privatization overall framework aimed at fostering This TA assignment facilitated and could lead to designing pan-association strategy, technical aspects of railway sustainable development in poor provided quality assurance and TA activities to address needs shared regulation, transaction structuring, urban communities. Individual technical input for structuring a Forum by all associations. Denmark and company valuation. Sweden projects would be organized as on "Competitiveness and Private profitable private ventures with a Sector Growth" and conducting ENTREPRENEURSHIP PROGRAM Madagascar focus on education, health, food, follow-up activities. This conference FOR THE INFORMAL SECTOR. housing, and ultimately the provision was held in Abuja, Nigeria, in July This allocation provides funding for CREATION OF A MONEY of basic infrastructure. Luxembourg 2002. The goal was to help effectively TA services to help the Support and MARKET MUTUAL FUND. This organize working groups and define Training Entrepreneurship Program TA project aims to strengthen the Mozambique productive procedures and agenda (STEP), a nongovernmental organi- capabilities of the Bank of Africa areas for the forum, with a view to zation based in Lagos, to prepare a Madagascar, a commercial bank. ADVISORY ASSISTANCE ON ensuring that its outputs would business plan refocusing and scaling This assistance will enable the bank PRIVATIZATION OF THE contribute to a richer and more up its assistance activities for the managers to assess existing legislation NATIONAL OIL AND GAS productive policy dialogue between informal sector in the southern part to determine how best they can DISTRIBUTION COMPANY the Government of Nigeria and of Nigeria. Switzerland protect mutual fund investors and to (PETROMOC). As lead advisor the World Bank and IFC with regard evaluate the feasibility of establishing to the privatization process for to an upcoming Private Sector South Africa a new money market fund. The Petromoc, the national oil and gas Development operation. Canada thinking is that this new fund could distribution company in Mozambique, TECHNICAL DESIGNS FOR later be expanded to an equity mutual IFC is coordinating industry experts NEEDS ASSESSMENT AND SUSTAINABLE LOW-INCOME fund for shares and other commercial to assess the future of the sector, WORKSHOP FOR NIGERIAN HOUSING AND SERVICES. These tradable securities. IFC TA Allocation particularly regarding servicing rural BUSINESS ASSOCIATION. This TA allocations support the cost of areas and small cities. This assign- project will carry out a needs assess- retaining an expert to prepare detailed Mali ment will design and implement a ment of several business associations technical designs for the construction divestiture strategy consistent with in Nigeria. A workshop with the of a model "eco-village" that is to PROGRAM TO DEVELOP both commercial and developmental associations was conducted, provid- comprise 150 affordable houses for SUSTAINABLE SMEs IN POOR goals; propose alternatives to deal ing a forum to discuss issues affecting rural farm workers, along with URBAN COMMUNITIES. The TA with environmental issues related their performance (such as how to facilities and associated urban services will establish the economic and to the existing facilities; and enhance build strategic alliances to lobby com- (roads, sanitation, water, energy, storm financial viability of community- regulation and monitoring of the mon issues) and to share information water drainage, and landscaping). oriented projects sponsored by the sector. Norway, IFC TA Allocation on modern types of membership serv- The Netherlands, IFC TA Allocation 46 D O N O R R E P O R T 2 0 0 2 SUCCESSAfrica Region: MARKET OVERVIEW OF plan, adopting cost-cutting measures, STORY PRIMARY AND SECONDARY and improving management infor- Better Corporate Governance in EDUCATION. This TA project will mation systems. IFC TA Allocation Nine African Countries carry out a market study of the primary and secondary education Uganda Developing countries as well as local and international market in South Africa, with particular investors now increasingly recognize that corporate focus on independent (private) RURAL ELECTRIFICATION governance is an essential tool for economic growth schools. The study is a joint effort PROJECT (PHASE III). This TA and prosperity. Macroeconomic difficulties in the past were among IFC, the Standard Bank of assignment provides assistance to exacerbated by inadequate corporate governance stemming South Africa (SBSA), and the the Uganda Rural Electrification from weak regulatory and legal systems, inconsistent auditing Independent Schools Association of Company, LTD, to negotiate standards, poor banking practices, unregulated capital markets, Southern Africa. The findings of the operating licenses and a power inefficient boards of directors, and failure to recognize the TA assignment will provide key purchase agreement for the combined rights of minority shareholders. To compete globally and inputs for the development of an rural generation and electric attract investments, companies all over the world must be IFC/SBSA financing package to distribution project in the Bushenyi perceived to be properly governed. Corporate governance support the growth and development and Rukungiri districts of Uganda. requires transparency, accountability, probity, and respect for of independent primary and secondary IFC TA Allocation the rights of all shareholders. To that end, IFC, with the help schools. Sweden of AMSCO, conducted a program to improve the institutional Western Africa Region capacity and corporate governance in nine African Tanzania, United Republic of countries--Côte d'Ivoire, Ghana, Mali, Mozambique, Senegal, STUDY OF THE INFORMATION Tanzania, Uganda, Zambia, and Zimbabwe. Better corporate PRIVATIZATION OF AIR TECHNOLOGY AND INTERNET governance has helped to build good practices and to create TANZANIA: TRANSITION MAN- SECTORS. This TA assignment will shareholder value through the preparation of tailored AGEMENT SUPPORT (PHASE II ). analyze the market and opportunities corporate governance manuals, workshops, and training. This TA assignment focuses on for investment projects in the The IFC program has proven to be a very useful tool to help providing transition management information technology and Internet build consensus on this often overlooked component of the support to facilitate short-term sectors in four selected countries in development equation in developing countries. Corporate stabilization initiatives required as the West Africa region (Côte d'Ivoire, governance is a long-term process that is implemented step part of the overall privatization effort Ghana, Nigeria, and Senegal). The by step, and it will continue to receive IFC's attention and for Air Tanzania Corporation, the idea is to highlight types of projects support. Denmark, Norway, Switzerland country's national airline. This TA that could provide positive economic project also will help the airline and developmental impact in these Corporate governance TAs that have been undertaken recently augment its management processes countries. In addition, the project in other countries, include Armenia, Poland, and Ukraine (see and implement specific steps required will provide information to assist p. 66) (The Netherlands, United Kingdom) and China. Canada, to reduce operating costs. These governments of the target countries Italy, IFC TA Allocation steps include developing a business to develop a policy and legal 47 D O N O R R E P O R T 2 0 0 2 environment favorable to promoting their related synthesis reporting. The funded by IFC. Participants include PHARMACEUTICAL SECTOR investments in the IT and Internet assessment will determine the extent selected IFC clients, who will help to INVESTMENT OPPORTUNITIES. industries. This assignment will also to which the banks are following the develop an IFC labor strategy with This TA project will provide an be used to attempt to identify possible good practice standards that they the objectives of promoting good overview of the pharmaceutical sector co-investors in these sectors. Sweden have jointly developed and to which labor practices among IFC clients in China and Russia, with special participating members in the and of forming a network of stake- emphasis on identifying investment Evaluation Cooperation Group holders and other interested parties opportunities. Ireland Global / Multi-Region (ECG) subscribe. Core MDBs (including other international finan- participating in the ECG are EBRD, cial institutions, civil society groups, STUDY ON CORPORATE HIV/AIDS TOOLKIT FOR MINING the World Bank Group, EIB, IADB, and governments) to work together SUSTAINABILITY IN EMERGING COMPANIES. IFC is working on AfDB and ADB. IFC TA Allocation on promoting good labor practices MARKETS (PART II). In collabora- developing tools and mechanisms to in countries with developing and tion with two consulting firms, help mining companies and mining WEATHER RISK MANAGEMENT: transition economies. In taking this SustainAbility of the United Kingdom communities in developing countries GUIDELINES FOR LEGAL approach to developing good labor and the Ethos Institute of Brazil, this to become effective partners in the AGREEMENTS AND INVOLVE- standards, the thinking is that IFC's initiative will analyze the business prevention and treatment of MENT. This TA project will provide clients, as a group, represent a case for pursuing corporate social HIV/AIDS, both among the mining legal advice on IFC participation in unique resource and can be a most and environmental sustainability in work force and in communities the Global Weather Risk Facility and knowledgeable and useful source of emerging markets. The analysis will dependent on the mines. This grant will develop a legal template to help support for developing and imple- be based on case studies drawn from covers the cost of experts to assist in guide IFC's involvement regarding menting a sound labor strategy to a wide variety of companies in IFC's this effort. The aim is to identify, legal relationships and the managing underpin sustainable development. own project portfolio, as well as a evaluate, and disseminate selected of liabilities in the weather risk IFC TA Allocation substantial number of external examples of public-private partnership management sector. In particular, the case studies and research. While approaches to HIV/AIDS prevention assignment involves drafting a legal TRANSFER OF TECHNOLOGY SustainAbility has conducted and treatment in the mining sector opinion that addresses the participa- KNOW-HOW FOR MANUFAC- comparable studies for companies in that have been shown to be workable tion agreement IFC intends to sign TURING FIRMs. The aim of this TA developed countries, this is the first and cost effective. Canada with Aquila, the global market project is to determine the technology time that this framework will be maker of weather derivatives, and required by industrial manufacturing applied to companies in emerging MULTILATERAL DEVELOPMENT elaborates on legal guidelines and companies in Bulgaria, China, and markets. The results of this study are BANKS: ASSESSMENT OF principles governing IFC's role in Romania to help them make made available through the publica- INVESTMENT EVALUATION the weather risk management area. productivity improvements and tion of a new report in July 2002: PRACTICES. This grant supports an IFC TA Allocation develop global competitiveness. The Developing Value: The Business assessment of the current status and assignment will also identify effective Case for Sustainability in Emerging quality of the evaluation practices CONFERENCE ON GOOD delivery mechanisms for technology Markets. Ireland used by multilateral development LABOR PRACTICES. This TA proj- transfer, including usefulness of an banks (MDBs) for individual private ect involves holding a conference on independent e-marketplace. Ireland sector investment operations, and of good labor practices, sponsored and 48 D O N O R R E P O R T 2 0 0 2 Sustainable Mining and Local Development Facility ASSISTANCE IN SETTING UP by international financial institutions, "I believe the number one challenge facing every mining company in the emerging markets WEB-BASED BUSINESS "TOOL- including IFC, as mechanisms to today is local community development. I believe the number one challenge for the World KIT" FOR SME FIRMS. This TA promote private sector economic Bank Group--if we are going to stay in extractive industries--is community development." project supports expertise to assist in development. In identifying suitable creating a Web platform--the "SME- firms for financing, fund managers Peter Woicke, IFC Executive Vice President. Toolkit" (www.SME-Toolkit.com)-- face a complex decisionmaking that can be accessed by World Bank environment. This TA assignment TA in the mining sector has in past years been mainly been used for studies of specific Group users and independently by will undertake a detailed and regions or countries or for work on preparing investment projects. Increasingly, however, TA work focused on the mining sector has begun to mirror IFC's focus on sustainable external users. The objective of the comprehensive analysis of a range of development. SME-Toolkit is to use technology to equity and venture capital markets, bring to SMEs information on prod- with an aim to better understanding Mining operations, whether new or expansions of existing mines, have a broad range of ucts and services needed throughout them and providing operating funds economic, environmental, and social effects, that are felt most immediately by local their business development and on a more effective basis. Japan communities. In addition to changes in the physical environment, the social and cultural operations cycle. Japan fabric of these communities can be dramatically affected. TRANSLATION INTO JAPANESE TRANSLATION AND PRINTING OF IFC'S "LESSONS OF EXPERI- In response to this challenge, the World Bank Group is discussing with donors the need OF IFC'S ANNUAL REPORT FOR ENCE" REPORT NO. 8: "THE to establish a facility fully dedicated to sustainable mining and local development, with FY2001 INTO JAPANESE. This ENVIRONMENTAL AND SOCIAL an aim to promoting and implementing best practice to address impacts on the local allocation supports the translation CHALLENGES OF PRIVATE SECTOR communities. The facility would be funded by private and public sector donors, and work with private mining operators, government authorities, and local communities. of IFC's FY01 Annual Report into PROJECTS: IFC'S EXPERIENCE." It is anticipated that services provided by the facility would include environment Japanese. The aim is to help the This allocation supports translation assessments and management plans, social assessments and community development Government of Japan--one of IFC's and dissemination of Volume 8 in plans, capacity building for local communities and junior mining companies, and principal stakeholders--to better IFC's "Lessons of Experience" studies, dissemination of best practice and lessons learned on sustainable mining. The size of understand IFC's activities and to which analyze IFC's work program. the facility and its detailed governance structure--including a supervisory board--are give other Japanese decisionmakers These reports, which look at IFC's being discussed with prospective donors and private sector companies. and the public access to current, operating experience from a variety detailed information on IFC's of perspectives, are a useful tool for In FY2002, $1.2 million in TATF funding was approved for five TA projects in the mining business activities and contribution understanding and strengthening sector. Significantly, four of these were oriented toward sustainable development to development. Japan market-oriented solutions in coun- activities: financing of a conference in China aimed at improving the investment climate tries with developing and transition for sustainable mining (Australia, IFC TA Allocation); support for a coal company in MARKET SURVEY FOR PRIVATE Russia to bring its operations into compliance with national Russian Federation require- economies. The translation and ments and with World Bank Group environmental, safety, and social standards (United EQUITY AND VENTURE CAPITAL dissemination work aims to provide Kingdom, IFC TA Allocation); development of a "toolkit" to help identify, evaluate, and INDUSTRIES. This TA assignment decisionmakers, potential new disseminate successful examples of public-private partnership approaches to HIV/AIDS supports a study of the developmen- stakeholders, and the general public prevention and treatment in the mining sector (Canada); and a range of programs for a tally important private equity and in Japan with a better picture of IFC's gold and copper mining investment in Lao People's Democratic Republic, that include venture capital markets in emerging work program and its contribution capacity building, management of environmental and social effects, protecting biodiver- markets. These markets are often used to economic development. Japan sity, and support for social infrastructure and related services. Australia, Japan 49 D O N O R R E P O R T 2 0 0 2 Chapter 2 Annex 2 TATF Consultant Services Overview of FY2002 Activities During FY2002 IFC's Trust Funds Department awarded 154 contracts to Procurement Guidelines respective donor agreements and the consulting firms and individual contractors to carry out technical assistance project work plan--in order to assignments under the TATF program. Of these, 63 were for individuals (total In April 2002 the World Bank encourage adequate competition. value US$1.5 million; average value US$23,400), and 91 were for consulting Group's Operations Policy and The IFC Trust Funds Department firms (total value US$8.9 million; average value US$97,500). In addition, the Country Services Department issued has been working with donors to Department processed expense claims totaling over US$12.0 million. revised guidelines for the selection and find ways to expand procurement use of consultants for operational opportunities for consultants, Since its inception the TATF Consultant Services team has been responsible purposes. This document covers a including the placing of formal for initiating contracts and processing financial transactions for TA range of World Bank Group programs, requests for proposals on websites assignments financed through the TATF program. This includes the adminis- including all trust funds executed by of donor trade offices and ministries. trative handling of each contract throughout its life. IFC focuses strongly on the Bank and IFC. In this context, management of client relationships with consultancies working for IFC and the new guidelines define the specific Consultant Hiring Overview with the IFC investment specialists who coordinate implementation of TA roles and responsibilities of staff assignments. In addition, the Consultant Services team ensures that the terms who manage TA assignments, and IFC's initial contact with a consult- and the processing of contracts comply with World Bank Group policies and others involved in consultant selection ant may take place weeks or months with donor agreements and project work plans approved by donors. are also more clearly identified to before an assignment begins. Once strengthen the procurement processes project funding is secured, a standard The TATF Consultant Services team members help the IFC staff who manage within the World Bank Group. consulting contract can usually be individual TA projects by providing information on relevant guidelines and generated within two to three weeks. restrictions; advice on the search, selection, and hiring of consultants on The Guidelines on selection of Different contracting processes are World Bank Group procurement and travel policies and procedures; advice consultants reflect the needs of a used for individuals and firms. on business benefits and services for which consultants may be eligible-- particular project or task manager information that is also provided by the team to consultancies retained and the requirements of a given trust IFC's Human Resources and through the Trust Funds program; and advice on anticipating and handling fund. The IFC staff who initiate and Administration Department issues all logistical and other contract-related matters. The team also provides manage donor-funded TA work are appointment letters to individuals, consultants with information and advice on how they can effectively handle encouraged to expand their search who are hired as international their administrative and performance responsibilities required by the contract for consultants as widely as possible-- short-term consultants. A contract is on an as-needed basis. within the criteria specified in the issued upon receipt of a request and 50 D O N O R R E P O R T 2 0 0 2 relevant supporting documents from What Is What Is Vendor Vendor Kiosk the TATF Consultant Services team for the hire of an individual. Supporting DACON? Registration? Enhancements documents required include the submission of a curriculum-vitae and DACON is a consultant registra- The World Bank Corporate World Bank Group Corporate the terms of reference prepared by tion database for consulting Procurement Department Procurement and Accounts the IFC task manager. firms that is managed by the verifies the qualifications of all Payable launched a Vendor Kiosk World Bank Group and Inter- firms providing services to the in August 2001. The system was During the assignment, a short-term American Development Bank. World Bank Group. Eligible firms enhanced in June 2002 to consultant is considered to be a It is a tool for Bank borrowers, are registered as vendors if they improve vendor and customer World Bank Group staff member beneficiaries, and staff to assist demonstrate that they are service. Of interest to consulting and is subject to certain rules (such in shortlisting and longlisting incorporated or registered as a firms are: as confidentiality and avoiding firms for projects. It is not company; operate with a positive conflicts of interest), restrictions · The on-line vendor registration necessary to register with operating income; provide (such as not being allowed to work application, information, and DACON to be considered for an evidence of insurance coverages; for the Bank Group for more than service desk assignment with IFC TATF or have client references; are 190 days in a given fiscal year) and · A service to update existing any other World Bank Group legally able to conduct business privileges (immunities). records for vendors already unit. It is also important to note in their country; and have more contracted with the Bank that registration in the DACON than one business client (not The World Bank Corporate Group system is not an endorsement more than 20 percent of its total Procurement Department issues con- · The basic terms and by the World Bank Group of the revenue can be derived from tracts for firms upon submission of a conditions used in standard information or qualifications World Bank contracts). The contract request package by the TATF consulting services contracts provided by firms. DACON is vendor application process is Consultant Services team. In contrast · A query function to check on not the equivalent of "vendor now web-based, and in June to the treatment of appointment for invoice status and payment registration" with the World 2002 the application process short-term consultant appointments, history Bank Group's Corporate was streamlined and enhanced. no World Bank Group benefits or Procurement Department. A special privileges are extended to To use these services and for separate registration process is team members engaged by the more information on working with required for vendor registration contracted firm, these individuals the World Bank Group, visit (see next box). For more infor- remain employees or subcontractors info.worldbank.org/vendorkiosk/. mation about DACON, please of the firm and are not considered visit www.dgmarket.com/dacon/. to be employees of IFC. However, the same rules on confidentiality and conflicts of interest do apply to contracts with firms. 51 D O N O R R E P O R T 2 0 0 2 IFC-Managed SME Facilities 52 D O N O R R E P O R T 2 0 0 2 3 An important part of the ringing together the policy reform expertise of the World Bank with the private sector business B experience of IFC, the World Bank Group created the jointly managed Small and Medium department's mandate is Enterprise (SME) Department in 2000 to support small business and private sector development, especially in frontier markets. An important part of the department's mandate is to provide field-based to provide field-based technical assistance through IFC-managed SME facilities, multidonor initiatives that pursue targeted technical assistance agendas to support small business development in some of the world's poorest countries.1 through IFC-managed Six such facilities currently operate: the African Management Services Company; the Africa Project Development Facility; the China Project Development Facility; the Mekong Project Development SME facilities Facility; Southeast Europe Enterprise Development; and the South Pacific Project Facility. A seventh, the SouthAsia Enterprise Development Facility, will open shortly. Efforts are also under way to launch two others: the North Africa Enterprise Development Facility; and the Indonesia Enterprise Development Facility. Like their predecessors, these new facilities will work to promote robust SME sectors in their regions and foster much-needed job creation, an essential requirement for poverty reduction. African Management Services Company The African Management Services Company (AMSCO) helps African companies become more sustainable and competitive by sourcing and providing experienced managers to client companies and providing client-specific training to local work forces. One of its key areas of focus this year was to complete the first phase of its regionalization program. The program is designed to place AMSCO personnel alongside clients in the African continent to enable a faster and efficient response to client needs. New offices, being set up in Africa, are staffed with local people, and progress is being made to increase the number of African managers provided to client companies. For comprehensive information on all of the World Bank Group's SME-related work, visit the department's website at 1 www.ifc.org/sme or see separate Report on WBG Review of Small Business Activities ­ 2002. See also the section on SMEs in Chapter 2, p. 23. 53 D O N O R R E P O R T 2 0 0 2 Other highlights of AMSCO's activities for the year include: Africa Project Development Facility · The number of managers grew by 21 percent, to a total of 307 at the end of The Africa Project Development Facility (APDF) provides support to SMEs in CY01; managers were assigned to 124 African companies (78 percent of Sub-Saharan Africa operating at both the retail and wholesale level. APDF's which were SMEs) in 24 countries. mission is to support the development of competitive African SMEs with services · A total of 4,550 employees received training from AMSCO, an increase of that are needed and affordable; it works mainly through local institutions and 90 percent over the previous year. local consultants. The APDF vision is to be a role model for African SMEs, ­ AMSCO, with funding through IFC's TATF program, assisted in the based on sound market and business practices, as well as to be a leader in development and launching of six country-specific corporate governance setting best practices and methods for measuring the effects of business devel- manuals (Ghana, Mozambique, Tanzania, Uganda, Zambia, and, opment services on enterprise performance and reduction of poverty in Africa. Zimbabwe), in which international standard codes are being translated to the level of national enterprise and adjusted to national laws (Denmark, APDF has recently broadened its range of services to include business advisory Norway-TATF program). The development and launching of corporate services, enterprise support services, and skills development to SMEs. The governance manuals for Côte d'Ivoire, Mali, and Senegal are expected to focus is now on building capacity, not only of SMEs, but also by developing start late in 2002 (Switzerland-TATF program). other service providers, such as local consultants, as well as those of local ­ AMSCO organized ten general seminars, which were attended by a wide finance institutions targeting SMEs. audience. · AMSCO clients contributed substantially toward the total costs of managing Recent activities have included: and training their employees. This demonstrates that the great majority of client companies are willing and able to pay for AMSCO's services, as well · Training local consultants to a level enabling them to provide high-quality as being satisfied with the service provided. services to SMEs in Sub-Saharan Africa. · Building capacity of local organizations promoting women and youth, such AMSCO continues to have major impacts on client companies. A good as the South African Women Entrepreneurs Network (SAWEN) and the example is the company's effect on Fountain Trust. Two years ago, the owners South African youth organization, Usombomvu, which may be replicated of Fountain Trust of Nigeria decided to restructure the company's profile, elsewhere on the continent. converting it from a merchant bank to a commercial bank. With the help of · Acquiring a diagnostic tool to evaluate the operations of SMEs developed AMSCO, Fountain Trust has been able to make this dramatic shift with a new by FUNDES, a Costa Rican-based foundation specializing in SMEs. chief operating officer offering broad experience in commercial banking. · Widening APDF's field presence with new offices in Mozambique and Fountain Trust's restructuring was also enhanced by a comprehensive program Cameroon. of training to provide the staff with the skills necessary to succeed in the · Coordinating donor efforts such as the APDF Ghana office's development of bank's new business area. Helping the bank's frontline employees deal with a sourcebook on all donor activities in Ghana, which facilitated a grant of retail clients was of special concern, given the new emphasis on SMEs. The US$1million by USAID for a United Nations Development Programme results of AMSCO's efforts are underscored in the bank's operating figures. (UNDP) project in microfinance. Fountain Trust has moved from loss into profit and has expanded its operations to meet the growing demand for its innovative products and services. 54 D O N O R R E P O R T 2 0 0 2 APDF was created in 1986 as a joint venture of IFC, UNDP, and the Africa Development Bank. Since then it has assisted more than 500 projects, resulting in total investment of some US$700 million and raising an estimated total of more than US$390 million. APDF has helped create an estimated 36,100 jobs. China Project Development Facility In May 2002 World Bank Group President James D. Wolfensohn visited Chengdu, China, to oversee the official launch of the China Project Development Facility (CPDF), which will support the development of a vibrant small business sector in the interior of China, with an initial focus on the province of Sichuan. CPDF uses a comprehensive and integrated approach in addressing three of China's most important economic challenges: the lagging development of western China; a need for stronger, commercially oriented financial institutions; and an underdeveloped SME sector. This approach lies at the heart of IFC's strategic priorities of focusing on frontier markets, supporting local SME and financial sectors, and assisting with sustainable development. CPDF is being funded by Australia, Switzerland, the United Kingdom, and IFC. Its activities have been planned and implemented in close collaboration with IFC and World Bank regional departments as well as the Sichuan government. To pursue its key objectives of generating employment growth in the private sector and strengthening sustainable local institutional capacity, it is currently working on projects in the following areas: Access to Finance · Technical assistance and capacity building for two Sichuan banks. · Preparation of an SME risk-sharing finance initiative. · Direct assistance that helps local SMEs strengthen and restructure their operations, obtain new capital, and better meet the challenges and opportunities emerging from China's new membership in the World Trade Organization. 55 D O N O R R E P O R T 2 0 0 2 · Support for an existing IFC · SME "mapping" in both Sichuan Advisory Assistance program, MPDF However, as private companies grow investment in the Sichuan SME and Zhejiang provinces (to allow a works with individual companies to larger and more sophisticated and are investment fund, and work on comparison between the interior develop business plans and financing more exposed to international com- facilitating additional equity fund and the coast); administrative cost proposals and provides technical and petition, there is an increasing need initiatives in the region. surveys; and support for private advisory assistance to improve the for advisory assistance in other areas · Possible support for a World Bank sector business associations. operations of those companies. In its such as technology, marketing, micro/small finance initiative. Business Support Services Development human resources, and management program, MPDF works to strengthen information systems. Capacity Building Mekong Project the quality and quantity of support Development Facility services available to SMEs, such as Business Support Services · Developing local consulting training, financing, consulting, and Development capacities through an innovative Launched in 1997, the Mekong information services. The program franchising and technical support Project Development Facility (MPDF) also seeks to improve the general · A "flexible learning" pilot was project. has a mission of supporting the business environment for private launched, with an initial series of · Designing and supporting establishment and growth of private, firms. Accomplishments of the 12 workbooks published in 2001. management education and domestically owned SMEs in two programs in CY2001 follow. The local language workbooks are training initiatives. Vietnam, Cambodia, and the Lao practical, easy-to-use, self-study · Mounting a major corporate PDR. It bases its work on the belief Company Advisory Assistance tools covering specific subjects of governance program targeted at that domestic entrepreneurship is small business management in private firms, banks, and local central to ongoing efforts in all three · The program completed 40 projects, marketing and human resources. agents of change. (Italy, IFC TA countries to overcome widespread of which 27 involved raising Twice voted "best-sellers" in Allocation - TATF program) poverty and to continue the transition finance and 13 were for technical Vietnam, 38,000 flexible learning from central planning to market- or advisory assistance. workbooks were sold in Vietnam Business Enabling Environment based economies. MPDF is financed and Cambodia. As a result, more by Australia, Canada, Finland, · Some 2,600 new jobs were created, resources will be used to extend · Follow-up on a May 2002 Japan, Norway, Sweden, Switzerland, and US$25.8 million in foreign the workbooks to other subject business enabling environment United Kingdom and multilateral exchange was earned or saved. areas of interest to SMEs and to seminar supported by the SME institutions, including the Asian make them available in PDR Laos. Department, IFC's East Asia/ Development Bank and IFC. The completion of 13 projects · The Bank Training Center (BTC) Pacific Department, and the involving technical or advisory was conceived and launched as a Australian Government, through MPDF's core working objectives are assistance reflects MPDF's response private company owned by nine the TATF Program. to improve the operational perform- to the changing needs of SMEs in the joint-stock banks in Vietnam. By · Support for efforts to implement ance of SMEs and their access to region. General access to bank loans, pooling their resources and provid- reforms in regulation, legislation, capital. Its activities are split into two especially in Vietnam, has improved ing them access to world-class and other key policy areas. main programs. In its Company dramatically over the past few years. materials and instructors, the BTC enables these banks to improve their human resource development 56 D O N O R R E P O R T 2 0 0 2 substantially, while at the same SouthAsia Enterprise detailed work program for its future time creating a company with the Development Facility work in the financial sector. SEDF clear potential to become commer- also carried out several studies on cially viable in the future. The Approved in FY2001, the SouthAsia Bangladesh's agribusiness and textile positive feedback from the market Enterprise Development Facility sectors (Denmark-TATF program); has prompted MPDF to consider (SEDF) will offer a mix of programs the studies will be important a similar initiative in Cambodia. to help SMEs in the region improve resources for SEDF as it designs its · MPDF worked closely with the their potential for growth. SEDF will initial activities in those areas. Asian Development Bank on the work extensively with local institutions formation of the Mekong including banks, training institutions, The SouthAsia Enterprise Enterprise Fund (MEF). A fund consultants, and government agencies. Development Facility is being funded management group has been by the Netherlands, the United established, and US$16 million Based in Dhaka, Bangladesh, SEDF Kingdom, and IFC. was raised for the first tranche in entered its start-up phase in FY2002 2001. This is the first regional ven- and expects to formally launch its ture capital fund targeting locally operations in the coming months. Southeast Europe owned SMEs. It is expected to fill One of its key focuses will be in Enterprise Development a major gap in the availability of helping local financial institutions institutional sources of risk capital learn ways to lend profitably to small Southeast Europe Enterprise for local entrepreneurs, especially businesses. Along these lines, in June Development (SEED) is a multidonor in high-growth areas such as 2002 SEDF organized a symposium initiative managed by IFC to information technology and high- to expose key South Asian banks to strengthen SMEs in Albania, Bosnia value exports. The fund is expected proven trends in small- and medium- and Herzegovina, FYR Macedonia, to commence operations shortly. size enterprise lending worldwide and Yugoslavia. The facility offers a (Norway-TATF Program). The event variety of services both to local SMEs Other initiatives and pilot programs shared experiences of selected small directly and to local organizations include an International Organization business lenders from the Philippines, that support them. SEED also works for Standardization (ISO) support South Africa, Sri Lanka, Thailand, closely with the World Bank and program, export marketing, and and the United States with senior other international institutions to SME enabling environment. bank managers, government officials, improve the difficult operating and private sector representatives environment for SMEs in these In July 2001 MPDF was certified from Bangladesh, the Maldives, target economies. Headquartered in with ISO 9001-2000 for Total Nepal, northeast India, and Sri Sarajevo, SEED has offices in Banja Quality Management, becoming the Lanka. The resulting feedback is Luka, Belgrade, Skopje, and Tirana, first component of the World Bank helping the new facility frame a and employs more than 60 staff. group to gain ISO certification. 57 D O N O R R E P O R T 2 0 0 2 SEED is funded by Austria, Canada, Investment Services · INVESTMENT PLAN. Following both the internal enhancement and Greece, the Netherlands, Norway, the implementation of key investment plans. SEED's environ- Slovenia, Sweden, Switzerland, the SEED is targeting companies for recommendations in the internal mental consultants will help companies United Kingdom, and IFC. sustained, market-based competition. enhancement plan, SEED often find solutions on issues dealing with If an SME can define investment assists companies in designing an environmental protection. They will To implement its mandate, SEED requirements in these terms, then and investment plan for a specific closely cooperate with the client to works along three service lines: only then is a company ready for project. The plan provides pro identify the project impact, mitigate financing. SEED will attempt to iden- forma financials of the proposed or reduce risks and potential negative · enterprise-level investment services. tify clients that are near this goal. In project and gauges the receptivity side effects, and highlight the · capacity building of enterprises such cases, SEED will actively try to of potential investors and their importance of environmental and and local service providers such as match the company with appropriate likely requirements for equity social outcomes. business associations, chambers of investors and financiers immediately. purchase, loan pricing, maturity, commerce, training and economic For those SMEs that need to security, support arrangements, Capacity Building institutions, and consultants who strengthen their performance, SEED and other financing features. serve the needs of SMEs. will assist in that development before · MARKETING THE INVESTMENT The vast majority of SMEs in · improvement of the business seeking financing. Investment service PLAN. SEED will market a com- Southeast Europe have been shielded enabling environment. products aimed at SMEs include: pany's investment plan to a targeted from modern market economies and group of financial sources on a are at a competitive disadvantage as During FY2002, SEED investment · INTERNAL ENHANCEMENT commercial, reasonable effort they operate and attempt to grow services delivered 31 internal PLANS. SEED assists companies in basis. Investment negotiations their businesses. Furthermore, there enhancement plans and 24 investment analyzing their current situation and with the financial partner are the is no history of business advocacy or plans. Fourteen projects were determining appropriate actions to responsibility of the company. association existing for the sole pur- financed for US$7.5 million. SEED improve internal management SEED will provide services to the pose of supporting business interests. also completed 37 capacity-building systems. SEED's recommendations company to help prepare it for SEED is addressing these issues by: projects (to business development focus on systems and mechanisms such negotiations. service providers, SMEs, or groups that can be implemented in the · Partnering with local associations of SMEs), training more than 800 near term, such as working capital Environmental and Social of business owners and helping local service providers and nearly management, management infor- Overview of SMEs them expand and function more 1,600 SME employees and managers. mation systems, cost analysis, effectively and independently of Finally, SEED conducted 22 business quality control, and environmental As a part of its existing services, donor support. enabling environment initiatives, certification. SEED helps companies SEED will review all aspects of the · Implementing training and technical which included surveys and studies, identify the resources they need to SME business relating to the environ- assistance programs for local publications, and input into donor implement the plan, including ment, occupational health and safety, business service firms (for example, and government strategies on SME members of their own staff, local fire protection, and social issues. This accounting firms, small business development and poverty reduction. consultants, SEED staff, and, if review will be an integral part of law firms, auditing firms, required, international experts. 58 D O N O R R E P O R T 2 0 0 2 management information firms, South Pacific and general consultants). Project Facility · Implementing SME training pro- grams to enhance competitiveness. The South Pacific Project Facility's · Sharing knowledge among SMEs mission is to assist and accelerate and SME service providers through the development of productive and in-person "business roundtables" self-sustaining SMEs in Pacific island and Internet-based exchanges. countries. SPPF achieves this by · Promoting the development of working with entrepreneurs in the women-owned and -operated Pacific island countries to develop businesses through targeted support and finance commercially viable · Advising in the purchase of local A good example of SPPF intervention for development of women's businesses with the potential to pro- companies from foreign is that of the Rural Development business associations. mote sustainable economic growth, shareholders or the acquisition Bank in Papua New Guinea provide productive employment, and of state-owned enterprises that (Australia-TATF program). In Business Enabling Environment stimulate export earnings. member countries wish to privatize. cooperation with the bank, SPPF · Advising Pacific island governments worked with ten SMEs with existing To help make the business SPPF's activities include: on private sector initiatives and or potential problems that could environment for Balkan SMEs more the privatization of public sector threaten their viability and provided simple, supportive, predictable, and · Evaluation of business ideas and enterprises. assistance with the formulation and transparent, SEED is currently: concepts on an objective and execution of corrective measures. confidential basis. For FY2002, a total of 30 projects Loan rescheduling or restructuring · Supporting legislative and tax · Development of business plans in industries ranging from manufac- proposals were prepared and reform benefiting SMEs. and, where appropriate, engaging turing and tourism to agribusiness submitted to the bank on behalf of · Reaching out to municipal leaders expert technical advisers to carry and banking benefited from the seven SMEs employing a total of to support local economic out feasibility and market studies activities of the SPPF--a 36 percent 108 people. The project gave the development programs targeting to evaluate fully the viability of growth over FY2001. Eight of these SPPF an insight into areas where SME development. business proposals. were technical assistance projects both the bank and its clients could · Organizing and disseminating · Arranging and negotiating debt undertaken by SPPF on behalf of benefit from a skills development business information that can help and equity finance on the best either private sponsors or governments program. SMEs identify new markets; available terms. to determine whether a venture or understand and comply with local · Identifying technical and managerial type of business is viable. These The South Pacific Project Facility laws and regulations; and learn requirements of clients and, if projects are intended to lead to was established in 1990 with financial about new products, production required, sourcing technical partners specific business opportunities for support from the governments of methods, and technology. on equitable and fair terms. which SPPF can then raise finance or Australia, Fiji, Japan, Kiribati, · Assisting in the selection of facilitate the investment climate in New Zealand, Samoa, and IFC. business partners and investors. the private sector in target countries. 59 D O N O R R E P O R T 2 0 0 2 IFC's Private Enterprise Partnership Building Partnerships for Sustainable Economic Growth 60 D O N O R R E P O R T 2 0 0 2 4 IFC's Private Enterprise Partnership T he Private Enterprise Partnership (the Partnership) is the technical assistance arm of IFC in the former Soviet Union.1 Established in May 2000, the Partnership builds on IFC's ten is: Ten years of IFC's hands-on years of advisory and investment experience in the former Soviet Union. With the creation of the Partnership, IFC has consolidated and expanded its technical assistance programs in the investment and technical region and more closely integrated them with IFC's investment program. IFC's Technical assistance activities in the region date back to 1992. assistance experience in the former Soviet Union. Serving: With support from donors, the Partnership works with private companies and governments to assist them to: Armenia, Azerbaijan, Belarus, · Attract private direct investment Georgia, the Kyrgyz Republic, · Stimulate the growth of SMEs · Improve the business enabling environment Russia, Tajikistan, Turkmenistan, To achieve these objectives, the Partnership implements programs in four distinct, Ukraine, and Uzbekistan. Funded complementary areas: jointly by donor governments · Developing financial markets (Canada, Finland, the Netherlands, · Building supply and distribution chains to link local companies to major investors and markets · Improving corporate governance practices and business regulations Norway, Sweden, Switzerland, the · Building business support services and improving the regulatory environment for SMEs United Kingdom, and the United States) and IFC. The Partnership is also known as "PEP" in other parts of the Report. For a copy of the Partnership's Annual Report, 1 contact the Director (see Directory for details) or go to www.IFC.org/pep 61 D O N O R R E P O R T 2 0 0 2 The Partnership's A Year in Review: the Funding Partnership's Programs Donor Agreements The Partnership is funded jointly by donor govern- The Partnership is currently implementing 24 projects HIGHLIGHTS ments and IFC. IFC has committed US$12.6 million in six countries. Fifteen of these projects were for the period July 1, 2000, to June 30, 2003. In launched in FY2002. In addition, the Partnership October 2002 the Partnership will seek additional completed two programs this fiscal year. The Before the Partnership was created, IFC received donor IFC funding for future operations. IFC's contribution following is an overview of the Partnership's funding for discrete, free-standing technical assistance covers the overall management of the Partnership, activities in FY2002 structured by program areas. initiatives. With the establishment of the Partnership, allowing it to spend the vast majority (95 percent) donors have been able to enter into multiyear funding of the donor funding directly on the technical Developing Financial Markets framework agreements with IFC. Multiyear agreements assistance initiatives. In addition to funding, IFC between the donors and the Partnership are structured contributes substantial time and expertise of IFC To help the post-Soviet economies build healthy according to regional or country focus and programmatic investment, technical, and other staff. financial markets and increase financing options activities. available to local businesses, particularly start-ups Donor contributions (not including those and SMEs, the Partnership develops leasing markets To-date, a number of such long-term agreements have contributions received before the creation of the and strengthens the banking sector. been signed: Partnership) currently amount to US$34 million over the full life of the Partnership's projects. The Leasing · A five-year general agreement for technical assistance Partnership has received the vast majority of its with the Canadian International Development Agency donor funding (US$28 million) directly from bilat- In 1997, when IFC began the Leasing Development (CIDA), covering Russia over five years and Ukraine eral donor agencies. About 11 percent of the Program in Russia, very few local people knew over three years, with total funding of CAD 8.8 million. Partnership's funding (US$4 million) has been what leasing was. Today, the size of the Russian · A three-year agreement with the State Secretariat for channeled through IFC's TATF Program. In addition leasing market will approach US$2.4 billion by the Economic Affairs of Switzerland (seco) for a portfolio to contributions from bilateral donor agencies, the end of 2002. IFC's Russia Leasing Development of projects in Russia, Ukraine, and Central Asia Partnership has received more than US$2 million Group, with funding from Canada and the United totaling US$7.1 million. in cash and in-kind contributions from other gov- Kingdom, has played a major role in the leasing · An open-ended agreement with the Government of ernment institutions and private sector companies. sector's growth in Russia. Key contributions the Netherlands for Russia and Ukraine with an initial include drafting and advocating passage of the contribution of NLG 5 million through Senter and a The Partnership thanks its current donor partners-- amendments to the Tax Code provisions on leasing subsequent contribution of 5.3 million through the Canada, Finland, the Netherlands, Norway, (passed in August 2001) and to the Law on Ministry of Economic Affairs. Sweden, Switzerland, the United Kingdom, and Leasing (passed in January 2002). · A three-year agreement for Ukraine with the Swedish the United States--for their generous support. International Development Cooperation Agency (Sida) totaling US$1.6 million. · A three-year agreement for Russia with the Ministry of Foreign Affairs of Finland totaling US$980,000. 62 D O N O R R E P O R T 2 0 0 2 To build local expertise, the Leasing Development Banking Group trained thousands of leasing professionals, potential lessees, and government officials across In the banking sector, IFC's strategy has been to 35 of the 89 regions of Russia. The team created combine investment with customized technical the industry's leading periodical, Leasing-Courier, assistance to private medium-size banks. In the and a website--both unique sources of practical spring of 2002, the Partnership launched a technical and analytical information on leasing in Russia. assistance project with Center-Invest bank in The Leasing-Courier, a bimonthly journal, reaches Rostov-on-Don to complement a US$2 million subscribers in 79 regions of Russia, and the leasing loan from IFC. The objective of this TA is to help website (www.ifc.org/russianleasing) attracts strengthen Center-Invest's management and about 10,000 visits each month. operations, particularly in the areas of corporate organization, business development strategy, IFC has complemented the Partnership's technical internal audit, and asset and liability management assistance work with investment, approving practices. Norway-TATF Program US$19 million of its own resources and mobilizing US$45 million from Western co-investors for three In March 2002, the Partnership launched another Russian leasing companies. program with NBD Bank, based in Nizhny Novgorod. The bank recently received a US$2.5 To intensify its work in the Russian regions, the million loan from IFC. The Partnership's technical Partnership launched leasing projects in the Urals assistance program to the bank will focus on region (United Kingdom-TATF Program), and in improving its internal audit function and the use Northwest Russia (Finland). of management information systems. Norway- TATF Program The expertise gained by the Russia Leasing Development Program gave a quick start to the These programs build on the Partnership's bank Partnership's Central Asia Leasing Development re-engineering program to Moscow-based Project (Switzerland, seco). Launched in October Probusinessbank. The two-year technical 2001, the project has developed and submitted assistance to Probusinessbank has helped the legislative amendments for consideration by the bank develop and implement a growth strategy governments and lawmakers in the Kyrgyz Republic, based on expanding its lending to SMEs, increasing Tajikistan, and Uzbekistan. The Kyrgyz Law on its assets by 27 percent and helping it attract more Leasing passed in June 2002, laying the foundation than US$20 million in financing, including a for the industry's development (box, p. 71). The US$5 million subordinated loan from IFC. United Uzbek law was passed in August 2002. The Russia Kingdom-TATF Program program also supported IFC's Armenia and Georgia offices in drafting leasing legislation. The legislation for both countries were passed in Spring 2002. 63 D O N O R R E P O R T 2 0 0 2 SUCCESSBelarus: STORY Advocates Ensure Local Businesses Have a Voice Building Supply and Distribution Chains Belarus has one of the most challenging business development climates in Central and To promote increased investment in post-Soviet Eastern Europe. IFC's Partnership works with local business associations to help them markets and to bring the benefits of direct become effective advocates for SMEs in this difficult setting. investment to local communities, IFC's Private Enterprise Partnership works to build local In the town of Gomel, in southeastern Belarus, local companies into competitive and responsible government bodies established a sales tax of 100 per business partners and links them into the supply month for individual entrepreneurs selling fur hats. This and distribution chains of major companies. sum amounted to about 78 percent of the average monthly Currently, IFC's Partnership is working with income of these entrepreneurs. For most of the fur hat suppliers in the agribusiness, mining, forestry, traders in Gomel, this tax threatened their businesses. furniture manufacturing, and automotive sectors in Russia, Ukraine, and Central Asia. With IFC's advice and legal expertise, the Council of Market Entrepreneurs began a campaign to reduce this tax, sending In June 2002, IFC's Board of Directors approved letters to officials at all levels of government ­ from the city IFC financing of US$3 million to help create the and regional administrations all the way to the Belarusian Agro-industrial Finance Company (AFC)--the first Ministry of Trade. To gain extensive coverage of this issue in private financial institution to serve Russian primary the regional and national media outlets, the Council also agriculture. IFC's partners, Rabobank and the organized a vigorous media campaign, with IFC's support. Netherlands Development Finance Company will provide an additional US$6 million through IFC's As a result, the Ministry of Trade lowered the tax on hats to syndicated loan program. AFC will finance 35 per month or about 27 percent of the average monthly agricultural enterprises that have supply contracts income of a hat trader. And this victory helped the Council of with major food processors in Russia. This project Market Entrepreneurs to attract 200 new members. developed from the Dutch-TATF Program that worked with a dozen Russian farms, to help them The Council of Market Entrepreneurs is one of the 18 business associations IFC works become suppliers to the Dutch dairy processor with across Belarus to create strong advocates for SMEs. In addition to providing advice Campina. Once AFC is operational, the Partnership, on organizing advocacy and media campaigns, the Partnership's Business Development with funding from the Government of the project, funded by the United States (USAID), trains and advises the business associations Netherlands, will assist potential clients of AFC on a range of modern business support services, from developing business plans to using with financial management and consult with them public relations techniques in product marketing. The project has guided the associations on agricultural, management, and technology issues. in the introduction of their business support services for SMEs on a sustainable, fee-for- service basis. Since IFC began working with Belarusian business associations, their membership base has increased 60% (from 10,600 to 17,100 members) and their client base has doubled 64 (from 6,950 to 14,000 clients). This ensures the associations' sustainable future growth based on increasing membership and business service fees. D O N O R R E P O R T 2 0 0 2 In the forestry sector the Partnership is working technologies, and then linked them into the supply with nine wood-harvesting companies in chains of food processors in southern Ukraine Northwest Russia to introduce sustainable and (Canada and Sweden). The Partnership also advises environmentally sound production practices, help Ukrainian farmers on developing business plans them develop business plans and investment and organizing their financial records to help them proposals, and match them with foreign investors. access financing. As a result of this work, funded by the Finnish government and Finnish investors, two of the In 2002, the Partnership started three new participating companies have signed investment projects in Russia to expand the benefits of IFC's agreements with large investors, and others have investments. In Magadan (Russian Far East), the established direct partnerships with the leading Partnership is working with SMEs to help them forest industry companies in Finland and Sweden. become suppliers to the mining industry, starting Currently the Partnership is working with several with Julietta Mine in Magadan--a joint foreign investors to establish wood-processing US$45 million investment by Canadian Bema facilities in Northwest Russia. Gold Corporation, IFC, and Standard Bank London & Bayerische Hypo-und Vereinsbank. The Partnership is working with Russian furniture Canada (CIDA) and Bema Gold manufacturers, who are suppliers to IKEA, to introduce the modern technologies needed to Eight time zones west of Magadan, IFC approved meet IKEA's strict environmental standards for a US$100 million loan to support the development production to ensure that these companies remain of Ford's assembly plant outside St. Petersburg. within IKEA's global supplier network (Norway- The Partnership is working with Russian makers TATF Program). The Partnership also works of auto components to build them into competi- with IKEA's suppliers to help them develop new tive and reliable suppliers to the Ford's assembly products using waste wood, to diversify their plant and to other automakers as well. USTDA- revenue, and to find new partners. TATF Program Still in its first year, the Partnership's Ukraine In Tajikistan, IFC is pioneering innovative Agribusiness Development Program set up approaches to improve cotton production and demonstration fields, provided hands-on training empower poverty-stricken cotton farmers to take to 800 family farms in growing new crops and control of their commercial activity and diversify employing modern agricultural production production. Switzerland (seco) 65 D O N O R R E P O R T 2 0 0 2 Improving Corporate Governance Partnership trained more than 300 professors and introduced corporate governance topics into the To improve the overall investment climate in curriculum of 23 universities across Ukraine, post-Soviet economies, the Partnership works with schools that now teach 3,500 students a year private companies and governments to strengthen about corporate governance. The Partnership also corporate governance practices and regulations. designed and introduced corporate governance These activities are designed in close collaboration courses at the Law School of Yerevan State with the World Bank and in the context of the University in Armenia. work of the Corporate Governance Forum. On the national level the Partnership worked with Currently the Partnership is implementing the Armenian government officials and lawmakers to Corporate Governance Program in Russia (the draft the Law on Joint Stock Companies and the Netherlands, Switzerland) and the Corporate Law on Limited Liability Companies, both of Development Program in Ukraine (Canada, which passed in the fall of 2001. The Partnership Switzerland). In the fall of 2001 the Partnership advised Russia's Federal Commission on the completed Corporate Governance projects in Securities Market in developing the Code of Armenia (the Netherlands-TATF Program) and Corporate Conduct, adopted in April 2002. In Ukraine. Canada, Japan, the Netherlands, the Ukraine the Partnership has contributed to six United Kingdom-TATF Program. pieces of legislation regulating a number of corporate matters from issuing securities to In Ukraine, the Partnership worked side by side with holding a general shareholders' meeting. 67 individual enterprises to revise their corporate documents, restructure their corporate organiza- Improving Support Services and tion, organize shareholders' meetings, and hold Business Environment for SMEs orientation sessions for the board of directors. The companies already attracted US$5 million in To build an environment conducive to the growth investment, with another US$20 million under of SMEs, the Partnership develops local business negotiations. In addition to customized company- support services and works directly with national level consultations, the Partnership has trained governments to improve policies and legislation representatives from about 13 percent of Ukraine's affecting the SME sector. active corporations and provided more than 5,000 consultations to companies and government officials. To help improve SME access to professional business support services in Uzbekistan, the To ensure that future managers and lawyers Partnership organized a pilot training program understand the importance of good corporate for Uzbek consultants (Switzerland, seco). In governance and have the skills to practice it, the September 2001, a group of seven Uzbek 66 D O N O R R E P O R T 2 0 0 2 Transparent Practices consultants participated in a three-week in-class publicizes the findings of the surveys and relies on and hands-on internship within the Ukraine them in its work with the government officials and Revive a Business Consulting Network--11 self-sustaining companies lawmakers to help remove the barriers to SME on the Brink of Bankruptcy established and mentored by IFC (United Kingdom, development. IFC has contributed to introducing United States). The consultants improved their or amending 26 pieces of legislation that helped technical skills in market research and marketing, reduce the number of government inspections of Trucking enterprise #2005, based in Kharkiv in eastern financial analysis, and modern business-plan SMEs from an average of 76 a year to 14 and the Ukraine, was privatized in 1997. The manager of the writing. Uzbek consultants also learned from their number of business activities requiring licensing company ignored basic corporate governance require- Ukrainian counterparts how to manage a consult- from more than 100 to 64. Drawing on its experi- ments. Not a single shareholders' meeting was held in ing business more effectively, build and maintain ence in Ukraine, in March 2002 the Partnership the first two years. The enterprise's management was client relationships, create more effective client launched an SME survey in Uzbekistan. under investigation for stealing from the enterprise. By proposals and contracts, and promote their services Switzerland (seco) 1999 employees had not been paid for months, and the through public relations campaigns. A second enterprise was on the verge of bankruptcy. group of Uzbek consultants will participate in a In Belarus, the Partnership works with 18 business similar program in mid-2002. associations to build their capacity to provide It was at this point that Alexander Khruchyov, the enter- quality information and consulting services to SMEs. prise's chief engineer, came to IFC's Corporate In March 2002 the Partnership, in cooperation The Partnership's SME Development project in Governance Project in Ukraine (Canada and Japan, the with the World Bank Group's SME Department, Belarus has trained and advised these business Netherlands, the United Kingdom-TATF Program). He began developing a pilot Internet portal to improve associations on a range of modern business needed help in organizing a first shareholders' meeting SME access to financing and business support support services, from developing business plans and drafting the company's corporate documents. At the services (Norway-TATF Program). The portal will to using public relations techniques in product meeting, despite fierce opposition from management, link SMEs to banks, leasing companies, and marketing (United States). The Partnership has Mr. Khruchyov presented his program for revitalizing investment firms and offer on-line applications for helped the associations provide their business the enterprise and nominated himself to the company's credit. To help SMEs improve the quality of their support services on a sustainable, fee-for-service board. The shareholders elected Mr. Khruchyov by an loan applications, the portal will offer interactive basis. In addition, the Partnership works with overwhelming majority and adopted the new charter learning tools for enterprises to conduct basic Belarus business associations to help them become and by-laws. financial self-assessments and online resources to more effective advocates for SMEs by helping strengthen their management and financial skills. organize advocacy and media campaigns and by In early 2000, Mr. Khruchyov began to turn things Additionally, the portal will link SMEs to local building their legal skills. Since IFC began working around. In consultation with IFC, Mr. Khruchyov set up business service providers, such as consulting firms with Belarusian business associations, their new management boards, introduced new services, and and management training companies. membership base has increased by 60 percent, restructured the company, selling idle assets and from 10,600 to 17,100 members, and their client setting up a subsidiary enterprise. As a result, during IFC has conducted annual surveys of SMEs in base has doubled, from 6,950 to 14,000 clients. 2001 the enterprise resumed the payment of salaries, Ukraine since 1996 (Norway-TATF Program). Increasing membership and service fees ensure the almost completely eliminated its wage arrears, and These surveys have proven to be a successful tool associations' sustainable growth. grew its business. in influencing SME policies. The Partnership widely 67 D O N O R R E P O R T 2 0 0 2 Chapter 4 Annex The Partnership: TA Projects Approved for Support in FY2002 Central Asia Tajikistan by improving their SME sector in Uzbekistan. The production and strengthening their Partnership will draw on the results CENTRAL ASIA LEASING direct links to the market. To achieve of the survey to work with the DEVELOPMENT PROJECT. The this goal the Partnership--in cooper- government to improve regulatory, Partnership draws on its leasing ation with IFC's Southern Europe administrative, and economic policies development program in Russia to and Central Asia Department and affecting the SME sector. This survey build competitive leasing industries with financing from IFC, Switzerland is based on the methodology in the Kyrgyz Republic, Tajikistan, (seco), and the farmers--has estab- developed in Ukraine, where the and Uzbekistan in order to increase lished a private company completely annual SME survey has proved to be financing options available to local owned by Tajik cotton farmers. The an effective instrument in improving businesses. The project provides company will supply its member the regulatory and administrative training for leasing companies, farmers with crop inputs and provide environment for SMEs. Switzerland banks, and potential leasing clients marketing services. The Partnership on the fundamentals of leasing is providing technical assistance to SME CONSULTANTS' TRAINING. operations and on conducting the company on its daily operations To improve SMEs' access to profes- financial and risk analysis when and training farmers in modern sional business support services in making investment decisions. In production practices to improve Uzbekistan, the Partnership addition, the project works with yields and quality of cotton and to organizes training programs for national governments to improve diversify their crop base. Switzerland Uzbek consultants to improve their the legal framework for leasing consulting skills and expand their operations. Switzerland Uzbekistan range of services on a sustainable commercial basis. These training Tajikistan SME SURVEY. To identify key programs include hands-on intern- impediments to business development ships within the Ukraine Consulting FARMER OWNERSHIP MODEL. at both the company and country Network--11 sustainable companies The goal of the project is to reduce level, the Partnership is conducting a established and mentored by IFC poverty among cotton farmers in comprehensive national study of the throughout Ukraine. Switzerland 68 D O N O R R E P O R T 2 0 0 2 Russia · NBD BANK RE-ENGINEERING component producers to establish PROGRAM. This program production in Russia. The initial NORTHWEST RUSSIA LEASING complements IFC's US$2.5 million phase of this project complements PROJECT. The Partnership opened loan to NBD, a Nizhny an approved IFC US$100 million a regional office in St. Petersburg to Novgorod­based bank, and aims loan to Ford Motor Company's intensify its leasing development to improve the bank's internal assembly plant outside St. Petersburg. work in northwest Russia. The audit function and the USTDA-TATF Program project will also build links between use of management information Russian leasing companies and systems. Norway-TATF Program PROJECT FOR DEVELOPMENT Finnish exporters. Finland OF THE FURNITURE · CENTER-INVEST RE- MANUFACTURING SECTOR. To MEDIUM-SIZE BANK RE- ENGINEERING PROGRAM. introduce environmentally efficient ENGINEERING PROGRAM. To This program complements IFC's production technologies into Russia's strengthen the banking sector in US$2 million loan to Center-Invest, furniture manufacturing sector and Russia, IFC combines investment a bank in Rostov-on-Don, and aims to lay the groundwork for increased with customized technical assistance to strengthen the bank's manage- investment in the sector, IFC is programs. The Partnership works ment and operations, particularly partnering with IKEA, a Swedish with medium-sized banks to help in such areas as corporate organi- home furnishings retailer, to upgrade them restructure their organization zation, internal audit, and asset the management practices and and operations, improve their liability management practices. production technologies of Russian procedures and policies, enhance their Norway-TATF Program furniture makers. In the project's information management systems, pilot phase, the Partnership is working and expand their lending practices to DEVELOPMENT OF with selected Russian IKEA suppliers SMEs. Currently, the Partnership is AUTOMOTIVE COMPONENT to demonstrate the profitability of implementing the following projects SUPPLIERS PROJECT. The investing in energy-efficient in the banking sector: Partnership is working with selected technologies and to help them Russian manufacturers of automo- develop and market new products tive components to improve their manufactured from waste wood. manufacturing processes, product Together with IKEA, the Partnership quality, and management practices is developing a financing mechanism to help these companies become to fund IKEA's suppliers and other suppliers to foreign auto producers. furniture makers. Norway and IFC The project is also assisting foreign TA Allocation-TATF Program 69 D O N O R R E P O R T 2 0 0 2 BUSINESS DEVELOPMENT IN Russian joint venture that produces RUSSIA'S FAR EAST. To promote and will supply the farms with high- business development in Russia's grade, virus-free seed potatoes. This Far East, the Partnership is working partnership with the joint venture with SMEs to help them become will enable Russian farms to improve suppliers to the mining industry, production and become suppliers starting with the Bema Gold / IFC to major food processors. Canada- investment in the Julietta mine in TATF Program Magadan. The program also works with the private sector and govern- Ukraine ment officials to improve the business enabling environment in CORPORATE DEVELOPMENT the Magadan region. Canada PROJECT. Building on its Corporate Governance Project in Ukraine, the STUDY OF INVESTMENT Partnership expands its advice to OPPORTUNITIES IN THE PRIVATE local companies to address a broader EDUCATION SECTOR. To promote set of issues that hinder Ukrainian increased investment in the private companies seeking outside investment. education sector, the Partnership is In addition to corporate governance, conducting a survey to profile the Partnership advises companies educational institutions for potential on financial management, asset IFC and private investment. The management, and investor strategies survey will also identify specific to help them become viable businesses areas in which technical assistance able to attract outside investment. can contribute significantly to the This project continues to work with development of the sector. Sweden- government officials on legislative TATF Program reform and with educational institu- tions to improve postsecondary TECHNICAL CAPACITY BUILDING programs on corporate governance. FOR DMITROV POTATO AND Canada, Switzerland DAIRY FARMERS. This project works with Russian farms to increase the SME FINANCE TOOLKIT. In coop- production and quality levels of their eration with the World Bank Group's milk and potatoes through modern SME Department, the Partnership is technologies and proper crop rotation developing a pilot Internet portal methods. The project is implemented that will provide new resources to in partnership with a Canadian- help Ukrainian SMEs become 70 D O N O R R E P O R T 2 0 0 2 SUCCESSKyrgyz Republic: creditworthy businesses and gain STORY access to financing. The portal will Laying the Foundation for the Leasing Sector offer online interactive learning tools for enterprises to improve their management and finance skills and Until recently the only forms of financing available to Kyrgyz businesses will link SMEs to local business were bank loans. But with bank collateral requirements of more than service providers, such as consulting 150 percent of the loan amount, bank financing has been out of reach for firms and management training most start-ups and small companies. SMEs are crucial to the Kyrgyz economy, companies, and to financial service as they employ about 60 percent of the working population and constitute providers, such as banks, leasing 36 percent of the gross domestic product. However, severe inaccessibility companies, and investment firms. to capital has constrained their potential growth. Norway and IFC TA Allocation- TATF Program To increase SME access to financing for capital investment, the Partnership's Central Asia Leasing Project is working to build alternative SME SURVEY AND SECTORAL financial markets, such as leasing (Switzerland, seco). Leasing is traditionally ANALYSIS. To monitor the progress more accessible to start-ups and small businesses, as it provides access to and gauge trends in the SME sector's equipment for a relatively small up-front investment and does not require development and identify the main collateral. To lay the foundation for the growth of the competitive leasing obstacles, IFC has conducted annual industry in the Kyrgyz Republic, the project worked closely with the surveys of the state of SMEs in National Bank of the Kyrgyz Republic to draft a leasing law. The Kyrgyz Ukraine since 1996. The Partnership Government approved the draft legislation in the fall of 2001 and presented draws on the results of the surveys to it to Parliament for consideration. On June 13, 2002, the Kyrgyz Parliament work with the national government adopted the Law on Leasing, incorporating 90 percent of the project's to help remove legal and administra- recommendations. tive constraints to SME development. The Partnership is extending the The Partnership's Central Asia Leasing Project has also worked with methodology of the SME survey to government officials, lawmakers, and the private sector to develop leasing analyze other sectors that have high legislation in Uzbekistan and Tajikistan. growth potential. The survey of other sectors includes both an overview of the regulatory environment and a complete value chain analysis. Norway-TATF Program 71 D O N O R R E P O R T 2 0 0 2 The Foreign Investment Advisory Service Program 72 D O N O R R E P O R T 2 0 0 2 5 FIAS has a strong he Foreign Investment Advisory Service Program (FIAS) helps the governments in developing T countries improve the foreign direct investment (FDI) environment of their countries. FIAS advises record of putting forth on laws, policies, incentives, institutions, and strategies. It helps countries increase the amount of investment they receive and the benefits this investment produces. recommendations that client countries recognize Since its founding in 1985, FIAS has assisted more than 120 countries--many of them on a continuing basis over the years. Its broad experience has helped it identify the essential attributes of a sound as valuable ­ and act on. investment environment. Its staff tailors this knowledge to the circumstances of client countries to help them reach their potential for attracting FDI. FIAS works only at the request of the client government, on topics identified and agreed to by both parties. This approach ensures the relevance of the assistance and lays the basis for active partnership. FIAS offers much more than one-way advice and written reports: through interactive workshops and roundtable meetings that often include business executives and other stakeholders, it helps clients chart technically and politically practical paths to change. FIAS has the unique strength of being a joint service of two of the world's largest multilateral development institutions: the International Finance Corporation and the World Bank. FIAS staff can-- and do--call on the expertise of the entire Bank Group (which also includes the Multilateral Investment Guarantee Agency, or MIGA, and the International Center for Settlement of Investment Disputes) in designing coordinated assistance packages for client countries. Advisory Services FIAS offers a comprehensive range of services to help the client government attract FDI. Terms of reference for each assistance project are tailored to meet the client's specific needs at the time. Some common topics for assistance follow. 73 D O N O R R E P O R T 2 0 0 2 Diagnostics Administrative Barriers Building Linkages Working with FIAS FIAS undertakes diagnostic studies One important tool the FIAS has The benefits of FDI are often An advisory project begins with a high-level to identify a country's main policy developed is its "Roadmap" analysis enhanced by increasing business links request from a potential client government, impediments to productive foreign of bureaucratic barriers that snarl with local companies. FIAS can help FIAS management's agreement to do the direct investment. The issues typically and slow both investment and clients design programs that foster work, and mutual agreement on the terms identified include prohibitions on subsequent production. These supply and other relationships of reference. Assignments typically take foreign investment in many sectors detailed flowcharts pinpoint problems between foreign-owned and domestic three to six months to complete. FIAS may or locations; restrictions on the share that will enable the governments to companies. communicate its recommendations in a of foreign ownership in the equity identify and eliminate counterpro- written report or by other means, such as of domestic companies; difficult ductive procedures and streamline Foreign Direct Investment Data a workshop. Whatever the vehicle, FIAS administrative approval processes; the necessary regulations that remain. Systems delivers assistance in a timely, practical, restrictions on repatriation of divi- and nonbureaucratic style. dends and capital; taxes; the character Investment Incentives Government agencies require and functioning of legal systems; and accurate data about investment The advice that FIAS gives is confidential problems foreign firms have in In a competitive world, countries flows--for their own use and to to its government clients, who are under no gaining access to land and bringing often grant benefits to entice provide information to the compulsion to accept that advice. in technical and managerial staff. investors. FIAS can analyze incentives marketplace. FIAS can help design Confidentiality helps establish a relation of to ensure they are competitive and nonintrusive systems for collecting trust in which FIAS can provide a frank Legal and Regulatory cost effective. data on direct investment, including assessment of a country's strengths and Environment measuring the impact of investments weaknesses for attracting foreign investment. Investment Promotion on key variables such as job creation FIAS has a strong record of putting forth In any country, the rules of the and export growth. recommendations that client countries game are critical to attracting Effective investment promotion can recognize as valuable--and act on. Reforms worthwhile investments. FIAS can influence investor decisions and suggested by FIAS have contributed to the review a country's legal and regulatory affect the amount and kind of invest- success that many of its client countries environment and recommend ments a country receives. Efficient have achieved in attracting more foreign measures in areas such as screening agencies are needed to attract FDI investment. procedures, restrictions on the and help manage investment policy. percentage of shares owned by FIAS helps client countries design The IFC and the World Bank contribute foreigners, currency convertibility, promotion institutions, adapting roughly 35 to 40 percent of the funding access to land, and investment models that have proven effective needed to cover FIAS's annual costs. The protection under national laws and elsewhere. It also helps these agencies rest comes through donations from more international conventions. formulate promotion strategies that than a dozen bilateral and multilateral identify competitive advantages and sources and from fees paid by the target specific opportunities. governments for which FIAS works. Strategies can be conceived on national, regional, or sectoral levels. 74 D O N O R R E P O R T 2 0 0 2 Regional Reports reforms over time, across countries, Asia and the Pacific or both; and stimulating dialogue Africa between the public sector and the Advisory assistance was provided at business community. a number of different levels in Asia FIAS conducted 15 advisory projects and the Pacific: regional forums, in Sub-Saharan Africa during FY2002, The second new area of assistance national governments, and subnational reflecting both the strong interest has been to examine more closely governments. The existence of an FIAS of these countries in attracting FDI the impact of FDI in some countries. office in the region (located in Sydney) and continuing high demand for At the request of the Tanzanian allows responsive service to clients' FIAS services in this region. While government, FIAS assessed the requests in a region remote from assistance continued to focus on relationship between competition Washington. The topics addressed traditional products such as policy and anticompetitive practices vary but fall within the general administrative barriers studies with regard to FDI. Increased FDI parameters of policy reform initiatives, (Guinea Bissau, Nigeria) and reviews flows can lead to benefits for the host the implementation of reform, and of Investment Laws (Southern economy, which are reflected through general administration of policy-- African Development Community, economic growth, poverty reduction, and the investment promotion and Mauritania, Democratic Republic of and technology transfers from multi- institutional aspects that accompany Congo), attention also increasingly national companies, and these benefits each. Within these main areas, the focused on two new areas: the imple- are generally magnified in a competi- administration of policy and the mentation of action plans, and the tive environment. Recommendations relationship between national and impact of FDI on the host economy. were developed to reduce barriers to subnational promotional agencies are entry and to improve competition in both assuming increased importance. Over the past few years, several key strategic sectors, as well as to African governments have adopted adopt a more appropriate legal and The assistance provided ranged from action plans aimed at streamlining institutional framework. the detailed and specific, such as the administrative procedures that improvements in elements of the existing and potential investors face FIAS was asked to assess Equatorial export environment--and incentives when they establish and operate an Guinea's investment climate, with an regimes--for export-oriented foreign establishment in the country. FIAS emphasis on how the recent FDI investment companies (recently, for has been assisting them in their inflows in the oil sector can be example, in Fiji and Samoa) to the implementation efforts, most notably used to benefit the local economy, more general, such as the organization by conducting surveys of the private especially the labor force. Corporate of subregional roundtables for senior sector. These surveys have been responsibility and the links between policymakers and private sector useful in identifying and quantifying the multinationals and the govern- representatives on key FDI policy the main administrative barriers to ment as well as the local private issues (most recently, for South Asia, investment; providing benchmarks sector were discussed in the light of in Dhaka). The scale of FIAS inputs and performance indicators of the recent international best practices. varies from a few days spent on a 75 D O N O R R E P O R T 2 0 0 2 desk review of draft legislation Client governments that are engaged Middle East (recently for Indonesia on a draft in administrative and regulatory investment law and for the reform can now compare their During the 1990s the countries of Philippines on incentives legislation) progress over time and between the Middle East generally failed to to several weeks, spread out over countries using standard surveys of participate in the global boom of FDI more than a year, for some imple- the business community. The surveys flows. Many of the region's govern- mentation projects. cover the costs and time requirements ments recognize that their countries businesses experience during standard have been left behind in the economic Europe and Central Asia investment procedures as well as globalization process and are now costs and time spent on such keen on catching up. This has FIAS continues to be very active in matters as company registration, resulted in several initiatives and Europe and Central Asia, carrying business licensing, getting access to activities geared toward making their out reviews of investment legislation, land, construction permits, paying economies more open and attractive investment incentives, and removal of taxes, customs procedures, product to foreign investors, and FIAS is administrative barriers to investment. certification, and various government assisting many of its regional clients FIAS has been particularly active in inspections. FIAS continues to work in this process. Gulf states, such as Southeastern Europe, Russia, the closely with client governments to Saudi Arabia and Kuwait, are actively Baltics, and the Caucasus region. develop a constructive dialogue developing a more liberal legal Having carried out 11 studies of between the government and environment, combined with the cre- administrative barriers to investment investors, prioritizing the reform ation of a corresponding institutional in Europe and Central Asia, FIAS is agenda; to develop workable reform framework. Other countries, such as now preparing self-assessment tools strategies; to assess the impact of Turkey, are seeking FIAS advice on for monitoring and evaluating the reforms on the business environment; concrete measures and institutional resulting reforms, as well as setting to determine which reforms are structures for facilitating the entry up the initial stages of new adminis- working well and which are not; and of FDI to improve the integration of trative barriers studies. These self- to make the necessary adjustments to their economies into the global assessment tools are currently being ensure that each country's overall marketplace and establishing public piloted in Bosnia, Bulgaria, Croatia, reform program is having the desired and private sector dialogue. Latvia, and FYR Macedonia. effect both on investment levels and on positive FDI spillover benefits throughout the economy. 76 D O N O R R E P O R T 2 0 0 2 related to private investment. FIAS assistance was quick and flexible and provided timely recommendations for improving this planned legislation. An interesting feature of FIAS's work in the region is a growing recognition by most governments there that they need to strengthen their international competitiveness in order to establish a vibrant private sector as a corner- stone of their economic development strategies. An increasing number of countries have expressed interest in sophisticated and forward-looking assistance: FIAS is currently in discussions with the government of El Salvador for assistance tailored to Latin America and the operations to neighboring countries. strengthening the private sector's Caribbean FIAS also assisted the government of corporate social responsibility Panama, in collaboration with IFC initiatives in order to improve the FIAS continues to meet a broad and MIGA, to structure a new free social and environmental conditions spectrum of assistance demand, driven zone around a previous U.S. military in the country. In Nicaragua, FIAS by the different needs of larger South base. Venezuela, despite its political is likely to provide assistance on American economies as well as the instability, recognized the danger improving the country's competition smaller, export-oriented economies of that convoluted administrative policy framework to enhance the Central America and the Caribbean. procedures pose to its competitive competitiveness of Nicaraguan The new government in the position, and FIAS assisted with an investments in the global economy Dominican Republic approached administrative barriers study. In and to facilitate the diffusion of FIAS to assist in a review of its FDI addition, FIAS assisted countries international best practices in the strategy to avoid the loss of FDI involved in drafting new legislation domestic economy. 77 D O N O R R E P O R T 2 0 0 2 Promoting Environmental and Social Sustainability in Partnership with Donors 78 D O N O R R E P O R T 2 0 0 2 6 onor support has been instrumental in helping IFC in promoting improved environmental and social By proactively identifying D performance in the private sector. Donors have engaged at the project level as well as in broader strategic programs, providing assistance for activities ranging from environmental risk assessment to opportunities to "do more cutting-edge environmental and social sustainability initiatives. The level of donor support for these activities has increased steadily in recent years. Highlights for FY2002 include: good," IFC can enhance · Donor support through the Technical Assistance Trust Funds program for 25 TA approvals the long-term development requiring assistance to address environmental or social issues. impact of its activities. · The launching of three new donor-supported environmental and social development facilities focusing on corporate citizenship, sustainable financial markets, and projects with local environmental benefits. · The establishment of a new initiative to reduce greenhouse gas emissions, the IFC-Netherlands Carbon Facility (INCaF). · Continued support from the Global Environmental Facility (GEF) for projects mitigating climate change and protecting biodiversity. The context for these donor-funded activities, which are described below, is IFC's pursuit of sustainability as a key strategic objective. Sustainability means that projects are evaluated for economic and financial viability as well as for environmental and social contributions. IFC will of course maintain its "do no harm" approach to environmental and social issues, but by proactively identifying opportunities to "do more good," IFC can enhance the long-term development impact of its activities. 79 D O N O R R E P O R T 2 0 0 2 FY2002 ENVIRONMENTAL TATF APPROVALS Donors supported 25 new TATF approvals with specific environmental bene- IFC looks first for situations where thus merit support through donor fits in FY2002. The table below presents these assignments organized by the improved environmental and social financing. Indeed, IFC's diverse type of activity being undertaken. performance contributes to better constituents expect the Country or Region Objective (funding source) financial results through increased Corporation to reach beyond its revenues, cost savings, risk core focus on commercially viable Sustainability reduction, lower capital costs, or investments into broader areas such Worldwide Analyze the business case for corporate social and environmental sustainability in emerging markets. Ireland enhanced brand value. A new as capacity building and project report published in July 2002, preparation, and donor funding Central and Eastern Europe Set up pilot for global sustainability reporting guidelines. IFC TA Allocation Developing Value: The Business makes such activities possible. South Africa Complete technical designs for a model "eco-village" of affordable housing for Case for Sustainability in Emerging rural farm workers. IFC TA Allocation Markets, presents concrete examples Together, donors and IFC are Innovative Environmental Finance Mechanisms as well as a framework for achieving adding considerable value. Donor Latin America and Caribbean Develop and promote "cleaner production" investments. USTDA success across the "triple bottom funding enhances the sustainability line." This report was generously of individual investments and Russian Federation Explore potential for carbon emissions trading for three coal-fired generating plants. Norway supported by Ireland through the encourages broader private sector TATF program and was co-published practices in developing countries Environmental Capacity Building of Financial Intermediaries with SustainAbility, a UK consultancy, that are environmentally and China Develop capacity and skills of domestic specialists to undertake environmental reviews and mitigation work in Sichuan Province. Denmark and the Ethos Institute of Brazil. socially sustainable. Donor funding also allows IFC to expand its Developing Businesses Providing Environmental Services IFC sees selected opportunities investment activities into sectors China Provide business advisory services to a supplier, builder, and operator of where environmental and social with a strong development impact, water and wastewater treatment services. United Kingdom, IFC TA Allocation performance can be significantly such as renewable energy, sustain- Yugoslavia Support environmentally sound privatization of Belgrade's Municipal solid waste enhanced through targeted use of able agriculture, and eco-tourism. services. Denmark, Greece, Sweden, Norway, IFC TA Allocation. donor funding. These opportunities In this way, donor funding helps Environmental Management and Risk Mitigation arise in IFC's do-no-harm activities, IFC to "push the market" toward Asia region Develop environmental management systems for SME manufacturers and such as improved environmental new practices and behaviors that lenders. Finland management systems, and particularly benefit the environment and local China Improve the investment climate for sustainable development of mining in in do-more-good initiatives, such as communities. China. Australia, IFC TA Allocation corporate citizenship and environ- Colombia Promote environmentally sustainable poultry production. New Zealand mental investments. Tasks such as India Review pesticides and agrochemicals under distribution and distilling lessons learned into manuals prepare a draft pesticide management plan for use by client and other private on good practice, developing training sector companies. Denmark materials, and testing innovative Lao People's Improve environmental and social management for a gold and copper mine. approaches cannot be charged to Democratic Republic Australia, Japan individual projects or sponsors and Mozambique Provide advisory services for the environmentally and socially sound privatization of the national oil and gas distribution company. Norway, IFC TA Allocation Russian Federation Develop an environmental and social audit and action plan for a coal company. United Kingdom 80 Russian Federation Support the sustainable growth of two furniture manufacturers. Norway, IFC TA Allocation D O N O R R E P O R T 2 0 0 2 Three New Social and In June 2002 IFC committed a total Environmental Facilities of US$10 million to these facilities over five fiscal years, the initial dura- Three new social and environmental tion of the facilities. IFC must raise facilities began operations on July 1, an additional US$45 million from 2002, in an effort to expand IFC's donors to complete the funding for support for environmental and social these initiatives. The Government of sustainability. The facilities address the Netherlands has approved initial three key do-more-good areas of core funding for the facilities. IFC is IFC's work: in active discussions with several other potential donors and would · Mainstream, project-related welcome the opportunity to explore work--the Corporate Citizenship support from additional donors. Facility · Capacity building in financial Corporate Citizenship markets--the Sustainable Financial Facility (CCF) Markets Facility · Environmental projects and The CCF provides guidance and project components--the support to the private sector in Environmental Opportunities emerging markets in the areas of Facility corporate social responsibility and environmental stewardship. The IFC has pursued several initiatives CCF will implement its objectives in each of these areas over the last through three programs. 5­10 years but has now reached the point where demand for its services The Environmental Stewardship substantially exceeds the capacity Program will help the private sector to deliver. The facilities will allow IFC address a range of environmental to respond to growing expectations challenges at project, strategic, and from the private sector and demand sectoral levels and will demonstrate from IFC clients in a more coordinated how proactive engagement in these and focused manner. The facilities areas can stimulate more cost- will work closely with other parts of efficient and cost-effective production the World Bank Group, such as the and more sustainable use of resources. SME Department, and with external partner organizations to learn from past experiences and to maximize dissemination of best practices. 81 D O N O R R E P O R T 2 0 0 2 The Engaging with Communities and Other Stakeholders Program will Development Program undertakes strategic initiatives aimed at creating help businesses, communities, and other stakeholders work together in the incentives and know-how within the broader financial sector. This includes complex areas of social and community development, equity, and transparency. work with rating agencies, central banks, stock exchanges, business schools, An overarching component of this program is strengthening the role of local consulting and professional services firms, and industry initiatives and consultation and participation in the development process. The program voluntary codes of practice. will focus on ways in which communities can be empowered to benefit from private sector activities, how revenue management and distribution on large SFMF's products and services under these programs include: projects can be used to promote local economic development, and how supply chains and trading networks can be developed to spread opportunities and · Training courses and workshops benefits beyond individual projects and to reduce poverty in marginalized groups. · Business advisory and support services · Technical assistance for project development and implementation The Employment and Employees Program will promote good and innovative · Market intelligence and information resources employment practices to bring positive benefits to both employees and · Strategic partnerships and business networks employers. It will focus on specific issues such as employee health (particularly · Support and input to voluntary industry initiatives and codes of practice the effects of HIV/AIDS), training, education, and ownership opportunities, as well as ways in which the private sector can promote and disseminate good Environmental Opportunities Facility (EOF) practices. The EOF supports private sector ventures that have a strong potential to Sustainable Financial Markets Facility (SFMF) increase environmental sustainability but must overcome the uncertainty associated with new markets, new technologies, and new ways of doing The SFMF aims to: business. The EOF will focus on innovative solutions to local environmental issues, such as clean water supply or air pollution. (For efforts directed to · Enhance the environmental and social impact of financial intermediaries global environmental issues, please see the discussion below on IFC's activities (FIs) operating in developing countries and transitional economies; with the Global Environmental Facility.) The EOF will work closely with · Strengthen the competitiveness of FIs by improving their capacity to selected partner organizations to identify and implement projects. manage environmental risk and the opportunities arising from increased sustainability; and The EOF will provide two types of catalytic support to environmental · Have a strategic impact on the sustainability agenda of the broader projects: project preparation grants, and flexible investment financing. The financial community. EOF gives priority to projects that need extra assistance in the development phase, after which they are likely to be financed on commercial terms by IFC SFMF is organized around three distinct programs. The Responsible or other market-rate investors. (This funding is similar to that available Institutions Program addresses the needs of the banking, leasing, insurance, through the TATF program but with a specific focus on environmental and microfinance sectors. The Sustainable Inward Investment Program projects.) The EOF seeks to leverage its investment funding with cofinancing focuses on private equity and venture capital funds. The Strategic Market from project sponsors and other sources. 82 D O N O R R E P O R T 2 0 0 2 IFC­Netherlands Carbon Facility What is the facility? The IFC-Netherlands Carbon Facility (INCaF) is an Two main types of projects are eligible for EOF support: arrangement under which the IFC will purchase greenhouse gas (GHG) emission reductions on behalf of the Government of the Netherlands using the "Clean · Projects that produce goods or services with specific environmental benefits. Development Mechanism" of the Kyoto Protocol. The Netherlands will use these Priority sectors include environmental services (such as clean drinking emission reductions to help meet its commitments under the Kyoto Protocol. The water, wastewater treatment, and the recycling or disposal of solid waste) Netherlands has allocated 44 million for this facility over the next three years. The and pollution reduction or abatement (including industrial air or water facility will provide additional revenues to eligible projects that generate emission emissions and indoor air pollution). If other funding cannot be found, the reductions in developing countries. EOF will also consider funding projects in sustainable resource use (such What are GHG emission reductions? GHG emission reductions are created as organic farming or certified sustainable forestry) and sustainable energy when a project reduces or avoids the emission of greenhouse gases, such as carbon (including renewable energy and energy efficiency). dioxide or methane, compared with the emissions that would have been expected · Projects that promote eco-efficiency through cleaner production and under a "business as usual" scenario. That is, the project is measured against a pollution abatement. baseline of expected GHG emissions to determine the extent of its impact. Special Initiatives What types of projects are potentially eligible? The facility has a particular interest in financing projects of the following types (in order of preference): IFC also undertakes special initiatives, such as identifying projects that can reduce greenhouse gas (GHG) emissions under the Kyoto Protocol. A new · renewable energy projects (such as biomass, wind, geothermal) that displace use activity in this sector is the IFC-Netherlands Carbon Facility, under which of fossil fuels; IFC will purchase GHG emission reductions for the benefit of the Government · energy efficiency projects, supply side or demand side, that reduce consumption of of the Netherlands (box, this page). Although this is not a typical donor- fossil fuels; · recovery and utilization of methane from, for example, waste landfills and coal funded activity--IFC is arranging the purchase of environmental assets by mines; and a bilateral agency on a cost-recovery basis--it is noted here due to the · conversions from fuels with greater to lesser GHG intensity (such as from coal to innovative relationship between IFC and a key donor country. natural gas). What type of funding will the facility provide? If a project is approved, the facility will make payments to the project over a period of 7­14 years upon periodic (perhaps annual) certification of actual GHG emission reductions. In return for these payments, the Netherlands will receive certified emission reductions that can be used to meet its obligations under the Kyoto Protocol. The facility may make limited advance payments for reductions but only under unusual circumstances. What are the benefits of the facility? The facility will contribute to the development of an important new market for environmental services. Host countries will gain access to efficient, clean technologies at a lower cost and will achieve more environmentally sustainable economic growth. Companies receiving payment from the facility for GHG emission reductions will enjoy a direct financial benefit in the form of a future stream of income that otherwise might not be available. 83 D O N O R R E P O R T 2 0 0 2 Global Environment Facility (GEF) The Global Environment Facility is a multilateral source of funding for projects in developing countries that contribute to global environmental objectives, such as the conservation and sustainable use of biological diversity (biodiversity) and the mitigation of climate change through reduced green- house gas emissions (http://gefweb.org). IFC's GEF activities aim to catalyze, appraise, and execute innovative private sector projects that support these objectives. Since 1995 IFC has undertaken 13 projects with funding of US$125 million from the GEF. IFC has used GEF funding in a flexible manner, ranging from competitively awarded grants to partial risk guarantees. Concessional resources provided by the GEF enable the private sector to explore new technologies and new business models that are not yet commercially proven, such as using solar photovoltaic energy to provide off-grid power. The aim is to accelerate market acceptance of these businesses and further IFC's objective of supporting sustainable private sector development. The advantages to the GEF of working through IFC include direct access to the capital, technology, and management skills available in the private sector. And by working directly with the private sector, IFC's GEF projects typically provide high leverage for GEF funding and a strong potential for replication. IFC recognizes the challenge of using concessional funding from the GEF appropriately and efficiently in market-based projects. To that end, IFC employs a strategy of matching the type of support to the obstacles blocking achievement of GEF's objectives. This strategy calls for IFC to use financing instruments other than grants, such as low-interest loans, guarantees, or contingent investments, whenever possible; to focus on near-commercial projects, because that is where the private sector and IFC operate most effectively; and to minimize use of GEF resources and maximize leveraging of other funding sources, particularly cofinancing from IFC and private sector capital. A selection of IFC's active GEF projects are summarized in the table on the next page. 84 D O N O R R E P O R T 2 0 0 2 GEF-SUPPORTED INITIATIVES Project Description GEF Funding (millions US$) Climate Change Hungary Energy Efficiency Cofinancing Program Catalyzes loans for energy-efficiency improvements from local financial intermediaries by using partial risk guarantees and targeted grants 5.7* Efficient Lighting Initiative Stimulates demand and supply for energy-efficient lighting in seven countries through a variety of market-building techniques 15.0 Photovoltaic Market Transformation Initiative Expands use of photovoltaics (solar power) by providing concessional financing of various types to private sector companies and financial 30.0 intermediaries in India, Kenya, and Morocco Solar Development Group Supports off-grid photovoltaic solar power through a combination investment fund and technical assistance facility 10.0* Biodiversity Terra Capital Fund Assists a private equity fund investing in ventures with biodiversity 5.0* benefits such as sustainable agriculture and nontimber forest products Multisectoral Small and Medium Enterprise Program Lends money at concessional rates to intermediaries (including 20.8 companies, banks, and NGOs) that in turn invest in small- and medium-size enterprises with climate change and biodiversity benefits * These projects also have mainstream IFC financing. IFC is currently preparing several additional GEF projects. Projects addressing Projects addressing the loss of biodiversity include: climate change include: · Eco-Enterprises Fund (Latin America), an innovative fund investing in · CEPALCO Distributed Generation PV Power Plant (Philippines), which will small- and medium-size companies with environmental and social benefits use on-grid photovoltaic power in conjunction with hydropower · Komodo National Park (Indonesia), a collaborative effort to provide · Commercializing Energy Efficiency Finance, which extends the Hungary sustainable park management and tourism development for a Energy Efficiency Cofinancing Program to five other countries in Central threatened area and Eastern Europe · Asian Conservation Foundation (Philippines), a partnership with a local · Fuel Cell Cofinancing Facility, which will promote the use of stationary fuel investment company using local NGOs to help conserve threatened marine cells for distributed electricity generation areas · Kijani Biodiversity Initiative, which seeks to conserve biodiversity in Africa by catalyzing private sector investment in biodiversity-related businesses 85 D O N O R R E P O R T 2 0 0 2 Annexes IFC DONOR-SUPPORTED TECHNICAL ASSISTANCE PROGRAMS: Activity / DFO Purpose / Strategy Inception Date IFC Technical Assistance To develop TA projects to help strengthen the business environment in client countries, 1988 Trust Funds (TATF) Program focusing on TAs to promote private sector growth. African Management Services Co. To assist SMEs with substantial African ownership to become more sustainable and 1989 (AMSCO) competitive in national and international markets Africa Project Development Facility To respond to the need for project preparation and assistance for African entrepreneurs 1986 (APDF) China Project Development Facility To support the development of private SMEs in the interior of China, with an initial focus 2000 (CPDF) on Sichuan Province Mekong Project Development Facility To foster growth in the number and size of domestic private firms in the Mekong region 1996 (MPDF) SouthAsia Enterprise Development To increase the number and growth rates of SMEs in Bangladesh, Bhutan, and Nepal 2000 Facility (SEDF) Southeast Europe Enterprise To help support the development of the private sector in Albania, Bosnia, 2000 Development (SEED) FYR Macedonia, and to the extent possible, in Kosovo. South Pacific Project Facility (SPPF) To assist and accelerate the development of productive, self-sustaining SMEs in Pacific 1985 Island countries North Africa Enterprise Development To support the development of markets and institutions that are key to SME growth in Approved by IFC Board in May 2002. Facility (NAEDF) (initially) Algeria, Egypt and Morocco Private Enterprise Partnership To expand IFC TA in the region via the development of SMEs and the promotion of In operation since 1987. The Partnership (The Partnership, or PEP) foreign direct investment. was formally created in May 2000. Foreign Investment Advisory Services To assist governments to improve their policies, regulations and institutions in order to 1985 (FIAS) attract more and more beneficial foreign direct investment. Corporate Citizenship Facility (CCF) To support best environmental and social practices in individual businesses in develop- Operational July 1, 2002 ing countries and actively disseminate those practices throughout the private sector in emerging markets. Environmental Opportunities Facility To provide project preparation support and seed financing for projects addressing local Operational July 1, 2002 (EOF) environmental issues. Sustainable Financial Markets Facility To enhance the environmental and social impact of IFC's funding via financial intermedi- Operational July 1, 2002 (SFMF) aries and to support the competitiveness of FIs, by improving their capacity to manage environmental risk. 86 D O N O R R E P O R T 2 0 0 2 IFC DONOR-SUPPORTED TECHNICAL ASSISTANCE PROGRAMS: PEP NAEDF SEDF TATF SEF FIAS (includes CCF, EOF and SFMF) D O N O R R E P O R T 2 0 0 2 87 IFC DONOR-SUPPORTED TECHNICAL ASSISTANCE PROGRAMS CUMULATIVE FINANCIAL SUPPORT IN US$ MILLIONS EQUIVALENT UP TO JUNE 30, 2002 CUMULATIVE FIAS 10% Donor TATF SME facilities FIAS PEP TOTAL FINANCIAL PEP SUPPORT 18% SME I. IFC Donor Community facilities African Development Bank - 13.50 - - 13.50 BY PROGRAM 47% ADB - 0.75 - - 0.75 (PERCENT) TATF EBRD - 1.22 - - 1.22 25% European Community 3.50 0.90 - - 4.40 Inter-American Devt Bank - 3.40 - - 3.40 UNDP 1.14 15.84 8.43 - 25.41 Australia 4.37 9.51 2.80 - 16.68 Austria 1.05 2.30 - - 3.35 Belgium - 2.51 0.17 - 2.68 CUMULATIVE All Others Canada 7.37 11.72 1.65 15.00 35.74 UNDP 27% Denmark 5.02 13.62 - - 18.64 FINANCIAL 4% IFC Finland 4.28 8.08 0.47 1.10 13.93 SUPPORT Sweden 16% France 1.88 10.64 0.79 - 13.31 5% Germany 2.23 6.77 - - 9.00 BY DONOR Canada Greece 1.85 0.25 - - 2.10 (PERCENT) 5% United India # - - - - - Japan States Ireland 2.03 1.52 0.15 - 3.70 7% 10% Israel 0.90 - - - 0.90 Switzerland United Italy 18.72 2.78 0.57 - 22.07 7% Netherlands Kingdom Japan 29.84 12.92 3.56 - 46.32 9% 10% Luxembourg 0.50 - 0.52 - 1.02 Mexico - 0.50 - - 0.50 The Netherlands 26.49* 24.74 2.34 6.28 59.85 New Zealand 1.49 1.87 0.91 - 4.27 Norway 6.04 11.93 0.29 0.01 18.27 Poland - 0.50 - - 0.50 Portugal - 4.84 0.25 - 5.09 Slovenia - 0.45 - - 0.45 Spain 0.85 - 0.30 - 1.15 Sweden 13.21 16.04 2.42 2.17 33.84 Switzerland 13.77 24.67 2.52 5.70 46.66 United Kingdom 7.25 19.56 2.12 36.67 65.60 United States 6.37 20.00 3.74 38.39 68.50 ICDS - 2.65 - - 2.65 Caribbean Devt Bank - 0.10 - - 0.10 Others - 2.83 - - 2.83 160.15 248.91 34.00 105.32 548.38 II. World Bank Group IBRD - 5.85 9.02 - 14.87 IFC 9.37* 65.11 19.22 12.60 106.30 MIGA - - 2.91 - 2.91 9.37 70.96 31.15 12.60 124.08 GRAND TOTAL 169.52 319.87 65.15 117.92 672.46 Left: IFC Executive Vice President Peter Woicke, Bavarian State Minister of Finance Dr. Kurt Faltlhauser and Director of the Munich and Notes: Oberbayern Chamber of Industry and Commerce Dr. Reinhard Doerfler. # Indicates contribution-in-kind. * Includes funding of US$7.97 million for new programs (social & environmental, SME and financial markets) established in late FY2002. TATF includes one-time funding for specific projects (excluding EC/IFC equity line of ECU 5 million). SME facilities comprise AMSCO, APDF, BAS, CPDF, SEDF, ESSA, MPDF, NAEDF, PBAS, SEED and SPPF. 88 FIAS is a joint service supported by IFC and the World Bank. PEP is the Private Enterprise Partnership; this coulmn (formerly titled as FSU) refers to all of IFC's privatization activities and technical assistance in the former Soviet Union. D O N O R R E P O R T 2 0 0 2 SME FACILITIES: IFC DONOR-SUPPORTED TECHNICAL ASSISTANCE PROGRAMS CUMULATIVE FINANCIAL SUPPORT IN US$ MILLIONS EQUIVALENT UP TO JUNE 30, 2002 1 1 2 1 Donor APDF AMSCO BAS CPDF SEDF ESSA MPDF NAEDF PBAS SEED SPPF TOTAL I. IFC Donor Community African Development Bank 8.00 5.50 - - - - - - - - - 13.50 ADB - - - - - - 0.75 - - - - 0.75 EBRD - - - - - - - - 1.22 - - 1.22 European Community - - - - - - - - 0.90 - - 0.90 Inter-American Devt Bank - - 3.40 - - - - - - - - 3.40 UNDP 10.00 4.84 1.00 - - - - - - - - 15.84 Australia - - - 1.48 - - 2.90 - - - 5.13 9.51 Austria - - - - - - - - - 2.30 - 2.30 Belgium 2.20 0.31 - - - - - - - - - 2.51 Canada 2.50 - 2.50 - - 1.94 1.91 - 0.73 1.37 0.77 11.72 Denmark 7.60 5.64 - - - - - - 0.38 - - 13.62 Finland 2.20 2.62 - - - - 3.26 - - - - 8.08 France 6.00 1.66 - - - - - 2.98 - - - 10.64 Germany 3.15 1.02 2.60 - - - - - - - - 6.77 Greece - - - - - - - - - 0.25 - 0.25 India # - - - - - - - - - - - - Ireland - 1.50 - - - - - - 0.02 - - 1.52 Israel - - - - - - - - - - - - Italy 1.00 1.00 - - - - - - 0.78 - - 2.78 Japan 4.00 - 0.80 - - - 1.53 - 0.45 - 6.14 12.92 Luxembourg - - - - - - - - - - - - Mexico - - 0.50 - - - - - - - - 0.50 Netherlands 7.71 7.63 0.63 0.90 1.52 - - - 1.35 5.00 - 24.74 New Zealand - - - - - - - - - - 1.87 1.87 Norway 5.36 0.35 - - - - 2.92 - 0.10 3.20 - 11.93 Poland - - - - - - - - 0.50 - - 0.50 Portugal 1.90 2.94 - - - - - - - - - 4.84 Slovenia - - - - - - - - - 0.45 - 0.45 Spain - - - - - - - - - - - - Sweden 5.43 4.86 0.41 - - - 1.91 - 0.62 2.81 - 16.04 Switzerland 7.30 4.27 - 2.33 - - 3.16 3.31 0.30 4.00 - 24.67 United Kingdom 3.72 3.42 0.20 3.17 5.34 - 2.32 - 0.50 0.89 - 19.56 United States 11.50 2.70 2.80 - - - - - 3.00 - - 20.00 ICDS - 2.65 - - - - - - - - - 2.65 Caribbean Devt Bank - - 0.10 - - - - - - - - 0.10 Others - 0.62 - - - - - - 1.31 - 0.90 2.83 89.57 53.53 14.94 7.88 6.86 1.94 20.66 6.29 12.16 20.27 14.81 248.91 II. World Bank Group IBRD - 5.85 - - - - - - - - - 5.85 IFC 23.60 4.26 4.20 5.00 5.00 0.60 4.00 5.00 3.00 6.00 4.45 65.11 MIGA - - - - - - - - - - - - 23.60 10.11 4.20 5.00 5.00 0.60 4.00 5.00 3.00 6.00 4.45 70.96 GRAND TOTAL 113.17 63.64 19.14 12.88 11.86 2.54 24.66 11.29 15.16 26.27 19.26 319.87 Notes: # Indicates contribution-in-kind. 1BAS, established in 1981 & closed during FY97; PBAS, established in 1991 & closed during June 1996; ESSA, established in 1994 & closed at end of January 2002. 89 NAEDF was approved by the Board of Directors of IFC in May 2002. 2 D O N O R R E P O R T 2 0 0 2 FY2002 DONOR AND PROMOTIONAL MEETINGS Month Country Location Government Consultants Month Country Location Government Consultants 2001 Netherlands The Hague X July Norway Oslo X Australia Washington, DC X Singapore Washington, DC X Finland Washington, DC X SME Donor France Paris X Roundtable Washington, DC X Germany South Africa Washington, DC X (State of Bavaria) Washington, DC X Spain Madrid X Italy Rome X Sweden Stockholm X Luxembourg Luxembourg X Switzerland Bern X Netherlands Moscow X UNDP New York X Netherlands Washington, DC X United Kingdom London X New Zealand Washington, DC X X United Kingdom Washington, DC X United States Washington, DC X United States Washington, DC X August November Luncheon for Australia Washington, DC X X DC-based donor Austria Washington, DC X counterparts Washington, DC X Canada Ottawa X Finland Washington, DC X Finland Washington, DC X Netherlands Washington, DC X Netherlands Washington, DC X X Sweden Washington, DC X Sweden Moscow X United Kingdom London X September Australia Washington, DC X December Belgium Brussels X Australia Washington, DC X X Committee of Austria Washington, DC X Donor Agencies Belgium Washington, DC X for Small Enterprise Canada Washington, DC X Development Stockholm X CPDF Annual Denmark Copenhagen X X Donors Meeting Chengdu, Sichuan Province X Finland Helsinki X X Denmark St. Petersburg X Finland Washington, DC X European Germany Bonn X Commission Washington, DC X X Iceland Reykjavik X X Finland Washington, DC X X Luxembourg Luxembourg X France Washington, DC X Netherlands The Hague X X Germany Washington, DC X Norway Washington, DC X Japan Washington, DC X Norway Oslo X Netherlands Washington, DC X X Sweden Stockholm X X Norway Washington, DC X Switzerland Bern X SME Roundtable Washington, DC X United Kingdom London X Sweden Washington, DC X Switzerland Washington, DC X October United Kingdom Washington, DC X Austria Vienna X United States Washington, DC X Belgium Brussels X Denmark Washington, DC X 2002 European Commission Moscow X January FIAS Donors Meeting Paris X Australia Washington, DC X Finland Helsinki X Canada Washington, DC X X France Paris X Finland Helsinki X Germany Nuremberg X Finland Washington, DC X Germany IBRD Donor (State of Bavaria) Munich X Roundtable Paris X 90 D O N O R R E P O R T 2 0 0 2 FY2002 DONOR AND PROMOTIONAL MEETINGS Month Country Location Government Consultants Month Country Location Government Consultants Iceland Washington, DC X Norway Washington, DC X Japan Washington, DC X Switzerland Bern X MPDF Annual United Kingdom Washington, DC X Donors Meeting Hanoi X Sweden Washington, DC X May United Kingdom Washington, DC X Australia Washington, DC X Denmark Washington, DC X X February Denmark Copenhagen X Australia Washington, DC X X Belgium Washington, DC X Austria Washington, DC X EBRD Donors Denmark Washington, DC X Meeting Bucharest X European Finland Washington, DC X Commission Washington, DC X Germany Finland Washington, DC X (State of Bavaria) Washington, DC X X Finland Moscow X Ireland Dublin X X Finland Helsinki X Netherlands Washington, DC X Germany Bonn X New Zealand Washington, DC X Germany Singapore Singapore X (State of Bavaria) Washington, DC X Switzerland Washington, DC X India Washington, DC X X United Kingdom London X Netherlands Washington, DC X United Kingdom Washington, DC X Sweden Washington, DC X United Kingdom Washington, DC X June United States Washington, DC X APDF/AMSCO Annual United States Moscow X Donors Meeting Abidjan X Australia Washington, DC X X March Canada Washington, DC X IBRD Donor Forum Washington, DC X EBRD Washington, DC X European Finland Washington, DC X Commission Brussels X Finland Helsinki X Netherlands Washington, DC X France Paris X Spain Washington, DC X Germany United Kingdom Washington, DC X (State of Bavaria) Washington, DC X Greece Athens, Thessaloniki X X April Ireland Dublin X Australia Washington, DC X Ireland Washington, DC X Austria Vienna X Israel Washington, DC X X Belgium Brussels X Korea Washington, DC X Canada Washington, DC X MPDF Special Denmark Washington, DC X X Donors Meeting Hanoi X Finland Washington, DC X Netherlands Washington, DC X X Germany Bonn, Frankfurt X X SEED Annual Germany Munich X Donors Meeting Skopje X Germany Washington, DC X Spain Madrid X X IFC Donor Spain Washington, DC X Roundtable Belgrade X SPPF Annual Ireland Washington, DC X X Donors Meeting Sydney X Netherlands The Hague X Switzerland Washington, DC X 91 D O N O R R E P O R T 2 0 0 2 Directory INTERNATIONAL FINANCE CORPORATION CHINA PROJECT DEVELOPMENT FACILITY SOUTHASIA ENTERPRISE Udayan Waglé, Director, Trust Funds Department Eric Siew, Manager DEVELOPMENT FACILITY International Finance Corporation (IFC) International Finance Corporation (IFC) Anil Sinha 2121 Pennsylvania Ave., N.W. 9/F, Tower B, Fuhua Mansion Manager Room F 6K-102 No. 8, Chaoyangmen Beidajie 3A, Paribagh Washington, D.C. 20433 Dongcheng District Dhaka 1000, USA Beijing, 100027 Bangladesh Tel: 1-202-473-0535 PR China Tel: 880-2 966-9301 Ext. 402 Fax: 1-202-974-4344 Tel: 86-10-6554-4191 Fax: 880-2 861-3220 E-mail: IFC-TrustFunds@ifc.org Fax: 86-10-6554-4192 SOUTHEAST EUROPE SME FACILITIES: MEKONG PROJECT DEVELOPMENT FACILITY ENTERPRISE DEVELOPMENT Website: www.ifc.org/sme Mario Fischel Mariann Kurtz General Manager General Manager AFRICA PROJECT DEVELOPMENT FACILITY 7th Floor, 63 Ly Thai To Hamdije Kresevljakovica 19/4 John James Hanoi 71000, Sarajevo General Manager Vietnam Bosnia and Herzegovina Hyde Park Lane Tel: 84-4 824-7892 Tel: 387 33 217 760 Victoria Gate West Fax: 84-4 824-7898 Fax: 387 33 217 762 Hyde Park 2196 Johannesburg NORTH AFRICA ENTERPRISE SOUTH PACIFIC PROJECT FACILITY South Africa DEVELOPMENT FACILITY Denise Jean Aldous Tel: 27-11-341-9030 Antoine Courcelle-Labrousse General Manager Fax: 27-11-325-0729 Program Manager Level 18, CML Building International Finance Corporation (IFC) 14 Martin Place AFRICAN MANAGEMENT SERVICES COMPANY World Trade Center Bldg. Sydney, NSW 2000 Frans Baneke Corniche El Nil, Boulac Australia Chief Executive Cairo, Egypt Tel: 61-2-9223-7773 Friedman Building Tel: 20-2 579-5353, 579-6565 579-9900 Fax: 61-2-9223-2533 Hogehilweg 4 Fax: 20-2 579-2211 1101 CC Amsterdam-Zuidoost The Netherlands Tel: 31-20-664-1916 Fax: 31-20-664-2959 92 D O N O R R E P O R T 2 0 0 2 PRIVATE ENTERPRISE PARTNERSHIP SOCIAL & ENVIRONMENTAL SUSTAINABLE FINANCIAL MARKETS FACILITY Christian Grossmann FACILITIES: Daniel Siddy Director Environmental Specialist International Finance Corporation (IFC) CORPORATE CITIZENSHIP FACILITY International Finance Corporation (IFC) 7/5 Building 2 Bolshaia Dmitrovka Mark Eckstein 2121 Pennsylvania Ave., N.W. 103009 Moscow Senior Environmental Specialist Room F 3K-282 Russian Federation International Finance Corporation (IFC) Washington, D.C. 20433 Tel: 7095-755-8294 2121 Pennsylvania Ave., N.W. USA Fax: 7095-755-8299 Room F 3K-322 Tel: 1-202-458-9899 Website: www.ifc.org/pep Washington, D.C. 20433 Tel: 1-202-974-4389 USA FOREIGN INVESTMENT ADVISORY SERVICE Tel: 1-202-473-8022 IFC-NETHERLANDS CARBON FACILITY Frank Sader Fax: 1-202-974-4389 Vikram Widge Coordinator, Trust Funds Program Manager Private Sector Advisory Services ENVIRONMENTAL OPPORTUNITIES FACILITY International Finance Corporation (IFC) The World Bank Group Louis Boorstin 2121 Pennsylvania Ave., N.W. 1818 H St., N.W. Manager Room F 3K-270 Room I 9-101 International Finance Corporation (IFC) Washington, D.C. 20433 Washington, D.C. 20433 2121 Pennsylvania Ave., N.W. USA USA Room F 3K-254 Tel: 1-202-473-1368 Tel: 1-202-473-3921 Washington, D.C. 20433 Tel: 1-202-974-4389 Fax: 1-202-522-3262 USA E-mail: CarbonFinance@ifc.org Website: www.ifc.org/fias Tel: 1-202-473-6684 Fax: 1-202-947-4389 93 D O N O R R E P O R T 2 0 0 2 Glossary ADB Asian Development Bank IFC International Finance Corporation AfDB African Development Bank INCaf IFC-Netherlands Carbon Facility AMSCO African Management Services Company IT Information technology APDF Africa Project Development Facility LAC Latin America and the Caribbean BAS Business Advisory Service MENA Middle East and North Africa for the Caribbean and Central America MIGA Multilateral Investment Guarantee Agency CCF Corporate Citizenship Facility MIS management information systems CEE Central and Eastern Europe MPDF Mekong Project Development Facility CEO chief executive officer NAEDF North Africa Enterprise Development Facility CIDA Canadian International Development Agency NGO nongovernmental organization CP cleaner production NLG Netherlands guilder CPDF China Project Development Facility PBAS Polish Business Advisory Service CV curriculum vitae PCB polychlorinated biphenyl CY calendar year PEP Private Enterprise Partnership DACON World Bank Group's registry of consultants PDF project development facility DANIDA Danish International Development Agency PDR People's Democratic Republic DFID UK Department for International Development PNG Papua New Guinea DTI UK Department of Trade and Industry RIUVN RMIT International University Vietnam EBRD European Bank for Reconstruction and Development SAS Sudg Agro Serv ECG Evaluation Cooperation Group SECA Southern Europe and Central Asia EIB European Investment Bank seco State Secretariat for Economic Affairs of Switzerland EOF Environmental Opportunities Facility SEED Southeast Europe Enterprise Development EU European Union SEDF SouthAsia Enterprise Development Facility FI financial institutions SFMF Sustainable Financial Markets Facility FDI foreign direct investment Sida Swedish International Development Cooperation Agency FIAS Foreign Investment Advisory Service SME Small-and medium-sized enterprise FMTA IFC Financial Markets Technical Assistance SPPF South Pacific Project Facility FR Federal Republic TA technical assistance FY fiscal year TATF Technical Assistance Trust Funds program FYR Former Yugoslav Republic UNDP United Nations Development Programme GEF Global Environment Facility UNEP United Nations Environment Programme GHG greenhouse gas USAID United States Agency for International Development IADB Inter-American Development Bank USTDA United States Trade and Development Agency IAS International Accounting Standards VROM Dutch Ministry of Housing, Spatial Planning and Environment IBRD International Bank for Reconstruction and Development $ US$ ICT information, communication, and technology EURO 94 D O N O R R E P O R T 2 0 0 2 PRODUCTION TEAM Veronica Banez Leslie Christensen Lloyd Corwin Maria Cussianovich Yves de Rosee Socorro Fuster Mariko Higashi Reina Kawaguchi Aminata Mbodj Tran Nguyen Michael O'Neill Bayo Oyewole Rosa Pedraza Sophana So Francis Tamakloe Luz Tatlonghari Anton van Ruiten Uday Wagle Wai-Keen Wong Fred Wright SPECIAL THANKS TO OTHER CONTRIBUTORS The Financial Markets team, including Lory Camba and Alison Harwood The SME team, including Ramon Cabo, Irina Niederberger, and Rob Wright The PEP team, including Irina Likhacheva and Heather Matson The FIAS team, including Teresa Andaya and Frank Sader The Environment team, including Louis Boorstin, Mark Eckstein, Sid Embree, Isabel Garcia, Dan Siddy, and Vikram Widge SPECIAL THANKS TO THE FOLLOWING FOR THEIR TECHNICAL ADVICE Desmond Dodd, Simon Fowler, David Harris, Brigid Holleran, Dana Lane DESIGN Studio Grafik PHOTO CREDITS Cover Photo: Photo courtesy the U.S. National Arboretum Inside Photos: Nicholas Flanders, Michele Iannacci, Neeraj Jain, Richard Lord, Susann K. Ollmann, Dragan Tanasijevic, Anton van Ruiten, Niels Vestergaard, Rob Wright, Wai-Keen Wong, Andrei Zubets INTERNATIONAL FINANCE CORPORATION 2121 Pennslyvania Avenue, NW, Washington DC 20433 USA Telephone: 1-202-473-0535 Facsimilie: 1-202-974-4344 www.ifc.org www.ifc.org/tatf/