59443 FOCUS , DELIVERY , RESULTS IFC and the Issues of Today Telling Our Story Our Road Map A Strategy for Increased Impact IFC uses a five-part strategy to drive operations, make the right choices, and maximize impact. Each pillar supports the others, giving IFC a clear road map for increased development impact and client satisfaction. A Sharper Focus on Frontier Markets Long-Term Partnerships Climate Change and Environmental Private Sector Infrastructure, Health, Developing Local Financial Markets Many countries, regions, and industries still with Emerging Players in Developing and Social Sustainability and Education IFC builds strong local financial institutions suffer from a lack of private investment. Countries IFC helps clients identify social and environ- IFC helps increase access to these key needs through a combination of loans, equity, struc- IFC builds long-lasting relationships with mental risks and opportunities--a key step in in several ways, including: tured finance, and advisory services. Our Increased focus on the needs of these frontier building a sounder future for people and the investments often come integrated with advi- clients. Our tailored, ever-changing products markets is a cornerstone of our strategy. We planet. Then we help them finance the result- · Collaborating with the World Bank sory services that help deepen local markets. and services help them grow stronger-- go where we are needed most, reaching the ing projects in energy efficiency, renewable in helping governments increase in good times and bad. We do this by: underserved wherever they are--whether in energy, and other areas. We support the sustainable private participation in The result is increased access to finance, an the poorest countries or in the poorer regions · Financing South-South investment, global climate change and sustainability infrastructure essential force in raising living standards and and high-impact sectors of middle-income thus increasing the flow of capital, agenda by: reducing poverty. Among our priorities: · Financing landmark projects in power, countries. We do this in part by: skills, and technology within the water, transport, and information and · Microfinance developing world · Developing new business models and communication technologies · Emphasizing low-income countries financing instruments for clean energy, · Small and medium enterprise finance and regions · Partnering with clients to integrate · Expanding private investment in the carbon finance, and environmentally more small and mid-size local health and education sectors · Housing finance · Strengthening small and medium sound technologies businesses into their supply chains · Trade finance enterprises · Providing gender programs that and bring more benefits to local · Focusing on agribusiness communities strengthen the role of women · Local currency financing · Providing innovative solutions in entrepreneurs · New financing for our clients from · Advising clients on corporate fragile and conflict-affected countries governance, HIV/AIDS, and other areas · Setting standards for the private sector international banks and other investors in developing countries, based on they otherwise could not access sound environmental, social, and governance principles Answering the Call Development impact is the core of IFC's business. Creating opportunity for whole electricity, and clean water. We help small-scale entrepre- communities and individual people is our passion. neurs gain greater access to the financing and training IFC Financial Highlights, Fiscal Year 2008 · $16.2 billion in new investments, a 34 percent increase they need to create jobs. We facilitate trade finance so that The rise in food and energy prices presents a special challenge, and IFC is responding. over the previous year entrepreneurs can import machinery and export goods. · $11.4 billion in commitments for our own account, Along with today's conditions in global financial markets, climate change concerns, and We also help clients see bottom-line benefits from inte- $4.8 billion in funding mobilized for clients the human cost of conflict in many countries, the rise in prices is creating an increasing- grating environmental, social, and governance principles · $1.75 billion pledged to the International Development ly difficult environment, especially for the 1.4 billion people living in extreme poverty. Association, the World Bank Group's lead agency for Lars H. Thunell into their daily operations. assisting the poorest countries IFC has an important role to play in helping address the challenges. We are the largest We focus on these goals, and we rigorously monitor and IFC's Reach multilateral financial institution investing in private enterprises in emerging markets, evaluate our results in reaching them. We then use what Our support enabled clients to: with activities in 130 countries. We help increase the availability of credit, for example we learn to improve our own performance and share our · Generate power for nearly 147 million customers assisting in providing 7 million microfinance loans and more than 500,000 housing · Distribute water to 18 million customers knowledge with others. · Establish 50 million new telecommunications connections finance loans in fiscal year 2008. We combine financing that helps local businesses grow quickly and sustainably with advice that helps them innovate, raise standards, mitigate The stories in this collection reflect this approach, show- risk, and share knowledge across industries and regions. Our affiliation with the World ing how we take on some of the most critical issues in Bank gives us additional leverage in terms of skills and experience. business and development today, and what our help means to the people involved. Food producers in Africa, There is much we can do. IFC is pursuing a carefully defined strategy, one that concen- entrepreneurs in Afghanistan, clean technology provid- trates our work in areas where we can make the greatest difference in frontier markets ers in China and India--these are just some of the many and regions. Committed to delivering results for our clients and shareholders, we cus- underserved markets we emphasize in our commitment to tomize our investment and advisory services to create opportunity and improve lives. going where we are needed most. By working with clients and partners, we put more children in school, help more people obtain affordable, high-quality health care, and improve access to telecommunications, Lars H. Thunell Cover Photo: West Bank and Gaza, one of more than 30 fragile and conflict-affected countries and regions where Executive Vice President and CEO IFC creates opportunity (see page 12). 1 Contents FOOD PRICES Africa Fighting the Food Crisis Answers in Africa 4 Ukraine Increased Production Part of the Solution 6 C L I M AT E C H A N G E India Clean and Green Investing With Carbon Credits 8 China New Technologies For an Earth-Friendly Age 10 ACCESS TO FINANCE Global Conflict Countries Building the Smallest Businesses 12 Global Scaling Up Microfinance Many Partners, One Goal 14 Brazil Corporate Governance Reform Is Good Business 16 Global GEMLOC Building Local Currency Bond Markets 18 INFRASTRUCTURE Madagascar Port Concessions An African Upgrade 20 Tunisia Airports Flight Path to the Future 22 I N F O R M AT I O N A N D C O M M U N I C AT I O N T E C H N O L O G I E S Global Technology Tools In the Fight against Poverty 24 E D U C AT I O N Mexico Student Loans Higher Education, Higher Incomes 26 AWA R D S : R E C O G N I Z I N G A C H I E V E M E N T Client Leadership 30 Sustainable Banking 31 How IFC Measures Results IFC rigorously measures the results and development impact of investments and advisory projects. We begin monitoring early, then continue as projects mature and produce more numbers. This careful tracking process goes on until completion, when we U ntil this year, business was slow for Grace compare final results with original objectives and re- Kgomongwe and her colleagues at Little apply the lessons learned in designing future projects. Rock Construction (above) in Marikana, South Africa, a rural area with 60 percent un- Our development outcomes tracking service (DOTS) employment and a high rate of HIV/AIDS. But covers all active projects in our portfolio, both invest- training received through IFC's partnership with ments and advisory services. The process starts by platinum mining company Lonmin Plc has helped setting initial objectives, using standard indicators by Little Rock win $3.6 million in new contracts industry or business line, and tracking achievements to renovate employee housing at Lonmin's local throughout the project cycle until closure. mine--enough to hire 80 people. Complementing these efforts of our own are those of the Independent Evaluation Group. It reviews major Real-time monitoring and evaluation allow IFC themes in IFC's work and shares its findings with staff to track and refine the training program. It aims and others involved in private sector development. to generate $60 million in new contracts for local small and medium enterprises by 2010, empower- This focus on results is a critical part of the way ing the 350,000 people in the communities we carry out our vision: that people should have the surrounding Lonmin's operations by opening up opportunity to escape poverty and improve their lives. new business opportunities. 2 3 Africa Fighting the Food Crisis Answers in Africa R ising food prices are a global catastro- by Tanzania's Bakhresa Group. It will allow phe, one that hurts developing coun- imported wheat to travel by rail into Malawi, tries the most. They may send more where it can be milled into flour for bread at than 100 million people back into poverty lower cost than through the much longer truck and push many of the poorest to the brink of routes used today. survival. We are also financing the $86 million expan- We are doing our part, helping the private sion of a West African commodity trader, Gha- sector play a bigger role in the World Bank na's Finatrade Holdings, that is bringing more Group's response to the crisis. rice into Benin, Niger, and other countries. In Africa, where the poor spend up to 80 IFC global agribusiness investment commit- percent of their incomes on food, IFC's focus ments reached $762 million in fiscal 2008, includes a vital, often overlooked factor: weak with another $136 million mobilized through infrastructure and logistics systems that hinder syndications. We expect that these commit- supply. In Mozambique we financed a sophisti- ments will support nearly 100,000 jobs and cated new oceanside grain terminal sponsored reach more than 18,500 farmers and 13,000 micro, small, and medium enterprises. $ Mn 900 IFC will do more in this crucial industry-- Syndications 800 increasing our agribusiness investment and ad- IFC's Own Account 700 visory portfolio to help feed a hungry world. In 600 doing so, we will apply what we have learned. 500 In agribusiness, IFC's contribution comes from 400 strengthening supply, distribution, and value 300 chains, building market access, and increasing 200 access to finance and our advice is often more 100 valuable when combined with our investments. 0 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 We bear this in mind in designing today's in- vestment and advisory initiatives in the sector. IFC's Rising Global Commitments in Agribusiness: Africa's Food Supply: Growing stronger, through IFC investments. A three-fold increase in the last four years. 4 FOOD PRICES 5 Ukraine Increased Production Part of the Solution T oday's world needs more food to reach stronger in agribusiness--attracting the private more people, at affordable prices. capital needed to bring more land into produc- Increased production is just as critical as tion, finance more farms, and modernize infra- improved distribution. structure for storage, processing, and shipping. We are helping make this happen, building on But only a few nations can produce and export our past experience in the country. considerably more food than they do today. One is Ukraine, a priority country in IFC's global In 2004, IFC provided $40 million in financing agribusiness strategy. We are helping it become a and advisory support to juice producer Sandora, more significant food supplier, able to ship more helping it expand operations and improve cor- grain in ways that support its own development porate governance and food safety certification. as well. Its annual turnover soon doubled, prompting a $678 million acquisition by PepsiCo in 2007. With excellent growing conditions and some of the world's most fertile undeveloped farmland, Now we are considering a $100 million invest- Ukraine could produce twice as much grain as it ment in another local client, Rise. This will help does today, experts tell us. But it needs to grow it increase its acreage in wheat, barley, and other crops by almost a third and strengthen 9,000 client farms with high-quality inputs, machin- ery, and services. We are also considering a new line of credit to help local farms and agribusi- ness companies affected by the global credit crunch, developing the agri-insurance market, and planning new leasing projects to help farm- ers obtain the upgraded machinery they need to become more efficient. It is the beginning of a far-reaching IFC approach--one that should help this "bread- basket of Europe" become a bigger grain source IFC finances Ukraine's agribusiness growth. for the world. Ukraine's Wheat Farms: a rising force in world food supply. 6 FOOD PRICES 7 India Clean and Green Investing With Carbon Credits L ike rising food and energy prices, climate guarantees that help clients in India and other change poses significant risks to develop- countries benefit from this $64 billion market. ment--and an important opportunity for The delivery guarantees product lets IFC act IFC to serve its member countries. as an intermediary, maximizing the value of We help the private sector reduce emissions clients' credits through innovative "win-win" with cleaner technology and renewable energy, transactions. It helps clients leverage our AAA especially in large countries where the stakes are credit rating to enter the carbon markets with the highest, such as India. full price transparency. Buyers in developed countries also benefit, with IFC eliminating To date just a few Indian firms have earned their risk of not receiving the promised credits. significant revenues from Kyoto Protocol- compliant carbon credits, an important financ- Indian industrial firm Rain CII Carbon was an ing tool that lets businesses in the developed early adopter, receiving an IFC carbon deliv- world offset their own emissions through ery guarantee for credits worth more than $25 sustainable investment in emerging markets. million at current market prices alongside the We have thus introduced new carbon delivery environmental upgrades at its plant in Andhra Pradesh that produces materials for aluminum smelters. This is our latest form of support to Rain, which has grown from a start-up com- pany in 1996 to become a global leader in its industry with repeated financing from IFC. A Dutch-funded IFC program also obtained about $10 million in carbon credits to finance Enercon India's wind power projects in Rajast- han and Karnataka. These are adding 75 mega- watts of new generation, creating a model that helps smaller renewable energy projects access commercial carbon finance. Wind Power: Part of IFC's climate change focus in India. Carbon Trading in Europe: A center point of the $64 billion global carbon credit market for environmentally sound projects in developing countries that IFC helps clients access. 8 CLIMATE CHANGE 9 China New Technologies For an Earth-Friendly Age H elping meet China's industrial needs One of Aloe's portfolio companies, Allied without overburdening the planet is Technology Group, cleans up China's coal one of today's greatest development industry with a coal gasification process that challenges. China has become the world's larg- also helps produce cleaner power. Another est source of carbon dioxide emissions, overtak- investee, Recupyl, extracts valuable cobalt and ing the United States. lithium from used lithium batteries, ensuring that they do not harm the environment. It then IFC responds in many ways. Among them: recycles the metals, offering a lower-cost alter- partnering with Aloe Private Equity, the first native for clients who would otherwise struggle investment group to join the United Nations' with skyrocketing metal prices. corporate social responsibility initiative, the Global Compact. Aloe Environment Fund II Complementing this equity approach, IFC helps combat climate change by financing the also helps clients like Industrial Bank and introduction of proven, sustainability-driven Bank of Beijing make environmentally friendly technologies to China and other markets. loans through the China Utility-Based Energy Efficiency Finance program. Industrial Bank­ "There are very few truly long-term trends financed projects have already reduced enough in industry, but sustainable investing is one," emissions to replace ten 100-megawatt power notes Vivek Tandon, Aloe's co-founder. "It plants. And we directly finance emerging is becoming part and parcel of everyday life, leaders in the sustainable forestry and wood and hopefully will continue for generations to products industries such as Nature, a company come." that is one of China's largest flooring manu- IFC took an early stake that helped the fund facturers and committed to sourcing its wood raise $200 million, then raised Aloe's profile in ways that do not lead to deforestation or by featuring it at an annual investors' confer- contribute to climate change. ence we host with the Emerging Market Private Equity Association. IFC-supported cleaner technologies help China meet its industrial needs without harming the environment. 10 CLIMATE CHANGE 11 Global Conflict Countries Building the Smallest Businesses T hey rarely receive recognition for it, but opment needed to create the First Microfinance small-scale entrepreneurs are heroes of Bank of Afghanistan. Profitable within three peacemaking, often driving the eco- years, it is now a "very successful young bank" nomic revival that brings stability to war-torn with more than 36,000 clients, according to countries and regions. When given the neces- a recent independent evaluation by Banyan sary financing, they will start businesses, create Global in New York. jobs, and build a better future--no matter how This built on work that began in 1996, when difficult the conditions. we teamed with German consulting firm IPC IFC helps make it happen. We enter newly to build ProCredit Bank Bosnia, which soon pacified countries early, oversee creation of new became its country's market leader. It is now a commercial institutions financing smaller busi- key member of ProCredit Holding, the world's nesses, then help them grow stronger over time. largest commercial microfinance bank holding company, with $6.7 billion in assets in 22 In early 2002 we were in Kabul, organizing the countries. equity, debt, and advisory services funding that the Aga Khan Foundation for Economic Devel- Today IFC has a large network of commer- cial microfinance partners, and we have led the launch of institutions that fuel business growth in the Democratic Republic of Congo, Pakistan, and other conflict-affected countries. This gives us a proven formula to apply where needed alongside other related initiatives such as IFC Ventures, our new $100 million pool of risk capital and advisory services for small businesses in Nepal, Sierra Leone, and other challenging markets. Pakistan: Financing for low-income women. Afghanistan: IFC's focus on microfinance provides small loans that help local entrepreneurs create jobs--and hope. IFC investment in microfinance institutions worldwide reached a record $315 million in fiscal 2008. 12 ACCESS TO FINANCE 13 Global Scaling Up Microfinance Many Partners, One Goal H amzalija Hatibovic can never forget gional funds to finance and advise local micro- the Bosnian war. It took away from lenders, targeting transitioning NGO initiatives him everything he had. like EKI as well as commercial institutions. After seeing his home and entire village de- The first of these, the European Fund for stroyed, he moved his family to Zenica, a new Southeast Europe, opened in 2005. IFC town where he knew no one. Every day was a helped it attract $833 million, mixing funds struggle to survive. But Hamzalija never lost from several sources in a unique public-private hope. He began to read books--books about partnership. The fund was the first commer- bees--and dreamed of starting a business mak- cial investor in EKI, which now has more than ing honey. 35,000 borrowers and ranks high on the U.S. business magazine Forbes' list of the world's When no bank would finance him, he went to most successful microfinance institutions. EKI, a new microlender that Christian human- itarian organization World Vision International IFC and KfW have created a similar vehicle had opened in 1996, just after the end of the that is bringing up to $1 billion to microfi- war. Unlike the others, EKI listened, then lent nance in Asia, and are considering one in Africa him $2,500 to buy bees. as well. Through these joint efforts, microfi- nance will begin to reach much more of its vast Today Hamzalija is one of EKI's best long-term potential market. clients. He owns a successful honey and wax products company that gives his family a stable, secure life. IFC is one of the world's largest There are countless others like him around the world--creditworthy poor people ready investors in microfinance, holding to move ahead when given a chance. To reach a portfolio worth more than them on a large scale, IFC and German devel- $900 million. opment bank KfW have created an innovative investment model, launching a series of re- Hamzalija Hatibovic, once a Bosnian war victim, is now the proud owner of a honey business built with loans from IFC microfinance client EKI. "I'll never forget EKI," he says. "It helped me when nobody else would." 14 ACCESS TO FINANCE 15 Brazil Corporate Governance Reform Is Good Business 7,500 7,000 I t was the end of the 1990s. Brazil's stock By 2003 local companies began to sign on, market, Bovespa, was in trouble. sensing the benefit of better governance. IFC 6,500 continued to promote the initiative, helping Share prices plummeted. Investors lost launch a $207 million private investment fund 6,000 money. Confidence collapsed. A key reason: the for companies moving to better governance market's lax standards of corporate governance, standards. 5,500 5,514 tolerating murky accounting, unenforceable regulations, and disregard for minority share- It was a start: today, more than 100 compa- 5,000 holder rights. nies have listed on the Novo Mercado, raising approximately $36 billion since 2002. The 4,500 "It was a total mess," recalls Mike Lubrano, investment fund Dynamo Puma II has had a IFC's corporate governance specialist at the 39 percent gross annual return, and conditions 4,000 3,834 time. once "hazardous for outside investors" are no Realizing their problem, Bovespa and its gov- more, reports The Economist. 3,500 ernment regulators asked IFC and the World In recent years the Novo Mercado's stock index Bank to suggest reforms. This led to bold 3,000 has solidly outperformed that of its parent, actions--including creating a separate listing Bovespa, proving that good corporate gover- vehicle for local companies with higher gover- 2,500 nance is good for business and development. nance standards. IFC is applying the experience to other gover- 2,000 IGC Dubbed the Novo Mercado (New Market), it nance challenges--for example, our work with opened in late 2000 with strict terms of trans- Standard & Poor's and others to create India's 1,500 IBOVESPA parency, accountability, and fairness, and IFC's first index of companies that have high envi- official backing. When local companies proved ronmental, social, and governance standards. 1,000 slow at first to take part, IFC arranged meet- ings with Calpers, TIAA-CREF, and other in- 500 stitutional investors. They spoke frankly about IFC provides corporate governance 2001 (June) 2002 2003 2004 2005 2006 2007 2008 (July) what kept them from Latin America's largest advice in more than 90 countries. market--too little transparency, too much risk. Brazil's Special Corporate Governance Stock Index (IGC) for companies listed on its trading segment for well- governed firms, the Novo Mercado, has consistently beat the broader benchmark IBOVESPA index in recent years. 16 ACCESS TO FINANCE 17 Global GEMLOC Building Local Currency Bond Markets T he fallout from the instability in U.S. attract the capital needed to play the same role financial markets runs deep. Just ask they do in more mature economies. This poses Johan Schoeman, a National a major obstacle to private sector development. Treasury official in South Africa. GEMLOC responds with: He saw the resulting global credit crunch · Advice--The World Bank is assessing prompt a 130 percent increase in his country's countries' needs and designing new foreign borrowing costs--one of the sharpest programs to strengthen local markets. spikes in all emerging markets, affecting local borrowing as well. He wonders how it could · Benchmarks--IFC is guiding a new private have been avoided. sector-led local currency bond market index, GEMX. It launched in April 2008, Participating in the World Bank Group's offering investors transparent data on 20 Global Emerging Markets Local Currency countries, and will soon add more. Bond initiative (GEMLOC) gives him the best way to learn: from his peers in other countries. · Investment--A top fixed-income investment manager, PIMCO, is developing "We discuss how our borrowing costs are new strategies to promote investment in affected by global uncertainty and what local currency bonds. measures have been put in place to weather the global storm," Schoeman says. "We all face the Working on three closely related fronts, giving same issues but seldom have the opportunity to bond market officials new access to investors share experiences." and each other, GEMLOC takes a unique, market-based approach that is filling an Malaysia, Mexico, and a few other emerging essential gap in development. economies have strong local currency bond markets that offer long-term financing for infrastructure development, corporate growth, and other critical needs. But in most countries these markets are undeveloped and unable to GEMLOC: Bringing bond market officials from several countries together for new dialogue is part of a broader World Bank Group initiative. 18 ACCESS TO FINANCE 19 Madagascar Port Concessions An African Upgrade T he world's poorest countries rarely have To ensure that all the lessons and results from world-class ports. But they need them-- this transaction were captured and shared, IFC speeding up shipments of imports and asked independent consultants from Europe's exports brings many benefits throughout the busiest port, Rotterdam, to assess the project 18 economy. months after completion. They suggested other ways to approach similar transactions: for exam- Six years ago Madagascar knew it had to improve ple, making sure at the outset that performance its main port, Toamasima. To turn it around, the indicators are clearly understood by all parties, government decided to create a public-private as well as getting better at managing government partnership offering profit incentives to a proven expectations. container terminal operator, hiring IFC to help bring this about. Careful monitoring and evaluation of Toamasi- ma have taught IFC useful lessons that would Under a transparent competitive bidding process otherwise have gone unnoticed. These will help we supported, in 2005 International Container us guide other clients' container terminal conces- Terminal Services Inc. of the Philippines won sions more effectively in the years ahead, bring- a 20-year concession to manage Toamasima. It ing bottom-line benefits to local economies. has since spent nearly $55 million upgrading the port, bringing the same high-caliber man- agement and technology it uses in Manila and elsewhere. Initial results show marked improvement. Toamasima's handling capacity has risen from 60 IFC Advisory Services have attracted to 2,500 tons a day. Ships and trucks load and $3.9 billion in anticipated new private unload at the Indian Ocean facility much faster than before. The gains have increased economic infrastructure investment since 2002. efficiency and lowered trade costs, while spurring competition with ports across the region. IFC helped create a public-private partnership that improved the capacity and efficiency of Madagascar's most important port. 20 INFRASTRUCTURE 21 Tunisia Airports Flight Path to the Future W ith an investment-grade credit rat- resource-poor nation become one of the ing and solid per capita income, highest-ranked emerging markets in the Tunisia might seem easy ground for World Economic Forum's Global Competitive- privately financed infrastructure projects. Yet as ness Report. But its main tourism gateway, the recently as February 2008, one of its top priori- Monastir International Airport, dates from the ties in infrastructure--an approximately $900 1960s and has reached saturation, limiting the million airports project--was in serious doubt. industry's growth potential. Based on a 40-year concession, the project Needing a new approach, in 2007 the govern- could not be financed solely by commercial ment awarded a Turkish firm, TAV Airports, a banks. Its sponsors turned to IFC, and the deal concession to upgrade Monastir Airport, build was completed in less than three months. another at nearby Enfidha, and manage both. But commercial banks could not provide loans Tunisia has built a strong tourism industry with tenors long enough for a major project around its Mediterranean beaches, ancient with high upfront costs and extended payback historical sites, and other attractions. Tourism periods in Tunisia. When IFC stepped in, is a major job creator, helping this otherwise lending at substantially longer maturities than commercial banks could, and working with government counterparts to make the conces- sion agreement more bankable, the project's financing moved swiftly to closure. ABN Amro, Société Générale, and Standard Bank worked alongside IFC as lead arrangers and syndication partners. One of the largest private investments in Tunisia's history, the project will bring benefits to all, providing improved service for tourists, a profitable business opportunity for TAV, and an estimated $5 billion in tax revenues and Sahara Sunsets: Part of Tunisia's tourist appeal. Architect's drawing of Tunisia's new Enfidha airport, a boost to the tourism industry being built through an concession fees to the government. IFC-financed public-private partnership. 22 INFRASTRUCTURE 23 Global Technology Tools In the Fight against Poverty M ore than 3 billion people around the world's first Mobile Money Summit in Cairo in world lack bank accounts. May 2008, bringing together 500 participants from 67 countries. The reason is usually cost--a for- midable barrier that today's technologies are One of the world's largest mobile operators, starting to overcome. Vodafone, presented its Kenyan mobile pay- ment service, M-Pesa, which lets users deposit, A fast-emerging industry connects cell phones, withdraw, or transfer money from a special, cell computers, and smart cards, giving poor people phone-based account for a small fee. Launched new entry points into the financial world. in 2007, it has already more than 2.3 million When successful, these technologies can change subscribers. Similarly, IFC is helping build the lives of those who would never go to a WIZZIT, a South African company whose conventional bank, or must travel long hours cell phone-based payment system allows the to get money to a relative, often risking robbery poor to pay electricity bills by debit card and en route. But it is an entirely new market, one receive funds by handset even if they lack where business models are still being tested bank accounts. and regulatory structures must yet take shape. To help chart its course, IFC cosponsored the The industry's potential impact extends beyond banking. In India, IFC was a founding share- holder in smart card provider FINO, whose fingerprint recognition technology enables illiterate people to purchase small-scale health insurance. FINO also helps make cashless hos- pitalization and claims administration possible in rural areas. Most of its 1 million users were completely cut off from financial services in the past. IFC advisors are also helping the firm expand in remote areas and add new health, pension, and remittance applications. With mobile phones, IFC client WIZZIT can reach poor By taking illiterate women's fingerprints, then converting them into secure identification on smart cards, IFC South Africans who would never use a bank. client FINO helps India's poor obtain health insurance and other essential financial services. 24 INFORMATION AND COMMUNICATION TECHNOLOGIES 25 Mexico Student Loans Higher Education, Higher Incomes S ilvia Baños is a woman of modest means. form of financing, most who do enroll cannot When she looks at her teenage son, she afford to complete their studies. sees the future. But today, Silvia's son Guillermo is studying "The only inheritance that I can leave him is communications at one of the country's top his career," she says. "That's why I do all I can private universities, Universidad Tecnológica de for him to finish his professional studies." México S.A. (UNITEC). With 38,000 students in Mexico City, Guadalajara, and Monterrey, In her country, Mexico, those with university it offers respected degree programs in architec- degrees usually earn at least twice as much as ture, engineering, medicine, and other fields those without. But a weak link in the local that give middle-class and low-income youths a financial system means that few can afford pathway to solid careers--and better lives. higher education. Only 2 percent of potential university students in Mexico have access to Guillermo attends classes on loans he re- student loans today, as opposed to 71 percent ceived from Financiera Educativa de México in the United States. And without this critical (FINEM), a privately owned student loan institution that opened in 2004. It obtained its early financing from IFC, through a long- term local currency loan for the equivalent of $15 million. This has allowed FINEM to finance more than 1,400 students, giving them a series of fixed-rate loans that they can use to finance each school term. FINEM's commercial success is helping establish a tuition financing model that we can apply elsewhere--including in higher-risk environments such as the West Bank and Gaza, where a new joint program with the Bank of Palestine and others will finance about 8,000 students a year. With IFC-supported student loans, Mexico's Guillermo IFC's partner university in Mexico, UNITEC, prepares students for the workplace. Baños (second from left) can afford a university education. 26 EDUCATION 27 Awards ________________ Recognizing Achievement 28 29 28 AWARDS: RECOGNIZING ACHIEVEMENT 29 Client Leadership Sustainable Banking E E ach year IFC presents an award to recognize a highly successful ach year IFC and the Financial Times present the FT Sustainable corporate client that, in line with our vision and purpose, has made Banking Awards, the leading global honor for financial institutions a significant contribution to sustainable development. showing leadership and innovation in integrating social, environ- mental, and corporate governance considerations into their operations. This year's recipient, CPFL Energia, is Brazil's largest private power producer and distributor. Since it became an IFC client in 2003, CPFL The competition has grown in popularity since its launch in 2005, has brought electricity to a million new customers and created more than particularly with banks from emerging markets, including Africa. This 7,000 jobs while making exemplary efforts to reduce energy losses and year's winners were selected from a record 182 entries across 54 countries. mitigate climate change. In 2007, it spent $30 million on reforestation Two new categories--Banking at the Bottom of the Pyramid and and other environmental programs. The energy efficiency of CPFL's small Sustainable Investor of the Year--were introduced and open to non- hydroelectric plants is allowing it to sell a growing number of carbon banking financial institutions. credits. In the past, most banks approached sustainability as a way of avoiding CPFL is a key member of Brazil's Novo Mercado trading segment for exposure to controversy and reducing reputational risks. But today many companies with excellent corporate governance practices (see p. 16). For consider it a source of competitive advantage and opportunities. Renew- CPFL Energia's clean power brings Regional honoree Nedbank's the second year running, it was recently honored as one of Brazil's top five able energy and energy efficiency, microfinance, low-income housing Brazil a better future. exemplary approach to banking companies for corporate governance at the Sao Paulo Investor Relations finance, and women entrepreneurs are just some of the markets where bolsters South Africa's economy. Global Rankings awards ceremony. Judges cited the firm's transparency, new business models are yielding more clients and profits. accounting standards, and social responsibility. This year's judging panel named Brazil's Banco Real as Sustainable Bank Its achievements have been accompanied by consistent financial success, of the Year. It has pioneered sustainable banking in South America, with earnings rising more than 20 percent a year. IFC's financing helped putting social and environmental issues at the center of all its business CPFL restructure and prepare for an initial public offering in 2004. Its activities. Among the winners of other awards: success has helped attract investment to the power sector in Brazil, a Regional Leadership Prizes country that as recently as 2001 had needed to ration electricity. · Asia ­ YES Bank, India · Eastern Europe ­ Industrial Development Bank of Turkey (TSKB) · Latin America ­ Banco Real, Brazil · Middle East & Africa ­ Nedbank, South Africa Banking at the Bottom of the Pyramid · ASA, Bangladesh (microfinance) Sustainable Investor of the Year · E+Co., United States (clean energy investment) 30 AWARDS: RECOGNIZING ACHIEVEMENT 31 HOW TO CONTACT US IFC has offices in more than 80 countries around the world. CREDITS Please contact the nearest regional office for further information. Headquarters Southern Europe and Central Asia Middle East and North Africa Telling Our Story Washington, D.C.: Istanbul: Cairo: Focus, Delivery, Results IFC and the Issues of Today IFC Corporate Relations Buyukdere Cad. No: 185, Kanyon Ofis Blogu Nile City Towers, 2005 Corniche el Nil 2121 Pennsylvania Ave., N.W. Kat 10 North Tower Produced by IFC Corporate Relations Department Washington, D.C., 20433 USA Levent 34394 24th Floor, Boulac Telephone: (1-202) 473-3800 Istanbul, Turkey Cairo, Egypt Telephone: (90-212) 385-3000 Telephone: (20-2) 461-9161/65 Photography: Ahikam Seri, Panos Pictures (Cover) Western Europe Lonmin Plc (page 2) Paris: East Asia and the Pacific Sub-Saharan Africa Kim Karpeles, PhotoShelter (page 3) 66, Ave. d'Iéna Hong Kong: Johannesburg: 75116 Paris, France 14/F, One Pacific Place 14 Fricker Road, Illovo, 2196 Giacomo Pirozzi, Panos Pictures (page 5) Telephone: (33-1) 4069-3060 88 Queensway Road Johannesburg, South Africa Reuters (page 7) Hong Kong Telephone: (27-11) 731-3000 Landov (page 8) London: Telephone: (85-2) 2509-8100 12th Floor, Millbank Tower Nairobi: European Climate Exchange (page 9) 21-24 Millbank Beijing: Commercial Bank of Africa Building Aga Khan Agency for Microfinance (pages 12 and 13) London SW1P 4QP, United Kingdom 15th Floor, China World Tower 2 Upper Hill Mara/Ragati Roads, 4th Floor World Vision International (page 15) Telephone: (44-207) 592-8400 China World Trade Center P.O. Box 30577-00100 No. 1 Jian Guo Men Wai Avenue Nairobi, Kenya Juha Sompinmaki, PhotoShelter (page 17) Brussels: (World Bank Office) Beijing, China 100004 Telephone: (254) 020-275-9000 Kris Tripplaar (page 19) 10 Rue Montoyer Telephone: (86-10) 5860-3000 International Container Terminal Services, Inc. (page 21) B-1000 Brussels, Belgium Latin America and the Caribbean Telephone: (32-2) 522-0034 Tokyo: São Paulo: Ian Dagnall, PhotoShelter (page 22) Fukoku Seimei Building 10F Edifico Torre Sul, Rua James Joule TAV Airports (page 23) Frankfurt: 2-2-2, Uchisaiwaicho, Chiyoda-ku 100 65-190 andar Bockenheimer Landstrasse 109 Tokyo, Japan Cidade Mongoes WIZZIT (page 24) 60325 Frankfurt, Germany Telephone: (81-3) 3597-6657 São Paulo, SP, Brazil FINEM (pages 26 and 27) Telephone: (49-69) 743-48230 Telephone: (55-11) 04576-080 South Asia Central and Eastern Europe New Delhi: Mexico City: Design: Corporate Visions, Inc. Moscow: 50-M, Shanti Path, Gate No. 3 Montes Urales, Oficina 503 36, Bldg. 1, Bolshaya Molchanovka Street Niti Marg, Chanakyapuri 110 021 Colonia Lomas de Chapultepec Printing: Mosaic 3rd Floor New Delhi, India Delegación Miguel Hidalgo Moscow 121069, Russian Federation Telephone: (91-11) 4111-1000 Mexico, D.F., 1100 Mexico Telephone: (7-495) 411-7555 Telephone: (52-55) 4111-10003098-0130 32 Our shared vision is · That people should have the opportunity to escape poverty and improve their lives. Our core values are · Excellence · Commitment · Integrity · Teamwork Our purpose is to · Promote open and competitive markets in developing countries · Support companies and other private sector partners · Generate productive jobs and deliver basic services · Create opportunity for people to escape poverty and improve their lives ifc.org 2008