Annual Report ABOU IFC Contents Letter from the IFC Board  Letter from David Malpass, World Bank Group President  Letter from Philippe Le Houérou, IFC CEO  Our Management Team  INVESTING FOR IMPACT IFC YEAR IN REVIEW  IFC Operational Highlights  IFC Financial Highlights  World Bank Group Summary Results  STORIES OF IMPACT Boosting Growth  Improving Lives  Scaling Up  Promoting Sustainability  ABOUT US  Our Expertise  Measuring Up  Our People & Practices  Additional information is available on IFC’s Annual Report website: www.ifc.org/AnnualReport. UT IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. Established in 1956, IFC is owned by 185 member countries, a group that collectively determines our policies. We leverage our products and services — as well as those of other institutions across the World Bank Group — to create markets that address the biggest challenges of our time that developing countries face. We apply our financial resources, technical expertise, global experience, and innovative thinking to provide sustainable market-based solutions that bring widespread benefits. IFC is also a leading mobilizer of third-party resources for projects. Our willingness to engage in difficult environments and our leadership in crowding in private finance enable us to have a development impact well beyond our direct resources. Cover: In today’s technology-driven global economy, IFC ignites the energy of the private sector to find solutions to some of the greatest challenges in development — investing for impact. LETTER FROM THE IFC BOARD IFC BOARD Fiscal 2019 saw a change in leadership and notable We endorsed the Bank Group’s Action Plan on achievements for the World Bank Group. The Board Climate Change Adaptation and Resilience. We also unanimously selected David Malpass as President welcomed progress on gender and development, for a five-year term, which began on April 9, 2019. and the Bank Group’s approach to closing the We actively engaged with management, and with gaps between men and women and between the President upon his joining, in strategic areas, boys and girls. We recognized advances in diver- including implementing the Forward Look vision for sity and inclusion among staff and management the Bank Group and capital package, strengthening and urged continued work internally and with the accountability framework of the Compliance client countries. Advisor Ombudsman, making operational adjust- ments under the IDA18 program, and scaling up We discussed the Bank Group’s leadership role on transformational projects. issues such as debt sustainability, disruptive and transformative technology, human capital develop- We discussed policy measures and internal ment, the future of work, regional integration and reforms to help carry out key deliverables in the trade promotion, and gender equality. We stressed Forward Look vision for the Bank Group and the the importance of collaboration in mobilizing capital package commitments, such as private finance for development across the Bank Group. sector mobilization and organizational and work- We also encouraged advancing partnerships force realignments. with the private sector, financial institutions, governments, and others on reforms to improve productivity and invest in human capital and infrastructure, which are key to delivering on our twin goals and the Sustainable Development Goals by 2030. We continued engaging with management on a number of sectoral priorities related to manu- facturing, fintech, education, and capital markets. We also discussed the approach to equity investing, IFC ANNUAL REPORT the IDA18 Private Sector Window, and the first IFC report on operations. We initiated discussions STANDING SEATED on impact investing to help contribute to measur- (Left to Right) (Left to Right) able positive social and environmental impact, Erik Bethel Juergen Karl Zattler alongside a financial return. United States (Alternate) Germany Masanori Yoshida Shahid Ashraf Tarar We noted IFC’s ambitious approach to develop Japan Pakistan new and stronger markets for private sector Werner Gruber Aparna Subramani solutions, particularly in IDA countries and Switzerland India fragile and conflict-affected situations. Under Adrián Fernández Hesham Alogeel the implementation of the IFC 3.0 strategy, Uruguay Saudi Arabia we welcomed the renewed focus on upstream Nathalie Francken Anne Kabagambe engagement and deeper collaboration within the Belgium (Alternate) Uganda Bank Group and elsewhere, with the ultimate Kunil Hwang Merza Hussain Hasan intention to deliver strong developmental results. Korea Kuwait (Dean) An important contribution to the focus on devel- Jean-Claude Kulaya Tantitemit opment impact is IFC’s use of a project rating Tchatchouang Thailand system, the Anticipated Impact Measurement and Cameroon Patrizio Pagano Monitoring (AIMM) system, which has enhanced Richard Hugh Italy Montgomery Christine Hogan the Board’s capacity to assess investment United Kingdom Canada projects for their potential to generate positive Jorge Alejandro Hervé de Villeroché development results. Chávez Presa France (Co-Dean) Mexico Fabio Kanczuk Koen Davidse Brazil The Netherlands Susan Ulbaek Denmark Guenther Schoenleitner Austria Yingming Yang China Roman Marshavin Russian Federation Armando Manuel Angola (Alternate) IFC ANNUAL REPORT WORLD BANK GROUP DAVID LETTER FROM DAVID MALPASS World Bank Group President MALPASS Our development mission is clear: to advance prospects in many developing countries and reces- shared prosperity and end extreme poverty. The sion risk in Europe, it has become even more urgent challenges remain urgent. For many countries, for the Bank Group — IBRD, IDA, IFC, and MIGA — to poverty reduction has slowed or even reversed, step up our effectiveness and impact. while investment and growth will not be enough to raise living standards. Poorer countries face Working together, these institutions have the tools many challenges in achieving basic development to help address the challenges emerging around gains, including severe deficits in clean water, the world. The IBRD-IFC capital package, approved electricity, health, education, jobs and private by the Board of Governors in October 2018, will sector competitiveness; barriers to the full provide additional lending capacity along with insti- inclusion of women in economies and societies, tutional and financial reforms designed to ensure alongside policies that too often favor elites IBRD’s long-term financial sustainability. IBRD has rather than creating work opportunities and further strengthened its financial management by support for those most in need; the urgency of introducing a Financial Sustainability Framework, environmental and climate challenges; and the including a sustainable annual lending limit. A surge in debt that is not bringing true benefits. strong IDA19 replenishment in December 2019 will extend our ability to support good development Economic growth has been the key engine of outcomes and better lives for the poorest people poverty reduction around the world. However, around the world. in many countries, especially resource-based economies, the benefits of growth weren’t We are sharpening our focus on selective and allowed to spread — growth helped increase impactful country programs to improve growth average incomes, yet it did not increase median and development outcomes. IBRD commitments incomes or lift the poorest 40 percent of the exceeded $23 billion this year. Commitments by IDA, population. With global growth slowing, median which provides grants and low-interest loans to income growth is sluggish in much of the world the world’s 75 poorest countries, were $22 billion, and declining in many poorer countries. In of which nearly $8 billion were grants. Together, middle-income countries slower growth erodes these Bank programs helped more countries come the living standards of the middle class, with closer to achieving their development priorities. many joining the ranks of the poor. This adds to the challenges facing the 2030 Sustainable Demand for human capital investments continued Development Goals, and the key poverty reduc- to grow over the fiscal year — reflecting the signif- tion goal is at risk of not being met. icant role this financing can play in promoting long-term inclusive growth and alleviating poverty. World Bank Group commitments to help coun- Over 60 percent of Bank operations helped address tries achieve better development outcomes gender gaps and encouraged full incorporation were nearly $60 billion in the fiscal year that of women in economies and societies. Several ended on June 30, 2019. With weak investment once-closed societies are allowing welcome IFC ANNUAL REPORT improvements in the legal, economic, and social in developing countries. As the largest global conditions for girls and women. Much more development institution focused on the private progress is absolutely necessary. sector, IFC creates markets and opportunities for sustainable private investment where they are The need for the rule of law and greater trans- needed most. IFC is shifting its focus to work- parency is an increasingly accepted development ing upstream to create a pipeline of bankable priority. In development finance, transparency in projects that will increase private investment in sovereign debt and debt-like contracts is vital to the world’s poorest countries. MIGA is the larg- improve the quality and profitable allocation of est multilateral political risk insurance provider, capital and new investment. with a mandate of creating development impact by helping attract foreign direct investment For fiscal 2019, 31 percent of IBRD/IDA com- to developing countries. Nearly 30 percent of mitments contained climate co-benefits, MIGA’s guarantee program over the fiscal year exceeding the Bank’s target of 28 percent by supported projects in IDA countries and fragile 2020. In December 2018, the Bank announced a settings, and almost two-thirds contributed to $200 billion five-year mobilization target to help climate change adaptation or mitigation. countries address climate challenges and put adaptation finance on a par with mitigation. Across IBRD/IDA, IFC, and MIGA, we are working to increase our commitments to lower-income Our goal is for countries to achieve economic countries as they improve their development success and broad improvements in living condi- outlook and to shift resources toward countries tions. As they advance, our relationship with them suffering from fragility, conflict, and violence. should evolve so that a growing share of our IBRD We will be improving our effectiveness and lending is available to countries in lower-income budget discipline throughout the year to make thresholds. For example, China achieved major more resources available to meet client needs increases in GDP, median income, and prosperity, and challenges. so our interactions are becoming more technical as lending declines. China’s policies are changing I am deeply optimistic that courageous, enlight- rapidly to improve global public goods, address ened leadership and strong policies can work environmental and climate change problems, to improve living conditions for those most in and reduce plastic and micro-plastic in its rivers. need. I saw first-hand the scope and urgency of China has evolved from a large-scale borrower the development challenges during my trip to to an important voice in the development Sub-Saharan Africa in April. I am hopeful there dialogue and a key contributor to IDA. is a path forward, having seen Prime Minister Abiy and his team launching ambitious reforms We are working in fragile areas, such as the in Ethiopia, the potential of the world’s largest Sahel and the Horn of Africa, to help countries solar energy plant in Egypt, the resilience of the build stronger foundations so that young people people of Mozambique after the devastation are more able to stay rather than seeking to of twin cyclones, and the inspiration for the migrate. IDA commitments to countries affected people of Madagascar after its first peaceful by fragility, conflict, and violence reached leadership transition. $8 billion in fiscal 2019. The people in developing countries are facing Many countries will need a much bolder immense challenges. The World Bank Group and agenda for boosting private sector growth to all our personnel and resources are committed generate more and better jobs. This entails to working with our partners around the world major changes in the business climate so that toward policies and solutions that improve the private sector can compete with the state on their lives. a level playing field — critical for generating jobs, profit, and innovation. The World Bank Group is increasing financ- ing for economic and institutional reforms to David Malpass enhance private investment and job creation World Bank Group President IFC ANNUAL REPORT LETTER FROM P L H IFC Chief Executive Officer Fiscal 2019 marked the second full year of implementing IFC’s ambitious new strategy to create markets and unleash private sector investments and solutions, particularly in regions with the highest rates of poverty and fragility. Called “IFC 3.0,” the strategy has required us to fundamentally reshape our business model and the way we work. It has demanded that we be more proactive, entrepreneurial in spotting market opportunities, and innovative in designing profitable projects that maximize development impact. IFC ANNUAL REPORT We made significant progress over the past fiscal year world’s poorest countries — those eligible to borrow from in rolling out new tools and approaches to support the World Bank’s International Development Association the full implementation of IFC 3.0. Country strategies (IDA) — as well as fragile and conflict-affected situations were introduced to improve our country-level engage- (FCS). In addition, IFC extended $4.5 billion in short-term ment. Upstream units were launched to sharpen our trade finance, of which $2.5 billion was in IDA and FCS focus on creating new projects. An Anticipated Impact countries. Measurement and Monitoring (AIMM) system was fully rolled out for all investment projects to enhance devel- We continued to prioritize advisory services for chal- opment impact assessment. And a new Accountability lenging markets as well. In FY19, we delivered nearly and Decision-Making Framework was put in place to 60 percent of our advisory program to clients in IDA clarify decision-making roles and accountabilities and countries, while 21 percent went to FCS. Sub-Saharan to increase operational efficiency. Africa accounted for the largest share of our advisory services in FY19, with about one-third of the total. We also continued to integrate the previously rolled out IDA18 Private Sector Window, Country Private Sector Diagnostics, and our “Cascade” approach to pursuing IMPROVING COUNTRY private sector solutions where sustainable while LEVEL ENGAGEMENT preserving scarce public resources for where they are Our ability to deliver IFC 3.0 at scale will depend in large needed the most. part on cultivating proactive and upstream country-level engagement. Our new FY19 country strategies uncover Complementing these actions were organizational areas where projects and markets can be created, and changes that will help us better respond to the needs they will build stronger project pipelines and increasingly of our clients and shareholders. A workforce planning guide the deployment of IFC resources. Over the past exercise was undertaken to ensure that we have the fiscal year, 25 strategies were developed and 26 more are right people in the right roles throughout IFC. under development for FY20. Another key step to support country-level engagement DELIVERING RESULTS IN was our creation of upstream units. Introduced in FY19, VOLATILE MARKETS these units will become operational in FY20. Working off Macroeconomic volatility in emerging markets made priorities outlined in our country strategies, the upstream it a difficult year for investors. Currencies depreciated units will play the role of incubator and integrator in between 10 and 30 percent in many large countries imagining and designing new projects, and they will help where IFC operates. Growth slowed in many more, and to coordinate upstream efforts across the entire World equity values suffered. Bank Group. Despite deep internal reforms and volatile market condi- tions, we delivered $19.1 billion of long-term financing UNEARTHING GREEN SHOOTS The Nachtigal Hydropower project in Cameroon demon- through 269 projects in FY19. Over a third of these were strates what can be achieved under the IFC 3.0 approach directed toward private sector development in the to market creation when we work with governments, IFC ANNUAL REPORT private sector partners, other development finance institutions, and World Bank Group colleagues. The project will increase Cameroon’s power-generation capacity by nearly one-third, bring clean affordable power to millions while helping to sustain economic growth, and save the country $100 million in genera- tion costs annually. Similarly, in Rwanda where there are about 3,000 mortgages in the banking system for more than 3 million households, IFC and the World Bank are Launching collaborating to build the foundations of a mortgage market by supporting capital market development and expanding access to housing finance. The Rwanda a Movement Affordable Housing project will facilitate the creation of a mortgage refinancing company that incentivizes lenders to scale up their housing financing through the provision of long-term funding for affordable housing. IFC also continued to replicate the success of the Impact Principles World Bank Group’s Scaling Solar program in FY19, The Operating Principles for Impact moving beyond four African countries to Uzbekistan. Management were launched at our Scaling Solar is a “one-stop shop” program for govern- Spring Meetings in April 2019. Sixty ments to rapidly mobilize private sector funded, grid-connected solar projects at competitive tariffs. institutions committed to follow the Uzbekistan, which is heavily dependent on natural principles. The founding institutions gas for its electricity generation, is looking to develop endorsed a groundbreaking new set up to 5 gigawatts of solar power by 2030 and is using of standards that bring much-needed the Scaling Solar approach to tender at least an initial discipline, transparency, and credibility 100 megawatts. to impact investing. More have adopted the principles since, and the list is Throughout FY19, IFC and our clients received expected to grow in the coming year. more than 40 prestigious awards. To mention a few, IFC was named the Development Finance Institution of the Year for the Middle East and North Africa by IJGlobal. Our Nachtigal Hydropower project was named the Multilateral Development Deal of the Year by Project Finance International and the African Power Deal of the Year by IJGlobal. And we received the Excellence in Latin American Local Capital Market Development award from LatinFinance. Initial Adopters ASSESSING OUR IMPACT IFC The AIMM system, which underscores IFC’s serious- Actis ness in achieving development impact, became fully Acumen Capital Partners operational for all new investment projects last AlphaMundi Group fiscal year, with more than 750 projects having been Amundi assessed and scored. Starting in July 2019, the AIMM AXA Investment Managers system is being rolled out on a pilot basis for advisory Baiterek National Managing Holding services. Belgian Investment Company for Developing Countries (BIO) Blue like an Orange Sustainable Capital BlueOrchard Finance BNP Paribas Asset Management Calvert Impact Capital Capria Ventures IFC ANNUAL REPORT Cardano Development European Development Finance Islamic Corporation for the Partners Group (ILX Fund and TCX) Institutions (EDFI) Development of the Private Phatisa CDC Group European Investment Bank (EIB) Sector (ICD, a member of IsDB Group) Proparco CDP — Cassa Depositi e Prestiti FinDev Canada Prudential Financial Kohlberg Kravis Roberts & Co. COFIDES Finnfund responsAbility LeapFrog Investments Community Investment Flat World Partners STOA Infra & Energy Management (CIM) LGT Impact FMO — the Netherlands Swedfund Cordiant Capital Development Finance Company LGT Venture Philanthropy MicroVest Capital Management Swiss Investment Fund for Credit Suisse IDB Invest, a member of the Emerging Markets (SIFEM) DEG — Deutsche Investitions- Inter-American Development Multilateral Investment Bank Group Guarantee Agency (MIGA) The Rise Fund und Entwicklungsgesellschaft mbH IFC Asset Management Norfund The Rock Creek Group Development Bank of Latin Company (AMC) Nuveen UBS America (CAF) IFU — Investment Fund for Obviam Water.org European Bank for Developing Countries WaterEquity Oesterreichische Reconstruction and Incofin Investment Entwicklungsbank AG (OeEB) Zurich Insurance Group Development (EBRD) Management Overseas Private Investment Investisseurs & Partenaires — I&P Corporation (OPIC) IFC ANNUAL REPORT IFC is committed to creating markets and opportunities under our IFC 3.0 strategy, especially for countries that have least bene ted from private-sector led investment and solutions. SETTING STANDARDS project cycle and to ensure independence from opera- IFC believes in leading from the front. We have been tions, we announced the creation of a new E&S Policy a leader in environmental and social standard setting for and Risk Department from July 2019 to serve as the two decades, promoting and advancing such initiatives E&S “regulator” with a direct reporting line to the Chief as the Equator Principles and Green Bond Principles. Executive Officer. Building on this history, IFC launched with partners the Operating Principles for Impact Management at We also introduced in FY19 our first Quarterly Operations the 2019 Spring Meetings of the World Bank Group Report to the Board of Directors. This report improves and International Monetary Fund. transparency by providing IFC’s year-to-date operational performance, including program, portfolio, operational These Principles seek to set the market standard for risk, and pipeline overview. In particular, for the first time credible impact investing. As of the end of June 2019, in IFC history, we delivered a multi-year pipeline presen- they have been signed by 63 institutions, and we are tation to the Board. in discussions with more than 40 others to sign the Principles. In addition, IFC published the report Creating LOOKING FORWARD Impact: The Promise of Impact Investing, which provides IFC is committed to creating markets and opportunities the analytical underpinning for the Principles. under our IFC 3.0 strategy, especially for countries that have least benefited from private-sector led investment BEING ACCOUNTABLE and solutions. To effectively deliver IFC 3.0 at scale and to meet our client and shareholder expectations, we will AND TRANSPARENT continue to refine our tools and approaches to support Accountability could not be more important to IFC. implementation of our strategy while amplifying efforts We are accountable to the people benefiting from and to invest for impact. In doing so, we will be more proac- affected by the projects we support, as well as to our tive and innovative, accelerate upstream initiatives, and creditors and borrowers, shareholders, and development operationalize the “Cascade” approach to leverage the partners. private sector to solve development challenges. To support our shift to more challenging markets, we decided to move our Environmental, Social, and Governance (ESG) Advice and Solutions Department to our Operations vice presidency effective July 2019. This will increase the ownership of ESG issues by investment and advisory project teams and strengthen our focus Philippe Le Houérou on ESG impact at the project and sector levels. At the IFC Chief Executive Officer same time, to improve Environmental and Social (E&S) risk management and accountability throughout the IFC ANNUAL REPORT Our Management Team Philippe Le Houérou Chief Executive Officer Our leadership team ensures that IFC’s resources are deployed effectively, with a focus on maximizing development impact and meeting the needs of our clients. IFC’s Management Team benefits from years of development experience, a diversity of knowledge, and distinct cultural perspectives. The team shapes our strategies and policies, positioning IFC to create opportunities where they are needed most. Stephanie Von Friedeburg Georgina Baker Elena Bourganskaia Marcos Brujis Chief Operating Officer Vice President, Latin America and Chief of Staff CEO, IFC Asset Management the Caribbean, and Europe and Company Central Asia Karin Finkelston John Gandolfo Mohamed Gouled Hans Peter Lankes Vice President, Partnerships, Vice President and Treasurer Vice President, Risk and Finance Vice President, Economics and Communication, and Outreach Private Sector Development Monish Mahurkar Sérgio Pimenta Nena Stoiljkovic Ethiopis Tafara Vice President, Corporate Strategy Vice President, Middle East Vice President, Asia and Pacific Vice President and General and Resources and Africa Counsel, Legal, Compliance Risk & Sustainability IFC ANNUAL REPORT INVESTING FOR IMPACT FRAMING THE AGENDA IFC’s Track Record of In uence Inspired the Equator Principles, environmental and social standards widely used in commercial Coined the phrase project finance. “emerging markets” and created a Launched the World Started the Sustainable database that became Bank Group’s annual Banking Network, a the foundation for Doing Business report, community of emerging- the world’s first comparing countries’ market financial sector emerging markets business regulatory regulators committed to equity indexes. environments. sustainability. + + + IFC ANNUAL REPORT IFC is more than an investor and adviser. We shape the thinking on private sector development. We bring key players together around shared goals, working in tandem to mobilize private capital to create jobs, reduce poverty, and improve lives. This collaborative approach enables our impact to reach far beyond the amounts we provide from our own resources. Success comes from de-risking markets, attracting more investment for market-based solutions that create a more equitable and sustainable world. We are looking to the future, building on more than six decades of experience as the world’s largest global development finance institution focused on the private sector. As we begin delivering on the goals of our record 2018 $5.5 billion capital increase, we draw on our strengths as a World Bank Group institution: We are always thinking about new ways to bring the private sector’s innovative, market-driven approach into the areas where it is needed most. Supported the creation of the Green Bond Principles. Played a leading role in establishing principles Launched the Excellence for the ways in which in Design for Greater multilateral development Led the impact investing Efficiencies (EDGE) banks and development industry’s creation of the green building standards finance institutions use Operating Principles for and certification system. blended finance. Impact Management. + + + IFC ANNUAL REPORT INVESTING FOR IMPACT Country Strategies Completed this Fiscal Year Angola Argentina  Armenia Bhutan China  Côte d’Ivoire Dominican Republic  El Salvador Ghana Indonesia Jamaica  Underway Mexico Mongolia Morocco Myanmar  Nigeria North Macedonia Papua New Guinea  Albania  Paraguay Philippines Senegal Serbia  Arab Republic of Egypt  Sierra Leone South Africa  Brazil Cambodia Central African Republic  Timor-Leste Colombia Democratic Republic of Congo  Ethiopia Fiji Haiti Honduras  Kazakhstan Madagascar Maldives Pakistan  Republic of Congo Rwanda Sri Lanka  Turkey Ukraine Uzbekistan  Vietnam and others IFC ANNUAL REPORT SETTING NEW STRATEGIES IFC brings private sector solutions to some of the world’s toughest development challenges, freeing up budget-constrained governments to make the most of their scarce public resources. In each country where we work, we identify the most promising opportunities for engagement, after assessing the socioeconomic context, the state of the local business community, and key trends in global industries and markets. This analysis is prominent in the new country strategies we began producing in July 2018, building on joint IFC/World Bank Country Private Sector Diagnostics that outline key reforms needed to spur business growth and create jobs. These country strategies drive us into earlier-stage, more proactive work. Their insights allow IFC’s operations to be integrated more deeply into the World Bank Group’s multiyear Country Partnership Frameworks — increasing our impact. IFC ANNUAL REPORT INVESTING FOR IMPACT IFC is a global partner in private sector development — sharing knowledge, building synergies, and helping to take the most promising ideas to scale. This year we launched new partnerships to enable deeper collaboration with other development finance institutions. Through these initiatives, we will work more closely with France’s Proparco and the United Kingdom’s CDC Group to create investment opportunities for the private sector in a few pilot countries. We are also working with our peer group institutions to track the amount of private investment mobilized for low- and middle-income countries each year and to establish principles for the ways in which blended finance should best be used to build the private sector in challenging markets. FORGING NEW PARTNERSHIPS IFC ANNUAL REPORT Thought Leadership IFC’s report Moving Toward Gender Balance in Private Equity and Venture Capital (see page 75), released this year, explores the link between financial returns and gender diversity in emerging market private equity and venture capital funds. The findings and the principles have been shared with investors, launching important conversations about the role of women as alloca- tors and recipients of capital. IFC ANNUAL REPORT INVESTING FOR IMPACT IFC’s Targeted Tools + EDGE green building certification standards + IFC InfraVentures + Joint Capital Markets + Managed Co-Lending Program (J-CAP) Portfolio Program + Global Agriculture + Scaling Solar and Food Security Program + SME Ventures + IDA Private Sector Window IFC ANNUAL REPORT UNLOCKING OPPORTUNITIES IFC focuses on promoting reforms and creating markets that help developing countries build long-term foundations for growth and prosperity. These proactive steps steer private capital and expertise in new directions — where they can have significant impact in improving people’s lives. We use a variety of innovative tools to act on these ideas, especially in the poorest countries. In Cameroon, where nearly 40 percent of people lack access to electricity, power supply has increased by almost one-third. This leap was made possible by the new €1.2 billion Nachtigal Hydropower Plant (see pages 54–55) jointly developed by IFC and Électricité de France. The financing package for Nachtigal uses a broad range of IFC instruments to attract private capital, as well as guarantees from the World Bank and the Multilateral Investment Guarantee Agency (MIGA). Set to open in 2023, the 420-megawatt plant on the Sanaga River comes as the result of critical sector reforms the government enacted with IFC and World Bank support, creating a more conducive environment for developing similar high-impact public-private partnerships. IFC ANNUAL REPORT INVESTING FOR IMPACT TRACKING THE IMPACT IFC ANNUAL REPORT The Anticipated Impact Measurement and Monitoring (AIMM) system launched in 2017 estimates and measures the development impact of all new IFC investments. This analytical tool gauges the effectiveness of our projects from the outset. It focuses on the key changes we expect to provoke — especially in creating markets. The system is evidence-based, estimating the development impact we foresee in ways that are explicitly tied to monitoring indicators. Used in the Nachtigal Hydropower Plant in Cameroon and many other projects this year, AIMM has strengthened the way we measure our impact through our involvement in a project. Measuring and Monitoring The AIMM system has been Starting in fiscal 2020, we will mainstreamed in IFC operations be connecting our early estimates over the past two years, focusing of projects’ impact ratings with initially on measuring the expected assessments we track in supervision. development outcomes of new The result: a better “end-to-end” projects. It is now also strengthening approach to results measurement the way we monitor performance. at IFC. IFC ANNUAL REPORT GLOBAL AWARDS IFC and our clients received more than 40 prestigious awards this year, highlighting our achievements in a broad range of areas. DEVELOPMENT MULTILATERAL GREEN BOND FINANCE DEAL OF THE YEAR DEVELOPMENT INSTITUTION For the Nachtigal BANK OF THE YEAR OF THE YEAR Hydropower Plant Honoring IFC’s global transaction in Cameroon leadership, best practice, and In the Middle East and North Africa PROJECT FINANCE innovation in green finance INTERNATIONAL CLIMATE BONDS INITIATIVE IJGLOBAL Green Bonds Pioneer Awards INNOVATION IMPACT REPORT OF EXCELLENCE IN IN ENABLING THE YEAR LATIN AMERICAN BUSINESS GROWTH For IFC’s Social Bond Impact LOCAL CAPITAL Recognizing IFC’s Cities Report: Financial Year 2018 MARKET Initiative for helping emerging- ENVIRONMENTAL FINANCE DEVELOPMENT market cities become more In appreciation of IFC’s role inclusive and address key “at the forefront of efforts challenges to develop capital markets FINANCIAL TIMES in Latin America and the Innovative Lawyers Award Caribbean” LATINFINANCE IFC ANNUAL REPORT FY AWARDS GLOBAL AWARDS Green Finance Global Sponsor Power Performer Grand Award for Best Collaboration of the Year of the Year For IFC’s social bond Annual Report (USA) GLOBAL To the Amundi Planet To Enel Green Power, the issuance For IFC’s Annual Report Emerging Green One fund IFC-financed Ngonye solar MTN-i Uridashi Awards, ARC Awards Environmental Finance plant in Zambia and other Japan Initiative of the Year renewable energy projects Best Annual Report —  and Green Bond Fund 100 Most Influential worldwide Deal of the Year —  Banking, Financial of the Year People in Gender Policy Emerging Market Services, Insurance, To the Amundi Planet Project Finance International Recognition for Henriette and Frontier Foreign and Real Estate Emerging Green One fund, Kolb, head of the gender Best Supranational Exchange Risk For IFC’s Annual Report a partnership of IFC and secretariat at IFC Dollar Deal of the Year For IFC’s Uzbek soum- Amundi Asset Management International Stevie Apolitical Network For IFC’s $2 billion 2018 denominated bond issue Awards Environmental Finance global bond issue MTN-i Uridashi Awards, IAIA Individual Award Global Capital Japan American Graphic Recognition for Lori Design Awards Anna Conzo, IFC senior For IFC’s Annual Report environmental specialist Graphic Design USA International Association for Impact Assessment REGIONAL AWARDS European Airport Medical Excellence African Refinancing Exceptional Investor EAST ASIA AND Deal of the Year in Diabetes Deal of the Year To private equity fund THE PACIFIC For Belgrade Nikola Tesla For Clínicas del Azúcar, For the Bujagali manager XSML Airport, Serbia Mexico hydropower transaction, Private Equity Africa IJGlobal Premio Nacional de Salud, Uganda Multilateral Agency Development Impact of the Year Mexico IJGlobal European Onshore Deal of the Year To IFC Deal of the Year Best Wind Farm in Africa For LeapFrog’s investment The Asset Triple A Asia For the Cibuk 1 wind farm For the Kipeto wind power in Goodlife Pharmacy, Infrastructure Awards MIDDLE EAST AND in Serbia project, Kenya Kenya NORTH AFRICA Best Multilateral Bond IJGlobal EMEA Finance Private Equity Africa To IFC’s Philippine Best Sustainability Best Structured Specialist Deal —  peso-denominated Program Finance Deal in Africa Consumer green bond supporting LATIN AMERICA AND For IFC’s renewable energy For the Tema Port To Helios Investment geothermal power THE CARIBBEAN work with Gaia Energy, expansion, Ghana Partners’ investment in The Asset Triple A Asia Morocco GBFoods EMEA Finance Best Deal — Southeast Latin America Power EMEA Finance Private Equity Africa Asia Awards Deal of the Year Best Chemicals Deal For the CELSE/Port of Project Finance and in Africa Thepthong Award Sergipe project, Brazil Finance Achievement To the Indorama Eleme For IFC’s green investments Project Finance International For IFC’s Egyptian Fertilizer & Chemicals in Thailand Fertilizers Company SOUTH ASIA expansion, Nigeria Broadcaster’s Association Best Bond and refinancing transaction EMEA Finance of Thailand Best Infrastructure EMEA Finance Best Partnership for Financing in Brazil African Petrochemicals Sustainable Sugarcane Deal of the Year —  For CELSE/Port of Sergipe Project Finance — Wind Deal of the Year Development Early Stage Technology LatinFinance For the Daehan Wind To Indorama Eleme To DCM Shriram, India To Jungle Ventures’ Power Plant in Jordan Fertilizer & Chemicals Bonsucro investment in Deskera, Project Finance sponsored by Korea Singapore Project Finance International Deal of the Year/Brazil Southern Power Co. Green Company AVCJ (Asian Venture and Latin America EMEA Finance African Commodities of the Year Capital Journal) For CELSE/Port of Sergipe Finance Deal of the Year To Commercial Bank Bonds & Loans Portfolio Company of For the Addax Energy trade of Ceylon the Year — Social Impact finance transaction in Asian Corporate Excellence EUROPE AND Project Finance Deal To AfricInvest’s investment Mauritania and Sustainability Awards CENTRAL ASIA of the Year/Americas in the Esprit private TFX Magazine For CELSE/Port of Sergipe engineering school, Tunisia Sustainability and International Financial Law Private Equity Africa Woman Investor Operational Excellence Best Power Deal Challenge For the Osmangazi Review To Runa Alam, co-founding partner and To Aavishkaar, India Elektrik expansion and Blue Planet Prize SUB SAHARAN CEO of Development EMPEA modernization in Turkey, International Partners International sponsored by Zorlu Enerji AFRICA For the Reventazón EMEA Finance Private Equity Africa hydroelectric project, Costa Rica African Power Best Infrastructure Deal Deal of the Year For Belgrade Nikola Tesla International For the Nachtigal Airport, Serbia Hydroelectricity Hydropower Plant, Association EMEA Finance Cameroon IJGlobal IFC ANNUAL REPORT IFC Year in Review In FY19, IFC invested $19.1 billion, including $10.2 billion mobilized from other investors. Our comprehensive approach helped businesses innovate, build internationally competitive industrial sectors, and create better jobs. LATIN AMERICA EAST ASIA AND EUROPE AND AND THE THE PACIFIC: CENTRAL ASIA: CARIBBEAN: . B . B . B BILLION BILLION BILLION in long-term in long-term in long-term investment investment investment commitments commitments commitments . M . M M MILLION MILLION MILLION micro, small, and micro, small, and micro, small, and medium loans medium loans medium loans provided provided provided . B . B .M BILLION BILLION MILLION in tax payments to in goods and services in new financing governments purchased from for firms with domestic suppliers improved corporate governance practices . B BILLION POLICY REFORMS . B in goods and services BILLION purchased from in 10 countries to domestic suppliers support growth and in goods and services promote investments purchased from domestic suppliers IFC ANNUAL REPORT MIDDLE EAST AND NORTH SOUTH SUB SAHARAN AFRICA: ASIA: AFRICA: M . B . B MILLION BILLION BILLION in long-term in long-term in long-term investment investment investment commitments commitments commitments .M . M .M MILLION MILLION MILLION micro, small, and micro, small, and micro, small, and medium loans medium loans medium loans provided provided provided M M . M MILLION MILLION MILLION more than 1 million in financing facilitated patients cared for farmers reached for infrastructure through public- private partnerships M . M MILLION MILLION . M people benefitted patients cared for MILLION from power generation and farmers reached distribution services IFC ANNUAL REPORT Operational Highlights Dollars in millions, for the years ended June 30 2019 2018 2017 2016 2015 Long-Term Investment Commitments FOR IFC’S OWN ACCOUNT Number of projects Number of countries MOBILIZATION ¹ Syndicated loans IFC initiatives & other Asset Management Company (AMC) Funds Public-Private Partnership (PPP)² TOTAL INVESTMENT COMMITMENTS Investment Disbursements For IFC’s account Syndicated loans TOTAL INVESTMENT DISBURSEMENTS Portfolio Exposure ³ Number of firms For IFC’s account Syndicated loans TOTAL PORTFOLIO EXPOSURE Short-Term Finance Average outstanding balance Advisory Services Advisory Services program expenditures Share of program in IDA countries⁴ % % % % % 1. Defined as “core mobilization” — financing from entities other than IFC that becomes available to client due to IFC’s direct involvement in raising resources. Excludes $607 million of unfunded risk transfers that are accounted for under IFC’s own account. 2. Third-party financing made available for public-private partnership projects due to IFC’s mandated lead advisor role to national, local, or other government entities. 3. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s debt investments, (ii) fair market value of IFC’s equity investments, and (iii) total undisbursed equity commitments. Effective July 1, 2018, to accommodate change in accounting standards impacting how IFC reports its equity holdings, IFC has introduced the new term “Portfolio Exposure,” which, instead of disbursed and outstanding balance, uses the fair market value of IFC’s equity investments. Therefore, FY19 Portfolio Exposure for IFC’s account and prior years are not directly comparable. 4. All references in this report to percentages of advisory program expenditures in IDA countries and fragile and conflict-affected areas exclude global projects. IFC ANNUAL REPORT Financial Highlights Dollars in millions, as of and for the years ended June 30* 2019 2018 2017 2016 2015 Net income (loss) attributable to IFC ( ) Grants to IDA – Income before grants to IDA Total assets Loans, equity investments, and debt securities, net Estimated fair value of equity investments Key Ratios Return on average assets (GAAP basis) % % % % % Return on average capital (GAAP basis) % % % ( )% % Cash and liquid investments as a percentage of next three years’ estimated net cash requirements % % % % % Debt-to-equity ratio ∶ ∶ ∶ ∶ ∶ Total resources required ($ billions) Total resources available ($ billions) Total reserve against losses on loans to total disbursed loan portfolio % % % % % * Financial results in 2019 are not directly comparable to the prior periods due to the adoption of a new accounting standard. A full explanation of the change and its implications is available in Management’s Discussion and Analysis and Consolidated Financial Statements. The document can be found at http://www.ifc.org/FinancialReporting. For more information, see the Financial Performance Summary on page 108. IFC ANNUAL REPORT FY Long Term Commitments Dollar amounts in millions, for IFC’s own account as of June 30, 2019 Total % By Industry Financial Markets % Infrastructure % Manufacturing % Tourism, Retail & Property % Agribusiness & Forestry % Funds % Health & Education % Natural Resources¹ % Telecommunications & Information Technology % By Region² Latin America and the Caribbean % South Asia³ % Sub-Saharan Africa % East Asia and the Pacific % Europe and Central Asia % Middle East and North Africa % Global % By Product Loans⁴ % Equity⁵ % Guarantees % Risk-management products % FY Portfolio Exposure⁶ Dollar amounts in millions, for IFC’s own account as of June 30, 2019 Total % By Industry Financial Markets % Infrastructure % Funds % Manufacturing % Agribusiness & Forestry % Tourism, Retail & Property % Health & Education % Trade Finance % Natural Resources¹ % Telecommunications & Information Technology % By Region⁷ Latin America and the Caribbean % South Asia % East Asia and the Pacific % Sub-Saharan Africa % Europe and Central Asia % Global % Middle East and North Africa % 1. Includes IFC’s activities in oil, gas, and mining. 2. Amounts include regional shares of investments that are officially classified as global projects. 3. Includes Pakistan and Afghanistan. 4. Includes loan-type, quasi-loan products. 5. Includes equity-type, quasi-equity products. 6. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s debt investments, (ii) fair market value of IFC’s equity investments, and (iii) total undisbursed equity commitments. 7. Excludes individual country shares of regional and global projects. IFC ANNUAL REPORT FY Long Term IFC’s Largest Country Exposures² Commitments by June 30, 2019 (Based on IFC’s Account) Environmental and PORTFOLIO % OF EXPOSURE ³ Social Category GLOBAL GLOBAL COUNTRY RANK $ MILLIONS PORTFOLIO NUMBER 1 India % COMMITMENTS OF NEW CATEGORY $ MILLIONS PROJECTS 2 China % A 3 Turkey % B 4 Brazil % C 5 Argentina % FI ¹ 6 Mexico % FI 7 Colombia % FI 8 South Africa % FI 9 Egypt, Arab Republic of % Total 10 Vietnam % 1. FI category applies to new commitments on 2. Excludes individual country shares of regional and global projects. previously existing projects. 3. Portfolio exposure is defined as the sum of the (i) committed exposure for IFC’s Visit www.ifc.org/escategories for information on debt investments, (ii) fair market value of IFC’s equity investments, and (iii) total category definitions. undisbursed equity commitments. FY Advisory Services Program Expenditures Dollar amounts in millions Total % By Region Sub-Saharan Africa % East Asia and the Pacific % Europe and Central Asia % South Asia % Latin America and the Caribbean % Global % Middle East and North Africa % By Business Area Advisory by IFC Industry % Financial Institutions Group % Transaction Advisory % Manufacturing, Agribusiness & Services % Infrastructure & Natural Resources % Telecoms, Media, Technology, Venture Capital & Funds % Advisory via Equitable Growth, Finance, and Institutions (GPs) % Environment, Social & Governance % IFC ANNUAL REPORT World Bank Group Summary Results IFC ANNUAL REPORT The Institutions of the World Bank Group The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries, consisting of five institutions with a common commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT IBRD Lends to governments of middle-income and creditworthy low-income countries. INTERNATIONAL DEVELOPMENT ASSOCIATION IDA Provides financing on highly concessional terms to governments of the poorest countries. INTERNATIONAL FINANCE CORPORATION IFC Provides loans, equity, and advisory services to stimulate private sector investment in developing countries. MULTILATERAL INVESTMENT GUARANTEE AGENCY MIGA Provides political risk insurance and credit enhancement to investors and lenders to facilitate foreign direct investment in emerging economies. INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES ICSID Provides international facilities for conciliation and arbitration of investment disputes. World Bank Group Financing for Partner Countries by fiscal year, millions of dollars World Bank Group 2014 2015 2016 2017 2018 2019 Commitments¹ Disbursements² IBRD Commitments Disbursements IDA Commitments³ ³ ⁴ ⁵ Disbursements ³ IFC Commitments⁶ Disbursements MIGA Gross issuance Recipient-Executed Trust Funds Commitments Disbursements 1. Includes IBRD, IDA, IFC, Recipient-Executed Trust Fund (RETF) commitments, and MIGA gross issuance. RETF commitments include all recipient-executed grants, and therefore total World Bank Group commitments differ from the amount reported in the Corporate Scorecard, which includes only a subset of trust-funded activities. 2. Includes IBRD, IDA, IFC, and RETF disbursements. 3. Figures include the commitment and disbursement of a $50 million grant for the Pandemic Emergency Financing Facility. 4. Figure does not include $185 million in approved IDA18 IFC-MIGA Private Sector Window instruments, of which IDA has exposure of $36 million in guarantees and $9 million in derivatives. 5. Figure does not include $393 million in approved IDA18 IFC-MIGA Private Sector Window instruments, of which IDA has exposure of $106 million in guarantees, $25 million in derivatives, and $1 million through funding of IFC-PSW related equity investment. 6. Long-term commitments for IFC’s own account. Does not include short-term finance or funds mobilized from other investors. IFC ANNUAL REPORT Global Commitments The World Bank Group maintained its support for developing countries over the past year as the Group focused on delivering results more quickly, increasing its relevance for clients and partners, and bringing global solutions to local challenges. . in loans, grants, equity investments, and guarantees to partner countries and BILLION private businesses. Total includes multiregional and global projects. Regional breakdowns reflect World Bank country classifications. IFC ANNUAL REPORT . BILLION EAST ASIA AND THE PACIFIC . BILLION EUROPE AND CENTRAL ASIA . BILLION LATIN AMERICA AND THE CARIBBEAN . BILLION MIDDLE EAST AND NORTH AFRICA . BILLION SOUTH ASIA . BILLION SUB SAHARAN AFRICA IFC ANNUAL REPORT STORIES OF IMPACT IFC’s proactive, methodical approach to problem-solving enables us to scale up our impact. Building on our 63-year legacy, we will continue to work with the private sector to innovate, leverage the benefits of modern infrastructure and technology, and expand opportunities for people and communities. IFC ANNUAL REPORT BOOSTING GROWTH 36 Page  IMPROVING LIVES 50 Page  SCALING UP Page  60 PROMOTING SUSTAINABILITY Page  68 16 stories highlighting some of IFC’s most impactful projects in the fiscal year IFC ANNUAL REPORT 2019 35 BOOSTING GROWTH IFC focuses on sectors that have the greatest potential to generate growth and job creation. Page Page Page Creating Markets Infrastructure Human Capital Preparing the Long Term Innovations in Ground for Private Commitments to Health Care Investment Large Scale Impact and Education IFC ANNUAL REPORT Page Page Page Agribusiness Access to Finance Technology Stronger Farming Assuring the Expanding Yields Jobs    Availability of Opportunities and Markets Essential Financial Through Services New Platforms IFC ANNUAL REPORT A lthough poverty rates have declined, progress has been uneven, and the number of people living in extreme poverty remains unacceptably high. Around the globe, the majority of poor people reside in fragile and rural areas, where it is more difficult to reach them. That’s why this is a crucial time in development — and IFC understands that we cannot wait for opportunities to come to us. IFC ANNUAL REPORT CREATING MARKETS Preparing the Ground for Private Investment As we carry out IFC’s Creating government signed a mandate an $11 million loan to the firm Markets strategy, we collab- with IFC for a 100-megawatt that included funding from the orate with the World Bank to project, making it the nation’s IDA Private Sector Window and a seek development opportunities first competitive tender to select private investor as well as advisory and work with governments to an independent power producer. support to help the company ramp create conditions that will attract This step forward is critical for up its operations. In Ayiti Leasing’s private finance. a country where an ambitious first two years, it financed more program of market reforms has than $6.6 million in leased assets —  IFC is partnering to introduce recently opened the door to private more than 80 percent of that going solutions that remove barriers to investment. to SMEs. The firm is expected market development and establish to finance at least $15 million by a sound framework for projects to Scaling Solar mandates signed by May 2020. bear fruit. Scaling Solar, a World June 2019 — in Ethiopia, Madagascar, Bank Group program designed to Senegal, Uzbekistan, and Zambia —  Implementing IFC’s strategy to make it faster, easier, and cheaper total 1.2 gigawatts of new solar develop new and stronger markets for developing countries to procure power generation. In several of for private sector solutions has utility-scale solar power, is an these markets, including in Zambia, required reshaping the way we example of this work. By providing where the first Scaling Solar plant work. Country strategies — based standardized documents designed came online this year, the program on country and private sector for a simple, transparent, and rapid achieved a substantial reduction in diagnostics — now help us establish tendering process, Scaling Solar local solar energy prices. sector priorities and potential facilitates the engagement of devel- engagements. The ability to assess opers in new markets. This allows A joint IFC-World Bank approach development impact and market small countries to benefit from the is also being used to create new creation potential before the start economies of scale typical to larger markets in Haiti, which is still of a project — achieved by our countries and ensures competition recovering from the devastating Anticipated Impact Measurement from committed industry players. 2010 earthquake. World Bank Group and Monitoring (AIMM) system support helped the government (see page 86) — has influenced IFC’s The results speak for themselves: remove legal barriers to facilitate project selection and design, and it After Scaling Solar was signed in the country’s first leasing entity will lead to more projects that can four African countries, the program and pave the way for private create markets. was expanded beyond the region in investment. Now, Ayiti Leasing, FY19 — to Uzbekistan. The country’s a subsidiary of the Alternative Insurance Company, helps owners of small and medium enterprises (SMEs) lease critical equipment on favorable terms. IFC provided Photo: This utility-scale solar power plant in Zambia opened in March 2019, financed with private investment that the World Bank Group’s Scaling Solar program helped attract. IFC ANNUAL REPORT IFC ANNUAL REPORT INFR ASTRUCTURE Long Term Commitments to Large Scale Impact I FC helps develop infrastruc- ture projects that can meaningfully improve peoples’ lives, especially in emerging markets where the speed and scale of urbanization presents critical needs in power, utilities, and transportation. We partner with governments, IFC’s long-term loan to GNA I is our largest single local-currency commitment to date. The facility, expected to become operational in 2021, will serve as a backup to the country’s power system, allowing for further use of renewable energy sources. It is expected to contribute to an annual reduction in Brazil’s In Serbia, IFC provided a €182 million financing package — including €72 million for our own account —  to help expand Belgrade Nikola Tesla Airport. The project, the first large-scale transport public-private partnership in Serbia, is expected to more than double the airport’s capacity, boost the country’s developers, and investors to emissions by 139,000 tons of carbon tourism and transport industry, and support such priority infrastructure dioxide equivalent based on the encourage economic growth. projects with financial as well as anticipated use of the plant. technical support. In Brazil, IFC’s To support renewable energy $288 million, 15-year loan and a Transportation infrastructure for projects in Vietnam, IFC invested $534 million local-currency parallel electric mobility is the focus of IFC’s $75 million in an infrastructure- loan to UTE GNA I Geração de $8 million investment in Lithium, focused listed green bond that was Energia S.A. (GNA I) supports India’s first electric fleet operator issued by Philippine power company the development, construction, company. The project will provide AC Energy, which aims to develop and operation of an integrated job opportunities for up to 8,000 up to 5GW of renewables across 1.3-gigawatt liquefied-natural-gas- drivers over five years. This is IFC’s East Asia and the Pacific by 2025. to-power facility. inaugural investment in electric IFC’s subscription is dedicated to mobility. The project supports selected AC Energy’s wind and electrification of transportation, solar projects in Vietnam totaling which will help avoid annual up to 360MW. Our investment greenhouse emissions of more anchored the $300 million green than 25,000 metric tons per year. bond and helped mobilize inter- national and institutional financing for deployment into AC Energy’s regional projects. Photos: An IFC-supported green bond helps client AC Energy build renewable energy projects across East Asia and the Pacific (far left). In Serbia (near left), IFC’s €182 million financing package will help Belgrade Nikola Tesla Airport more than double its capacity. IFC ANNUAL REPORT HUMAN CAPITAL I In Mexico, where diabetes is the leading cause of death and disability, we are helping Clínicas del Azúcar offer more effective care to low- and middle-income patients. Because continuous disease management is critical, Clínicas n some Middle Eastern del Azúcar offers a one-stop-shop countries, inequitable access to retail approach that combines health care — alongside inconsistent multidisciplinary care teams, quality of services, long wait times, behavioral science, and a subscrip- and high absenteeism among tion model with annual fixed-fee doctors — plagues patients as much payment plans. IFC’s $4 million as their ailments do. The prescrip- equity investment in the company tion? A new website and mobile will support the launch of 100 new clinics and the development of its digital strategy. Clínicas del Azúcar Innovations in Health has treated more than 100,000 diabetes patients since 2011. With Care and Education IFC’s backing, the chain is looking to reach 2 million patients in the next five years. Ensuring excellence among health care service providers, especially app from Egyptian tech company in emerging markets, motivated Vezeeta that empowers patients in the design of IFC’s Health Quality Egypt, Jordan, Lebanon, and Saudi Assessment Tool. In FY19, Hallelujah Arabia to connect to — and rate —  General Hospital in Ethiopia signed health-care providers. an agreement to receive this comprehensive assessment, joining Since Vezeeta’s 2012 launch, it has a list of health providers from helped 2 million people find doctors seven countries, including Nepal and book appointments — a service and Pakistan. The evidence-based that is especially useful for patients strategy to improve operations in remote rural areas. IFC’s $1 million will include recommendations on investment will support Vezeeta in enhancing corporate processes, its plan to expand its operations. minimizing patient safety risks, and making the company more This is just one way that IFC’s attractive to international partners, financing for health and education such as investors and insurance companies helps people and soci- companies. The tool also helps eties thrive. In fiscal year 2019, we prepare hospitals and clinics to provided $670 million in financing, pursue national or international including funds mobilized from health-care accreditations. other investors. Our clients helped deliver health care to 49.9 million Education is an equally important patients and education to priority in Ethiopia, where IFC is 4.7 million students. working with Gebeya, a pan-African education technology and online job placement company, on an advisory-services program that will strengthen innovative tech start-ups owned or led by women. IFC ANNUAL REPORT Photos: IFC invests in innovation, supporting clients like education technology firm Gebeya in Ethiopia (left), Egyptian-based online and mobile health care information provider Vezeeta (above, right) and Mexican diabetes clinic The Digital Gender-Ethiopia chain Clínicas del Azúcar (below, right). Program, supported by the Women Entrepreneurs Finance Initiative and the Creating Markets Advisory Window, will help train 250 female software developers and provide seed funding to at least 20 women entrepreneurs. In Colombia, IFC’s long-term loan of $25 million will improve infra- structure on five campuses of the Universidad Santo Tomás, which offers high-quality higher education to about 35,000 students in regions that include remote cities and conflict-affected areas. IFC ANNUAL REPORT IFC ANNUAL REPORT AGRIBUSINESS Stronger Farming Yields Jobs   and Markets I FC has made agribusiness a priority because of the sector’s broad development impact and potential for poverty reduction. Our investment and advice help companies address higher demand and escalating food prices in an environmentally sustainable and socially inclusive way. In India, IFC’s $35 million investment in DCM Shriram Ltd. will support the expansion of the company’s sugarcane processing capacity in the low-income state of Uttar Pradesh. The financing comes along with an ongoing advisory program that is helping train 185,000 sugar- cane farmers in advanced farming techniques. In Latin America, IFC and partners arranged a $100 million financing In South Africa, IFC’s €30 million package to grow Argentina-based loan, together with its advice, San Miguel, a major industrial- are fertilizing the growth of ized and fresh citrus exporter. United Exports (formerly Mbiza), Strengthening San Miguel’s a family-owned South African operations in Argentina, Peru, and business that plants, packs, and Uruguay will help the company exports fruits. Technology and create jobs, apply environmental infrastructure upgrades will increase and social best practices, and efficiency and add up to 250 new improve agricultural productivity. permanent jobs and 4,200 seasonal jobs in communities with high unemployment rates. Many of these positions will be filled by women. Photos: Oranges being processed in a plant owned by San Miguel, an Argentine company that has received a $100 million financing package from IFC and partners. IFC ANNUAL REPORT ACCESS TO FINANCE Assuring the Availability of Essential Financial Services F or Sione Tau, a Tongan who picks strawberries in New Zealand, sending money back home was often complicated and expensive: he had to withdraw cash from his bank, negotiate with a remittance agent, and pay a high fee before his wife, back in Tonga, could access the funds. seasonal workers based in New Zealand now use this system. IFC and TDB are working to expand the voucher system for Tongans living in Australia. Access to basic financial services —  a bank account, a mortgage, an insurance policy, or in Tau’s case, a (MSMEs) — working with financial institutions and governments to achieve impact. In FY19, we advised 87 financial institutions on ways to expand access to finance. Our clients provided more than $230 billion in financing for MSMEs. Enabling access to finance for SMEs means to send money home — is was also behind IFC’s $100 million The Ave Pa’anga Pau (“Send essential for economic growth. It subordinated loan to Equity Bank Money Securely”) remittance enables people and businesses to Kenya. The loan will enable the service, developed by IFC and the build assets, increase income, and bank to expand its lending to SMEs Tonga Development Bank (TDB), reduce financial risks. Yet about and climate-finance to save costs has changed that. This secure, 1.7 billion adults lack basic bank and support renewable energy, mobile-based system transfers accounts, and around 200 million green buildings, energy efficiency, funds from bank accounts in New small and medium enterprises and climate-smart agricultural Zealand to bank branches and (SMEs) in developing countries projects. savings accounts in Tonga, making lack financing. life easier for overseas workers In the Kyrgyz Republic, we invested like Tau. About half of the Tongan IFC provides investment and advice $8 million in a new private equity to expand access to finance for fund from Highland Capital, an millions of individuals and micro, investment management firm, small, and medium enterprises to help expand access to finance for SMEs. The financing package included $4 million for IFC’s own account blended with $4 million from the IDA Private Sector Photos: A remittance service developed by IFC and the Tonga Development Bank has made it easier for people like Sione Tau (right), a migrant strawberry picker in New Zealand, to send money back to their families in Tonga. IFC ANNUAL REPORT Window. The fund will provide critical growth capital to businesses in services, agricultural processing, health, education, telecommunica- tions, media, and technology. Our FY19 report The Unseen Sector: A Report on the MSME Opportunity in South Africa, examines South Africa’s small-business landscape and recommends how to expand opportunities for MSMEs. Findings feed into the IFC SME Push Program, which will channel up to $3 billion over the next five to seven years to increase lending to small South African businesses and create jobs. IFC ANNUAL REPORT TECHNOLOGY Around the world, we partner M with mobile and broadband service providers to help them expand and upgrade their network infra- structure. In FY19, we invested $399 million in telecommunications, media, and technology, including funds mobilized from other investors. Our portfolio is now $2.7 billion. In Argentina, our loan of $310 million odern to Telecom Argentina, which information and communication offers fixed and mobile high-speed technologies enable poor people to connections and pay TV, will boost obtain access to services, resources, expansion of broadband coverage, and opportunities — making mar- including in underserved regions. kets and institutions more efficient. The financing package — provided But half the world’s population is at a time when many Argentine still offline. companies are struggling to obtain funding to grow their operations —  includes $110 million from IFC, with Expanding Opportunities additional funding mobilized from international banks. This second Through New Platforms financing follows one in 2016. IFC’s advisory support to M-Pesa Mozambique, a mobile money platform, will increase financial inclusion in a country where nearly The situation is particularly 60 percent of citizens lack access challenging in Africa, where only to financial services. Ten months 22 percent of the population has after implementation, the number access to the Internet. IFC and of active M-Pesa customers rose partners’ investment of up to by nearly 70 percent. More than $100 million in CSquared, a firm 1,280 small and medium enterprises that promotes the use of shared (SMEs) have signed on since the infrastructure to make Internet project was launched. services more affordable and reliable to underserved countries in Liftit, a Latin American-based Africa, aims to change that. After tech firm that connects truck laying more than 1,600 kilometers drivers to businesses that need (km) of fiber-optic cables in Ghana cargo delivered, will be able to and Uganda, CSquared started expand operations in Mexico and operations in Liberia. With close to Colombia after IFC’s $2.8 million 140 km of cables already installed equity investment. Liftit’s platform in the country, the network is provides companies with more effi- expected to facilitate the rapid cient, reliable, and affordable cargo growth of both fixed and mobile delivery while making it easier for broadband data in the region. truck drivers to find work and be paid promptly. IFC ANNUAL REPORT Photos: IFC equity investment is fueling the expansion of Liftit, an innovative digital platform connecting truck drivers to businesses needing deliveries in Colombia and Mexico. IFC also helped expand the TechEmerge platform to Brazil, where it connects start-ups with leading corporations in emerging economies to form new partner- ships. In Brazil, it has matched 20 tech companies from seven countries with 15 health-care providers to conduct pilot projects that include fast and noninvasive diagnostic exams and artificial intel- ligence solutions for genetics and imaging diagnostics. TechEmerge, a World Bank Group initiative, was launched in India in 2016 to improve health-care delivery and patient outcomes in the country. IFC ANNUAL REPORT IMPROVING LIVES IFC’s work improves the lives of poor people in some of the most challenging areas of the world. Page Page Page IDA and Conflict Sub Saharan South Asia Affected Areas Africa Private Sector Boosting Growth Accelerating Solutions Where It Matters Change on the to Strengthen Most Continent Economies IFC ANNUAL REPORT Page Middle East and North Africa Overcoming Obstacles Through Private Investment IFC ANNUAL REPORT IDA AND CONFLICT AFFECTED AREAS Boosting Growth Where It Matters Most T he small island nation of Timor-Leste is experiencing its longest period of stability since achieving independence in 2002. But as in many fragile and conflict-affected areas, past vola- tility left behind poor infrastructure and limited economic development. Today, about 1.3 billion people live in IDA countries. Afghanistan is one of them, and we are helping make a difference for citizens trying to recover from three decades of conflict. One of the legacies of this instability is electricity consump- tion that is among the lowest in the world. Fewer than 30 percent To jumpstart progress, IFC worked of Afghans are connected to the with Timor-Leste’s government grid. The country imports up to deliver the Tibar Bay Port, to 80 percent of its energy, and the country’s first public-private frequent blackouts affect some partnership (PPP) project. When parts of the country for up to the port becomes operational 15 hours a day. IFC is working in 2021, it will reduce congestion with the government to design a at the existing port, easing a 40-megawatt solar-power plant significant economic bottleneck. that will more than double the IFC support enabled legislation country’s current solar energy for this PPP, helped build capacity capacity and that will offer a to develop and implement the new model for subsequent solar necessary contracts, and facilitated projects. a transparent tender process that attracted investors. The new port Small and medium enterprises will create 500 direct jobs. (SMEs) are important drivers of growth in the world’s poorest This multipronged approach countries, but their growth is illustrates IFC’s strategy in fragile often hindered by limited access to and conflict-affected situations. financial services. Our Small Loan We help create and strengthen Guarantee Program (SLGP) pools a institutions, mobilize investment, portfolio of IFC risk-sharing facilities and promote private entrepreneur- and synchronizes with broader ship — demonstrating throughout World Bank Group efforts to how this approach addresses improve the enabling environment critical development challenges. for these SMEs to access finance. In FY19, our investments in fragile In FY19, we increased our existing and conflict-affected areas totaled investment in SLGP by $400 million. nearly $545 million, including funds The program is supported by an mobilized from other investors. By IDA Private Sector Window first- 2030, we expect 40 percent of IFC’s loss guarantee of up to $120 million. annual investment commitments This is expected to enable up to to be in IDA countries — those $800 million in SME lending in low- eligible to borrow from the World income countries around the world. Bank’s International Development In Haiti, for example, a $2.5 million Association. risk-sharing facility we committed IFC ANNUAL REPORT with Société Générale de Solidarité (Sogesol) is expected to help the microfinance institution provide more than 500 loans to SMEs and agribusinesses by 2023, fostering economic growth and job creation. IFC also backs companies that can successfully scale up their business in one challenging market and then leverage that experience to expand across borders. For example, we provided a €24 million financing package to Gaselia Group, one of the largest beverage and packaging groups in West Africa. The invest- ment will help the company expand operations in Côte d’Ivoire and Mali and set up a soft-drink project in Guinea. Photos: Girls in Timor-Leste look forward to a bright future. IFC is helping the government of this once conflict- ridden country attract investment for a new port that will boost business and create jobs. IFC ANNUAL REPORT F or Marie-Paule Effagon, a 48-year-old teacher living in Yaoundé, Cameroon, two-day power outages — which are not uncommon — wreak havoc on her family’s routine. Yet Effagon is considered lucky: nearly 40 per- cent of Cameroon’s citizens have no access to electricity at all. Photos: Teacher Marie-Paule To improve lives and long-term Effagon (above) is one of many economic prospects, IFC and the in Cameroon who will benefit World Bank are helping to finance from new power to be produced by the privately financed the Nachtigal Hydropower Plant, Nachtigal Hydropower Plant. a privately owned and operated IFC ANNUAL REPORT SUB SAHAR AN AFRICA Accelerating Change on the Continent 420-megawatt power plant. It will The Nachtigal project — IFC’s largest to logistics services for small increase the country’s installed power investment on the conti- and medium enterprises (SMEs), power capacity by nearly one-third nent — illustrates our “upstream” including those in underserved and bring clean, affordable power to work and proactive approach to regions. It will also enable faster millions when it begins operations development across Sub-Saharan payment schedules as well as new in 2023. Africa, home to almost half of all financing and savings programs for people who live in extreme poverty. truck owners and drivers. Our early engagement helped In FY19, our long-term investments confirm Nachtigal’s technical, finan- in the region totaled $4.1 billion, With support from the IDA cial, and environmental feasibility including nearly $2.3 billion mobi- Private Sector Window, IFC is also and address bureaucratic bottle- lized from other investors. providing a multicurrency facility of necks. Key project development $21.1 million equivalent to Baobab and structuring support came from We often seek out companies that Group, a leading global microfi- across the World Bank Group. IFC use technology and innovation to nance network. Support extends to is directly investing €60 million in unlock sustainable development Baobab’s affiliates in Burkina Faso, equity, lending up to €110 million in the region. With support from Côte d’Ivoire, Democratic Republic for our own account, and mobi- the Private Sector Window of of Congo, Madagascar, Nigeria, and lizing another €806 million from the Global Agriculture and Food Senegal. Baobab, a long-time IFC a global syndicate, including four Security Program, IFC co-led the client, is a pioneer in digital financial commercial banks and 10 other financing of $10.3 million to help services across the continent. It is development finance institutions. Kenyan start-up Twiga Foods to known for helping entrepreneurs We also provided interest rate expand operations and to connect access credit even though they swaps to help mitigate interest rate more than 13,000 rural, smallholder often lack the required collateral or risk. Through the development of farmers to urban vendors. The credit history. It expects to provide inclusive community engagement firm’s platform uses mobile-phone credit to even more entrepreneurs strategies with Nachtigal, IFC is technology to coordinate supply and people with limited access to helping create tangible benefits and demand and to pay farmers banking services. to surrounding communities and within 24 hours. IFC is also advising identifying ways of mitigating Twiga Foods on aligning food gender-based violence risks. safety practices with global stan- dards and ensuring the traceability of produce. In Nigeria, we led a $6 million equity investment in Kobo360, a tech- enabled e-logistics platform that connects truckers to transportation services seeking cargo haulers. The investment will help the company reduce costs and increase access IFC ANNUAL REPORT Photo: In Bangladesh, IFC is building the skills of female supervisors in the garment sector as part of our commitment to increasing opportunities across South Asia. IFC ANNUAL REPORT SOUTH ASIA Private Sector Solutions to Strengthen Economies W hen Mosammot Janata Khatun was promoted from working on the sewing line to supervising others at Dhaka’s Jinnat Knitwears, she was nervous. After all, 19 of every 20 line supervisors in Bangladesh’s ready-made garment upgrade machinery, and add more value-added items to its product line. IFC’s multiyear engagement with the Bangladeshi garment sector includes investment and advisory services and is focused on promoting women’s employment factories are men, even though and the sector’s sustainable growth. women comprise 80 percent of line workers. IFC’s Gender Equality and To help Bangladesh counter Returns (GEAR) program helped declining natural gas supplies and prepare her for the new role. By deliver clean energy to its citizens, combining technical and soft-skills we provided a $20 million long- training, the program equips term loan to Omera Petroleum, women like Khatun with the skills to help the company double its to advance their careers. capacity and increase the avail- ability of liquefied petroleum gas. GEAR is among the IFC programs This effort will expand access of helping make Bangladesh’s cooking gas to 350,000 additional garment industry internationally households — reducing the use of competitive, sustainable, and firewood, coal, and natural gas. safe for its workers. The industry is a major driver of Bangladesh’s In India, we invested $100 million in economy: It accounts for more the India Resurgence Fund to create than 80 percent of the country’s a dedicated platform for distressed exports and employs more than assets resolution. The fund will 4 million people. restructure potentially viable mid- to large-size nonperforming compa- Strengthening economies is critical nies, helping preserve existing jobs because more than 250 million and create new ones. The restruc- South Asians live in extreme turing will enable banks to dispose poverty. Close to 500 million people of nonperforming loans, freeing up across the region are not connected capital for their lending activity. to the grid. In FY19, we provided almost $3.0 billion in financing for To help mechanize farming in businesses in South Asia, including India, IFC invested $100 million in $1.1 billion mobilized from other Mahindra & Mahindra Financial investors, expanding our portfolio Services. This will enable the in the region to $11.5 billion. company to extend loans to farmers for tractors, vehicles, and As part of our continuing work in other equipment and to finance Bangladesh’s garment sector, IFC’s small and medium enterprises $14.4 million loan to the Epyllion (SMEs). The effort contributes to Group will help set up a new manu- the government’s target of doubling facturing facility that will nearly farmers’ incomes by 2022 and double the garment manufacturer increasing agricultural productivity, and exporter’s production capacity, which contributes to food security. IFC ANNUAL REPORT MIDDLE EAST AND NORTH AFRICA Overcoming Obstacles Through Private Investment A fter 24-year-old Hana’a Mehyar Awad graduated from Palestine Ahliya University College’s corporate governance program, an IFC initiative to promote corporate governance in the Middle East and North Africa, she landed a job at the Palestine Investment Bank. Now, the Hebron native hopes of jobs and innovation. Economic growth rates in the region have halved since the 2011 Arab Spring, unemployment is high, and conflict has displaced vast numbers of people. To strengthen the region, in FY19, we invested $891 million, including $370 million mobilized from other investors. to help drive economic growth in her hometown — the largest To help expand access to elec- Palestinian city in the West Bank, tricity — a major hurdle to regional which generates one-third of the growth — IFC assembled a area’s GDP. $71 million financing package that included funds raised through the Training future leaders like Managed Co-Lending Portfolio Awad — and more than 1,100 Program (MCPP) to support the other graduates of the corporate construction of Jordan’s Daehan governance program — is the Wind Power Plant. This was IFC’s goal of this decade-long project second major investment in the between IFC and the Palestine country’s wind sector in FY19. The Capital Market Authority (PCMA). 51-megawatt plant will supply clean It’s part of IFC’s support for the energy to homes and businesses Middle East and North Africa’s across the country. Since 2011, IFC private sector, a potential source has invested close to $300 million in 13 renewable projects in Jordan, enabling about $1 billion in private sector investments in the nation’s power sector. Photos: Small businesses in Lebanon are growing with financing from Fransabank, an IFC client (left). Investment and advice from IFC is helping Egypt’s Middle East Glass Manufacturing Company increase production, reduce energy consumption, and cut greenhouse-gas emissions (right). IFC ANNUAL REPORT Alongside syndications partners, IFC provided up to $100 million in debt financing to the Middle East Glass Manufacturing Company (MEG), Egypt’s leading maker of glass containers. This will help MEG ramp up production to supply a variety of clients, from beverage makers to pharmaceutical firms. IFC is also providing advice to help MEG reduce energy consumption and cut greenhouse-gas emissions as part of our effort to bolster resource efficiency and reduce costs in the manufacturing sector and to help companies compete internationally. In Lebanon, IFC is the anchor investor in Fransabank SAL’s green bonds program. Our $75 million investment will help Fransabank provide financing to eco-friendly projects in commercial energy efficiency, renewable energy, and green buildings. We also provided $100 million in debt financing to Société Générale de Banque au Liban to boost access to finance for small and medium enterprises (SMEs) and to help develop climate finance. IFC’s advisory team will work with the bank to help enhance its capacity to finance climate- smart projects and to help mitigate climate change. The loan includes funding from several MCPP partici- pants alongside IFC’s own funding. IFC ANNUAL REPORT SCALING UP IFC is taking an increasingly proactive approach to accelerate private sector development —  creating markets and opportunities where they are needed most. Page Page Guiding Impact Local Capital Ushering Impact Markets Investing into Ideas and Actions the Mainstream to Spur Domestic Growth IFC ANNUAL REPORT Page Mobilization Attracting Capital to Meet Development Needs IFC ANNUAL REPORT GUIDING IMPACT Ushering Impact Investing into the Mainstream A a $13.9 million investment from LeapFrog, AllLife has expanded its team, opened a second call center, launched new products, and more than doubled its revenue. The pursuit of investments that can generate a measurable positive impact on society — while llLife, the only insurer of also generating positive returns people living with HIV/ for the investor — is proving its AIDS in South Africa, is accus- worth. Although the market is tomed to making the impossible still relatively small, measured in possible. The firm was created to billions, the potential is enormous. insure people without access to Investor appetite could be as affordable life insurance — people much as $5 trillion in private who were previously viewed as markets — private equity, nonsov- uninsurable. That might not sound ereign private debt, and venture like a formula that investors would capital — and as much as $21 trillion jump at. But the company’s mission in publicly traded stocks and bonds, was in sync with that of IFC client according to the IFC 2019 report LeapFrog Investments: to support Creating Impact — The Promise of “purpose-driven businesses with Impact Investing. Realizing this real social impact.” Following on potential depends on the creation THE IMPACT THESIS OF IMPACT INVESTING INTENT CONTRIBUTION Desire to Investment capital improve (either at market or social and concessional terms) environmental AND/OR outcomes Additional assistance (e.g., knowledge transfer, control, influence) IN V E S T M EN T IFC ANNUAL REPORT of investment opportunities and vehicles that enable investors to pursue impact — and financial returns — in sustainable ways. As one of the world’s largest impact investors, IFC has a decades-long track record. We are shaping the impact-investing market as it becomes a large-scale force for good. But that’s not all. Accountability is This year, with partners, we devel- key, so the principles require annual oped the Operating Principles for disclosure and periodic independent Inset: IFC’s Creating Impact —  Impact Management, establishing verification of how they have been The Promise of Impact Investing report a common discipline and market implemented. This offers investors surveyed the vast potential of this consensus around the management additional confidence and enhances kind of financing, which brings both of investments for impact. These the market’s credibility. As of June financial and social results. impact-investing principles reflect 2019, 63 institutions had signed the best practices across a range of principles — creating for the first public and private institutions and time a market standard for impact- integrate impact considerations investing management. into all phases of the investment life cycle: strategy, origination and structuring, portfolio management, See www.ifc.org/DevelopmentImpact/OPIM exit, and independent verification. for IFC’s disclosure statement on impact. MEASURABLE IMPROVEMENTS Creation or Increases or improvements improvements of markets in social and environmental outcomes Improvements in enterprise’s outputs or processes ENTERPRISE OR SECTOR IMPACT IM PAC T IFC ANNUAL REPORT Photos: IFC helps to build strong local capital markets in a wide range of countries including Kenya (above) and Kazakhstan (at right). IFC ANNUAL REPORT LOCAL CAPITAL MARKETS Ideas and Actions to Spur Domestic Growth S trong capital markets are an important driver of economic growth. Businesses can tap into those markets as a source of long-term, local-currency finance. Governments can access them to finance roads, schools, and hospitals. But although developing countries account for more than one-third We issue local-currency bonds to finance projects in a manner that protects companies from foreign currency fluctuations and encour- ages global investors to participate in bond offerings. We also help governments draft policies and regulations that strengthen capital markets. We often support local In Costa Rica, we raised 5.7 billion colones ($10 million) through a triple-A rated bond issued in the domestic market. The proceeds will be used to boost housing finance for low- and middle-income families that lack access to mortgage loans. IFC also joins initiatives that help of the world’s economic output, institutions to issue and invest in countries develop thriving and they represent just 10 percent of local-currency bonds, a move that sustainable capital markets — from global stock-market capitalization. can attract global investors. regulation and policy to institution- These countries also make up a very building. One of them is the Joint small share of the global market In addition, IFC provides tools Capital Markets Program (J-CAP), for corporate bonds. that enable clients to swap a World Bank Group-wide initiative. foreign-currency obligations into In FY19, J-CAP identified oppor- local currency and to access capital tunities to expand private sector markets through their own bond engagement to deliver capital- issuances, which are made more markets financing in areas such as creditworthy with an IFC partial climate, small and medium enter- credit guarantee. We also help prises (SMEs), and infrastructure. In mobilize local bank lending into Kenya, J-CAP is now working with priority sectors through our risk- leading pension funds to establish sharing facility product. a capital-market vehicle that will provide long-term financing for Our work in Kazakhstan illustrates infrastructure and affordable hous- our approach. We issued our first- ing projects. J-CAP is supported by ever Kazakhstani tenge bond, IFC’s Creating Markets Advisory raising 8.6 billion tenges ($25 mil- Window and development partners. lion) to help develop local capital markets. The bond’s proceeds have been invested in KazFoodProducts, a leading food processing group in the country, to support the group’s expansion plans and to boost the country’s agricultural sector. IFC ANNUAL REPORT MOBILIZATION Attracting Capital to Meet Development Needs G to ease integration between the from over 500 financing partners country’s mining sector and global for more than 1,100 projects in over markets. Collaboration across the 115 emerging markets. Our syndi- World Bank Group made significant cations portfolio of outstanding financing possible for the $1.5 billion investment commitments totaled Sangarédi project. IFC’s expertise in $16 billion as of June 2019. In FY19, uinea has mobilizing private capital on a vast IFC mobilized $5.8 billion for debt nearly one-third of the world’s scale helped deliver $750 million investments in developing coun- reserves of bauxite, the primary in financing to the project —  tries. The second platform, IFC source of aluminum. Yet the $150 million for our own account Asset Management Company, has country’s mining sector has long and the remainder mobilized from raised $10.1 billion in assets and struggled to reach its potential. a group of investors including seven manages 12 investment funds. IFC is working in partnership commercial banks. The World with the government, mining Bank’s support for sector reforms We continue to innovate and companies, investors, and local and transparency initiatives and for develop new products, expanding communities to help the country technical assistance in public finan- our debt platforms to reach a bigger develop this resource and achieve cial management paved the way share of the potential $80 trillion in its economic goals. for the investment. A political-risk untapped liquidity from global insti- insurance policy issued by the tutional investors. These products The IFC-supported Sangarédi- Multilateral Investment Guarantee and platforms, together with our GAC bauxite mine — one of the Agency (MIGA) gave additional traditional syndications products, largest foreign investments in comfort to investors. enable us to mobilize billions in Guinea — will strengthen the private capital to emerging econ- country’s status as a world-class IFC mobilizes private capital omies, including to the world’s producer and exporter of bauxite through two primary platforms. poorest countries — those eligible to and develop new infrastructure The first is our debt syndications borrow from the World Bank’s IDA. program, which since 1959 has mobilized more than $70 billion Photo: Working with World Bank Group partners, IFC mobilized large- scale financing for Guinea’s $1.5 billion Sangarédi bauxite mine — one of the country’s largest foreign investments. IFC ANNUAL REPORT In FY19, we provided an additional $600 million financing to 22 projects in 17 countries using credit insurance policies as de-risking tools provided by private insurance companies. Some of these projects are taking place in fragile econo- mies with limited or no alternative financing resources. We continued to expand the Managed Co-Lending Portfolio Program (MCPP), created in 2013. Delivering local-currency financing solutions to our clients was another focus area in FY19. We mobilized the equivalent of $1.2 billion in local currencies to 11 projects in six coun- tries, using various local-currency loan-syndication products. In Brazil, IFC mobilized an additional 150 million reais (about $40 million) following a similar investment to support the development of digital infrastructure by Phoenix Towers. The company builds telecommu- nications towers that allow mobile network operators to deploy 4G networks in underserved parts of the country. IFC ANNUAL REPORT PROMOTING SUSTAINABILIT IFC helps businesses in developing countries overcome key obstacles to sustainable growth. Page 70 Page 72 Sustainability Climate Innovative Mainstreaming Solutions Green-Business for Improving Opportunities Cities 68 IFC ANNUAL REPORT 2019 Y Page 74 Gender Helping Women Bridge the Opportunity Gap IFC ANNUAL REPORT 2019 69 SUSTAINABILIT Y Innovative Solutions for Improving Cities M h half which w ore than alf of all people live in urban areas, hich helps explain why cities consume close to two-thirds of the world’s energy and account for more than 70 percent of global greenhouse-gas emissions. As more people move to cities, the speed and scale of urbanization also accel- erates the demand for affordable housing, well-connected transport systems, and other infrastructure, basic services, and jobs. Photo: IFC helped municipal leaders in Bogotá introduce a new cable car system that bypasses crowded city streets, cutting some commutes by up to 45 minutes. IFC ANNUAL REPORT finance sustainable infrastructure such as the new Metrobus and bicycle routes. We have also offered technical advice to support low- emission transport and energy efficiency options for the city, which last year hosted Urban 20, an IFC-supported G20 initiative that brought together mayors from To meet such vast needs, IFC works hundreds of urban areas across around the world to discuss ways with governments and the private more than 60 countries. In Bogotá, the private sector can promote sector to build inclusive, safe, Colombia, for example, drivers environmentally friendly urban resilient, and sustainable cities that and passengers used to endure solutions. serve residents and businesses. bumper-to-bumper traffic because Areas of focus include green build- of outdated transportation infra- In Mariupol, Ukraine, where an ings, public transportation, electric structure. IFC helped the city build influx of more than 100,000 vehicles, waste management, water cable cars that cut some commutes refugees since 2014 has strained the supply, and renewable energy. by 45 minutes. Riders are also city’s resources, the aging public safer, following IFC-led community transport fleet struggles to meet IFC’s $8 billion Cities Initiative engagements that revitalized local needs. IFC’s €12.5 million loan illustrates how our sustainability surrounding parks, gardens, and has added efficient and comfortable principles are already transforming community centers. New IFC- buses to the fleet alongside a new backed bus rapid transit lines have bus depot, bus workshop tools and shortened travel times across equipment, and a traffic planning the city. and management system. IFC is also providing advice to improve IFC’s model for engaging with the transport system’s governance cities — combining investment structure, bolster private sector and advice — has been replicated participation, and enhance long- in Argentina, where IFC and the term financial and operational Buenos Aires city government part- sustainability. nered to improve urban mobility. IFC provided a $50 million loan to Expanding access to basic infra- structure and essential services to low-income communities in a sustainable way is one of the ultimate objectives of our Social Bond Program. Proceeds from these bonds contribute to financing projects in these areas. In FY19, we issued 12 social bonds in seven currencies, raising the equivalent of $538 million. In January 2019, in response to investor demand, we more than doubled the outstanding volume of our Australian dollar Kangaroo social bond, raising an additional 400 million Australian dollars. IFC ANNUAL REPORT CLIMATE Mainstreaming Green Petrochemicals Corporation Limited to help the company install nitrous oxide abatement facilities. IFC will Business Opportunities also support the company to imple- T ment an environmental and social action plan. Green buildings continue to be a priority. IFC’s Excellence in Design for Greater Efficiencies (EDGE) program now covers more than 150 countries to certify green buildings. EDGE creates an attractive investment opportunity for IFC and other banks. In five years, IFC’s invest- o confront the challenge This accounted for 30 percent of ments in green buildings rose from of fostering climate resilience, our total commitments for the year. $160 million to $761 million for both economies must become climate- Our investments have helped avoid IFC’s own account and mobilized smart. IFC is mainstreaming climate the emission of 15.5 million tons of capital. One of these investments business across sectors, focusing on carbon dioxide equivalent. is a loan package of $275 million clean energy, green finance, green to support PT Trans Corpora in buildings, climate-smart cities, and IFC helps agribusiness companies Indonesia to open 125 green retail climate-smart agribusiness. become more productive by stores across 25 cities by 2025. PT using climate-smart technologies Trans Corpora is expected to create In FY19, we met our climate target, and practices in high-emission more than 30,000 jobs and work providing $5.8 billion in climate- sectors such as fertilizer. In India, with more than 6,000 suppliers, smart financing, including $3.2 billion we put together a $60 million nearly 70 percent of whom are small mobilized from other investors. package for Deepak Fertilisers and and medium enterprises (SMEs). IFC ANNUAL REPORT Renewable energy remains a rupiah Komodo green bond that $500 million in private capital to significant part of IFC’s climate raised the equivalent of $134 million. support climate-smart investments investments. IFC invested We also issued our first Colombian in developing countries. $2.4 billion in FY19 and is increas- peso-denominated green bond ingly working upstream to open of 35 billion Colombian pesos IFC is increasingly building climate markets for new technologies. ($10 million equivalent) that was risk considerations into our business We partnered with the World placed in the offshore market. and sharing lessons globally. We Bank’s Energy Sector Management piloted climate risk assessment in Assistance Program (ESMAP) to IFC is also building the market by FY19. IFC and the World Bank act explore new markets for offshore investing in green bonds issued as the Secretariat for the Carbon wind and floating solar photovol- by financial institutions and Pricing Leadership Coalition, which taics. We are also working with other companies. IFC committed works with governments, corpora- companies and regulators to scale $150 million in a green bond issued tions, and civil society to advocate storage markets in emerging econ- by Indonesia’s Bank OCBC NISP, for effective ways to price carbon. omies, enabling more renewable contributing to the government’s IFC discloses under the guidelines energy to enter the grid. target of a 29 percent reduction recommended by the Task Force in greenhouse emissions by on Climate-related Financial Green bonds are a key way of 2030. In Thailand, IFC became Disclosures (see page 104). providing long-term capital to the sole investor in TMB Bank’s issuers to drive climate business. $60 million green bond. This is IFC issued 37 green bonds totaling the first green bond issued by a $1.6 billion in 11 currencies. This commercial bank in Thailand. IFC Photo: Jakarta-based Asia Green Real included a Sterling green bond of also created the first global green Estate uses EDGE, IFC’s green building 350 million British pounds in July bond fund targeting corporate standards and certification program. 2018 — the first such bond to be issuers in emerging markets, the issued by a multilateral develop- Real Economy Green Investment ment bank since 2015. In Indonesia, Opportunity (REGIO) Fund. It IFC issued an inaugural Indonesian is expected to catalyze at least IFC ANNUAL REPORT GENDER Helping Women Bridge the Opportunity Gap H o Thi Hai Ngan, a Vietnamese businesswoman, launched two ventures, but they both failed because of a lack of financing. Yet she persevered and opened an electronics store after receiving a $25,000 loan from Vietnam Prosperity Commercial Joint Stock Bank (VPBank). Within We mobilize our investment part- ners to get more money into the hands of female business owners. In Brazil, where women-owned SMEs face a $19 billion financing gap, we arranged a $225 million loan for Banco Santander Brasil, which includes $75 million mobi- lized from a commercial bank. The six months, the value of her funding is earmarked for women- business quadrupled to $400,000. owned firms. IFC’s $125 million investment in But women entrepreneurs require VPBank helped make Ngan’s loan more than credit to succeed. It is possible. At $1.4 trillion, the gap for also important to provide access to financing women-owned small training and networks. The Women and medium enterprises (SMEs) Entrepreneurs Finance Initiative in emerging markets is immense. (We-Fi), a collaborative partnership IFC has long worked with financial hosted by the World Bank Group, institutions to increase the flow addresses those needs. In FY19, of capital to women. Through our we partnered with WEConnect Banking on Women program, we International, a global network that have invested and provided advisory connects women-owned busi- services to 88 financial institutions nesses to qualified buyers, to boost in 50 countries to increase financing access to markets for women- for women-owned and women-led owned SMEs in emerging markets. SMEs. As of June 2019, our portfolio totaled $2.2 billion. In Nigeria, IFC worked with AXA Mansard to design insurance products for women. AXA increased the number of policies sold to Photo: Business began to boom for Vietnam’s Ho Thi Hai Ngan when she received financing from IFC client VP Bank. IFC works with local financial institutions worldwide to help close the $1.4 trillion gap in financing for women- owned SMEs in emerging markets. IFC ANNUAL REPORT women to more than 40,000 as of December 2018 from 19,000 in late 2016, when the project was launched. The company plans to insure 60,000 Nigerian women by 2020. With support from We-Fi, we are now working in Cameroon, Ghana, and the Philippines to bring insurance coverage to more women. We also promote diversity in corporate leadership. Nominations of female board members in firms where we have investments rose to 36 percent from 15 percent in 2011, when we started monitoring the data. Our goal is to reach 50 percent by 2030. Our research highlighting the business case for narrowing the gender gap is yielding significant findings as well. IFC’s FY19 report Moving Toward Gender Balance in Private Equity and Venture Capital found that private equity and venture capital funds with gender-balanced senior investment teams generated up to 20 percent higher returns compared with funds that have a majority of male or female leaders. The findings of the report suggest that the lack of women as allocators and recipients of capital may reduce investment returns and hurt female entrepreneurs. IFC ANNUAL REPORT About Us IFC strives to deliver what cannot be obtained elsewhere. We call that special edge our “additionality.” Using it to maximize our development impact is a cornerstone of our strategy. OUR EXPERTISE Where We Work What We Do Our Industry Expertise MEASURING UP Understanding Our Development Impact OUR PEOPLE & PRACTICES Our Governance Accountability Global Partnerships Portfolio Management Managing Risks Our Approach to Sustainability Reporting Under the Task Force on Climate related Financial Disclosures Independent Auditor’s Limited Assurance Report on a Selection of Sustainable Development Information Financial Performance Summary IFC ANNUAL REPORT OUR EXPERTISE IFC combines investment with advice and resource mobilization to help the private sector advance development. IFC ANNUAL REPORT Where We Work As the largest global development institution focused on the private sector, IFC has a staff presence in 93 countries. We apply lessons learned in one region to solve problems in another—just as we show companies how to match their expertise to opportunities in other developing countries. IFC ANNUAL REPORT What We Do INVESTMENT Our financial products enable companies to manage IFC provides investment, advice, risk and expand their access to foreign and domestic capital markets. Since IFC operates on a commercial and asset management to clients in basis, we invest exclusively in for-profit projects in developing countries. These offerings developing countries and charge market rates for our products and services. complement each other, giving us a unique advantage as we help the Our offerings are designed to meet the specific needs of member countries across different industry private sector create opportunities. sectors — with a special focus on infrastructure, Our products and services are tailored manufacturing, agribusiness, services, and financial markets. In FY19, we made $19.1 billion in long- to a client’s specific needs, adding value term investments in 269 projects to support the every step of the way. Our ability to private sector in developing countries. This includes $10.2 billion mobilized from other investors. attract other investors brings additional benefits, introducing our clients to PRODUCT LINES new sources of capital and better Loans ways of doing business. IFC finances projects and companies through loans for our own account, typically for seven to 12 years. We also make loans to intermediary banks, leasing companies, and other financial institutions for on-lending. While IFC loans traditionally have been denominated in the currencies of major industrial nations, we have made it a priority to structure local-currency products. IFC has provided financing in 73 local currencies. In FY19, we made commitments for $7.1 billion in new loans for our own account. Equity Equity investments provide developmental support and long-term growth capital that private enterprises need. We invest directly in companies’ and financial institutions’ equity and also through private-equity funds. In FY19, equity investments accounted for about $1.0 billion of commitments we made for our own account. IFC generally invests between 5 percent and 20 percent of a company’s equity. We encourage the companies we invest in to broaden share ownership through public listings, thereby deepening local capital markets. We also invest through profit-participating loans, convertible loans, and preferred shares. Trade and Commodity Finance The IFC Global Trade Finance Program guarantees trade-related payment obligations of approved financial institutions. The program extends and complements the capacity of banks to deliver trade finance by providing risk mitigation on a per-transaction basis for more than 218 banks across 71 countries. IFC ANNUAL REPORT In FY19, IFC had a commitment of $4.5 billion Blended Concessional Finance in trade finance, more than half of which was committed in International Development Association IFC uses several tools to crowd in private financing (IDA)* countries and fragile and conflict-affected that would otherwise not be available for high-impact situations (FCS). development projects. One tool that is helping us move into more challenging environments is blended Syndications finance. This involves blending concessional funds —  typically from development partners — with our own IFC’s Syndications Program is the oldest and largest financing and that of our co-investors. Blended among multilateral development banks. It works to finance can help de-risk or improve the risk-reward enable IFC’s public and private partners — commercial profile of transactions that are on the threshold of banks, institutional investors, insurance companies, commercial viability, making them more attractive to sovereign funds, and other development institutions —  private sector investors. to participate alongside us as we provide loans to companies in emerging markets. IFC’s blended concessional finance facilities cover a range of countries, sectors, and thematic areas that By mobilizing our partners’ capital, we forge new are essential to IFC’s strategy. One of these facilities, connections that can help increase foreign investment the IDA Private Sector Window, for example, is playing in the world’s poorest countries and provide a fund- a crucial role in mobilizing investment into some of the raising path for other growing local enterprises to world’s least developed countries. follow. In FY19, IFC syndicated a total of $5.8 billion to 70 partners through B loans, parallel loans, credit In FY19, we committed more than $236 million of mobilization, local currency syndications, and the concessional donor funds, catalyzing $589 million in award-winning Managed Co-Lending Portfolio investments for IFC’s own account. IFC also plays a Program, which creates bespoke portfolios of leadership role in the implementation of Development emerging-market loans for investors. Finance Institutions’ Blended Finance Principles, which call for a disciplined approach to blended Syndications accounted for 57 percent of the total concessional finance to avoid market distortions and third-party funds mobilized by IFC for our clients in crowd in private sector investment. FY19, and 37 percent of these funds went to borrowers in IDA and FCS countries. At year-end, Syndications managed a total portfolio of $15.8 billion on behalf of ADVICE its investment partners. Providing advice is a critical part of IFC’s strategy to create markets — an effort coordinated with Derivatives and Structured Finance governments and the World Bank. Through our IFC makes derivatives products available to our advisory programs, we work with clients — including clients, solely for hedging purposes. By allowing companies, financial institutions, industries, and these companies to access international derivatives governments — to transform ideas into bankable markets to hedge currency, interest-rate or projects. We help establish the necessary conditions commodity-price risks, we enable them to enhance that will attract capital, enabling the private sector their creditworthiness and improve their profitability. to grow. In offering risk-management products, IFC acts generally as an intermediary between the market Our advisory work is informed by the IFC-World Bank and private companies in emerging markets. IFC Country Private Sector Diagnostics, the World Bank also provides structured-finance products for clients Group’s multiyear Country Partnership Frameworks, seeking to raise funds on global and local capital and IFC’s Sector Deep Dives. markets and manage financial risk. IFC has assisted first-time client issuers in accessing the markets • We help companies attract private investors and through partial credit guarantees. We also assist partners, enter new markets, and increase their clients in structuring and placing securitizations with impact. We provide tailored market insights as well capital-markets investors. as advice on how to improve companies’ operational performance and sustainability. • We help industries adopt good practices and standards to increase competitiveness and productivity. • We help governments structure public-private partnerships to improve people’s access to high- quality infrastructure and basic services. We also advise on improving the business environment through reforms that promote investment, spur growth, and create jobs — while providing support for the implementation of these reforms. *This refers to IDA-17. IFC ANNUAL REPORT • We work in collaboration with the World Bank to Gender Equality: We work with companies to provide upstream policy advice that helps create enhance the recruitment, retention, and promotion of markets and support future transactions in multiple women. We also help companies increase women’s industries. access to financial services, technology, information, and markets. Particularly in the poorest and conflict-affected areas of the world, we work with clients to improve their Corporate Governance: We help companies improve environmental, governance, and social practices —  access to capital, mitigate risk, and safeguard against including those related to gender. We also help mismanagement by improving their corporate potential investment clients improve their operational governance. performance and management practices to attract the financing they need. Environmental and Social Risk Management: We help integrate environmental and social risk- In FY19, our advisory portfolio grew to $1.5 billion, management considerations into companies’ encompassing 783 advisory projects in 116 countries. operations to achieve long-term success. Fifty-nine percent of IFC’s advisory program was in IDA countries, 21 percent was in FCS areas, and HOW WE WORK WITH FINANCIAL INSTITUTIONS 24 percent of our advisory program was climate- AND FUNDS related. Forty-two percent included efforts to improve gender-related issues. Our advisory staff members Financial Institutions: We help clients strengthen remain close to clients, with almost 80 percent based risk management and diversify product offerings in the field. in categories such as SME finance, gender, housing finance, and sustainable energy. We also promote HOW WE WORK WITH COMPANIES universal access to finance, strengthen capital markets, and establish credit bureaus and collateral Agribusiness: We help companies improve registries. productivity and standards by creating efficient value chains, ensuring food security, enabling strong Fund Managers: We help develop the private equity links with smaller farming enterprises and rural industry in frontier markets and provide advice to communities, and improving the focus on positive fund managers and SMEs in which the funds invest. economic, social, and environmental outcomes across the food supply chain. HOW WE WORK WITH GOVERNMENTS Infrastructure and Natural Resources: We help Public- Private Partnerships (PPPs): We help companies develop high-impact bankable projects governments design and implement PPPs that are by supporting them to provide increased benefits to tailored to local needs, help solve infrastructure local communities to mitigate local risks in projects. bottlenecks, and achieve national development goals. We also help companies use resources such as energy and water more efficiently, support the development Financial Sector: We work with governments and of renewable-energy markets, and help expand the private sector to build resilient, transparent, people’s access to modern energy services. and smooth-functioning financial systems and capital markets. Corporate Finance Services: We help companies enter new markets, attract investors, and structure Investment Climate: We help improve the business complex projects, offering advice on the design and environment through reforms that promote execution of mergers, acquisitions, and partnerships. investment, spur growth, and create jobs. Green Buildings: We offer tools and training to Cities Initiative: We help local governments, help companies construct buildings that use energy, municipalities, and provinces prioritize and develop water, and materials more efficiently. We also help sustainable, resilient infrastructure services for governments establish related policy frameworks and their citizens. work with banks to launch green-finance products. Joint World Bank Group Initiatives: Operating within Small and Medium Enterprises (SMEs): We help World Bank Group joint global practices, we work SMEs strengthen their skills and performance, upstream to create a business enabling environment improving their ability to participate in the supply where financial stability, access to finance, and and distribution networks of larger firms. We advise risk management provide a foundation to crowd in companies and governments on how to improve private sector investment, create capital markets, and working conditions and boost the competitiveness of accelerate equitable growth. We complement these the textile sector’s supply chain. efforts by working through the Joint Capital Markets Program (J-CAP), a World Bank Group initiative to develop local capital markets. IFC ANNUAL REPORT IFC ASSET MANAGEMENT IFC Global Infrastructure Fund: The $1.2 billion IFC Global Infrastructure Fund was launched in 2013 COMPANY and co-invests with IFC in equity and equity-related investments in the infrastructure sector in emerging IFC Asset Management Company, LLC, a wholly markets. As of June 30, 2019, the fund had made 22 owned subsidiary of IFC, mobilizes and manages investment commitments totaling $702 million. capital for businesses in developing countries and frontier markets. Created in 2009, AMC provides China- Mexico Fund: Launched in 2014, the $1.2 billion investors with unique access to IFC’s emerging- China-Mexico Fund is a country-specific fund that markets investment pipeline, while also expanding the makes equity, equity-like, and mezzanine investments supply of long-term capital to these markets. AMC along with IFC in Mexico. It focuses on infrastructure enhances IFC’s development impact and generates alongside other sectors, including manufacturing, profits for investors by leveraging IFC’s global agribusiness, services, and banking. As of June 30, platform and investment standards. 2019, the fund had made three investment commitments totaling $320 million. As of June 30, 2019, AMC had raised approximately $10.1 billion, including about $2.3 billion from IFC. It IFC Financial Institutions Growth Fund: The manages 12 investment funds covering equity, debt, $505 million IFC Financial Institutions Growth Fund and fund-of-fund products on behalf of a wide variety is a follow-on fund to the IFC Capitalization Fund of institutional investors, including sovereign wealth and makes equity and equity-related investments funds, pension funds, and development-finance in financial institutions in emerging markets. As of institutions. June 30, 2019, the fund had made five investment commitments totaling $158 million. AMC FUNDS IFC Global Emerging Markets Fund of Funds: IFC Capitalization Fund: The $3 billion IFC Launched in 2015, the $800 million IFC Global Capitalization Fund consists of two subfunds — an Emerging Markets Fund of Funds invests mainly in equity fund of $1.3 billion and a subordinated debt private equity funds that are focused on growth fund of $1.7 billion. Launched in 2009, the fund helped companies in various sectors across emerging and systemically strengthen important banks in emerging frontier markets. The fund also invests directly in such markets, bolstering their ability to cope with financial companies. As of June 30, 2019, the fund had made and economic downturns. As of June 30, 2019, the 28 investment commitments totaling $740 million. fund had made 41 investment commitments totaling $2.8 billion. IFC Middle East and North Africa Fund: Launched in 2015, the $162 million IFC Middle East and North IFC African, Latin American, and Caribbean Fund: Africa Fund makes equity and equity-related The $1 billion IFC African, Latin American, and investments in the MENA region. As of June 30, 2019, Caribbean Fund was launched in 2010. The fund the fund had made four investment commitments invests in equity and equity-related investments totaling $66 million. across a range of sectors in Sub-Saharan Africa and in Latin America and the Caribbean. As of June 30, Women Entrepreneurs Debt Fund: The $115 million 2019, the fund had made 38 investment commitments Women Entrepreneurs Debt Fund, launched in totaling $876 million. 2016, extends senior loans to commercial banks for on-lending to women-owned small and Africa Capitalization Fund: The $182 million Africa medium enterprises in emerging markets. This is a Capitalization Fund was launched in 2010 to invest component of the $600 million Women Entrepreneurs in systemically important commercial-banking Opportunity Facility, a partnership established in institutions in Africa. As of June 30, 2019, the fund March 2014 between IFC and the Goldman Sachs had made eight investment commitments totaling 10,000 Women initiative. As of June 30, 2019, the $130 million. fund had made investment commitments to 10 banks amounting to $110 million. IFC Catalyst Fund: The $418 million IFC Catalyst Fund was launched in 2012 and invests in funds that provide IFC Emerging Asia Fund: The $693 million IFC growth capital to companies developing innovative Emerging Asia Fund, launched in 2016, makes equity ways to address climate change in emerging markets. and equity-like investments across all sectors in It also may invest directly in those companies. As of emerging markets in Asia. As of June 30, 2019, the June 30, 2019, the fund had made 22 commitments fund had made five investment commitments of totaling $365 million. $145 million. IFC ANNUAL REPORT Our Industry Expertise FINANCIAL INSTITUTIONS Well-functioning, inclusive, and sustainable financial markets ensure efficient resource allocation and are IFC’s leadership role in sustainable essential for achieving the World Bank Group’s twin private sector development reflects goals to end extreme poverty and boost shared prosperity, as well as meeting the United Nations’ the depth and breadth of expertise we Sustainable Development Goals. have acquired over 60 years of helping IFC’s work with financial intermediaries helps emerging-market firms succeed and strengthen financial institutions and overall financial grow. This is a unique advantage in the systems, expanding existing capital markets and creating new ones, which includes bolstering their marketplace. environmental and social risk management practices. This allows IFC to support micro, small, and medium We leverage our global industry enterprises and enables the growth of digital financial services delivery channels to a far greater extent than knowledge to tackle the biggest we would be able to support on our own. development challenges of our era— As IFC operates through financial intermediaries, we including unemployment, climate encourage them to become more involved in priority change, and food and water security. sectors — such as women-owned businesses and climate change — and in fragile and conflict-affected states, as well as in housing, insurance, infrastructure, AGRIBUSINESS AND FORESTRY and social services. Agribusiness plays an important role in poverty In FY19, our new long-term commitments for our own reduction. The agricultural sector accounts for at least account in financial markets totaled about $5 billion. half of GDP and employment in many developing countries — making it a priority for IFC. HEALTH AND EDUCATION We provide financing and advisory support for the Health care and education are basic human needs —  private sector to address the demand for food in an but they remain beyond the reach of many people in environmentally sustainable and socially inclusive way. developing countries. IFC offers long-term financing and working-capital Expanding access to health care and education is a solutions to help clients finance inputs, including central element of any strategy to end poverty and seeds, fertilizers, and crop-care chemicals for farmers. boost prosperity. IFC supports health-care providers and life-sciences companies by providing financing We pursue investments in logistics and infrastructure and advisory support, sharing industry knowledge, such as warehouses and cold chains to improve the raising management and clinical standards, improving efficiency of supply chains and reduce food waste. To adherence to global quality standards for medicines, improve agricultural productivity, we work to expand helping shape government policy, and supporting the adoption of efficient operational techniques and public-private collaboration. technologies that allow the best use of inputs and resources and help mitigate climate-change impacts. In education, we support private enterprises to IFC also provides advisory support to strengthen complement the work of the public sector and client operations, increase operational capacity of create more opportunities for people so that they smallholder farmers, address climate-change impacts, are productive in rapidly changing economies. We improve food safety, and unlock new markets. work with technology-based solutions and vocational education providers, and also tertiary education In FY19, our new long-term commitments for our own institutions, to improve employability options for account in agribusiness and forestry totaled about their students. $501 million. IFC is the world’s largest multilateral investor in private health care and education. In FY19, our new long-term commitments for our own account in health and education totaled about $374 million. IFC ANNUAL REPORT INFRASTRUCTURE NATURAL RESOURCES Modern infrastructure spurs economic growth, Industries that can harness natural resources are vital improves living standards, and can help address for many of the world’s poorest countries. They are a emerging development challenges, including rapid key source of jobs, energy, and government revenues. urbanization and climate change. IFC focuses on They also provide a wide array of benefits for local supporting private infrastructure projects whose economies through sustainable supply chains and innovative, high-impact business models can be benefit-sharing programs. widely replicated. This work includes early-stage and strategic engagement with governments, developers, IFC’s mission in the oil, gas, and mining sector is to and investors. We are committed to it because the help developing countries realize these benefits, while private sector can make a significant contribution to helping promote sustainable solutions for community infrastructure, providing essential services to large development. We provide financing and advice for numbers of people — and do so efficiently, affordably, private sector clients, and also help governments and profitably. adopt effective regulations and strengthen their capacity to manage these industries across the Our work to support infrastructure advances value chain. people’s access to power, transportation, and water. Additionally, we advise governments on public-private In FY19, our new long-term commitments for our own partnerships, collaborate with mayors to improve account in the sector totaled about $280 million. municipal and environmental infrastructure, and find solutions to urban transport and other challenges. TELECOMMUNICATIONS AND INFORMATION We mitigate risk and leverage specialized financial TECHNOLOGY structuring and other capabilities to make projects bankable. We also help mitigate project risks by The rise of digital technologies offers emerging helping companies engage multiple stakeholders markets a once-in-a-generation opportunity to lay and support benefit sharing activities with local the foundation for economic growth, social inclusion, communities. innovation, job creation, and access to high-quality services that would have been unimaginable even a In FY19, our new long-term commitments for our own decade ago. account in this sector totaled about $1.1 billion. Because IFC has one of the largest footprints in MANUFACTURING emerging markets, we are shaping the ways that the enabling infrastructure for digital technologies The manufacturing sector plays a vital role in creating such as telecommunications towers, broadband, and opportunity and reducing poverty in developing data centers is developed and financed. We are also countries. We work with our clients to increase investing in ventures and growth-stage companies production scale and complexity — introducing more that offer innovative technologies or business models value-added manufactured products and using more geared at emerging markets in areas including health advanced industrial-process technologies. Fostering care, education technology, e-commerce, and clean the production of basic materials such as cement, technology. chemicals, and metals can have a ripple effect across value chains — with the potential to create formal jobs In FY19, our new commitments for our own account in in manufacturing as well as in associated services. this sector totaled about $131 million. We have maintained our focus on manufacturing, TOURISM, RETAIL, AND PROPERTY including in construction materials, textiles and garments, industrial equipment, and transportation The tourism, retail, and property sectors contribute machinery. We invest in and advise companies that significantly to job creation, tax revenues, and seek a more complex model of production. We economic growth for developing countries. promote best practice standards in areas such as energy efficiency, carbon emissions, human resources, Our investments promote the development of and gender. We also provide advisory support on business-enabling infrastructure — including business improving workforce and operational productivity for hotels, warehousing, and commercial property. We mid-size manufacturing clients. work with our retail and hotel clients to create jobs, increase tax revenues, improve business and trading In FY19, our new long-term commitments for our own conditions along their value chains, and raise labor account in the manufacturing sector totaled about standards. We also invest in property companies to $534 million. expand affordable housing. In each of these areas, green buildings play a key role in our investment and advisory work. In FY19, our new long-term commitments for our own account in tourism, retail, and property totaled about $522 million. IFC ANNUAL REPORT MEASURING UP IFC offers clients a unique combination of investment and advice designed to promote sustainable private sector development in emerging markets. We use this special edge to maximize our development impact. IFC ANNUAL REPORT Understanding Our IFC’S APPROACH TO DEVELOPMENT IMPACT Development Impact IFC has developed a comprehensive approach to manage for greater development impact and improve our performance each year. The process, which includes the use of scorecard targets, begins IFC is at the forefront of measuring with country and sector diagnostics. This leads to the development outcomes for private development of country strategies that identify sector priorities and potential engagements. The process sector operations. We set corporate is strengthened by an assessment of anticipated targets for development impact and development outcomes that informs project selection and design. Regular monitoring of project results —  measure the results of our work to and eventually, selective evaluation of mature projects gain a critical understanding of how to identify outcomes achieved and lessons learned —  allows us to meet our goals. effective our strategies are—and to determine if we and our clients are DIAGNOSTICS   IDENTIFYING THE NEEDS AND BARRIERS reaching the people and markets that most need our help. IFC’s work begins with a diagnosis of the opportunities and constraints to private sector solutions to development challenges in specific countries. Country Private Sector Diagnostics (CPSDs) — a joint IFC-World Bank tool — identify constraints to private sector investment and recommend specific actions in priority areas to address those constraints. They also identify sectors with significant potential for private sector engagement and development impact. AN END TO END SUPPORT SYSTEM FOR IMPACT ASSESSMENT DIAGNOSTICS Inform sector focus and project selection; identify country priorities PROJECT RESULTS EVALUATION RATINGS MEASUREMENT Promotes Drive Identifies learning and project achievements and accountability selection lessons learned ex-post and design ex-ante Monitoring / Feedback IFC ANNUAL REPORT CPSDs tap into IFC’s extensive knowledge of the IFC has developed sector frameworks that provide private sector and its needs and limitations across the analytical support to facilitate the assessment sectors and geographies and into the World Bank’s of a project’s expected outcomes and contribution expertise in promoting country policy reforms and to market creation. Sector frameworks present the dialogue with governments. development impact thesis that motivates IFC’s involvement in a sector. In FY19, we published CPSDs on Angola, Ethiopia, Kenya, Nepal, and Rwanda and finalized another IFC has now assessed more than 750 investment seven — Burkina Faso, Guinea, Morocco, Senegal, projects for their expected development impact Philippines, South Africa, and Uzbekistan. As of June and assigned ex-ante — or expected — AIMM scores 2019, an additional 15 CPSDs were being developed —  to each of them. Ex-ante AIMM scores are fully Egypt, Côte d’Ivoire, Democratic Republic of Congo, integrated into investment teams’ decision making, Ecuador, Haiti, Indonesia, Jordan, Kyrgyz Republic, allowing IFC managers to weigh development impact Lebanon, Madagascar, Mozambique, Myanmar, considerations against a range of strategic objectives, Nigeria, Tunisia, and Ukraine — and we have a robust including return, risk, country, and thematic priorities. pipeline of CPSDs for FY20. Published CPSDs are available at www.ifc.org/cpsd. WHAT EX ANTE AIMM SCORES SAY ABOUT IFC’S DEVELOPMENT IMPACT To promote cross-institutional collaboration on diagnostics work, IFC, the World Bank, and other At the start of FY19, IFC established development development finance institutions — including the impact targets for new committed projects in the European Bank for Reconstruction and Development, fiscal year. These targets are: for AIMM-scored, the European Investment Bank, the United Kingdom’s committed projects, an average ex-ante AIMM score Department for International Development, and the of 56, with 15 percent of committed projects rated Swedish International Development Cooperation “very strong” for market creation potential. For the Agency — launched the Country Diagnostic Platform first time, we defined in quantitative terms IFC’s in FY19. The website makes available diagnostic development impact ambitions for new projects at papers that identify obstacles to progress as well the start of a fiscal year. as opportunities for private sector development in emerging economies. Published diagnostics are During the year, IFC committed 187 projects that were available at www.countrydiagnostics.com. scored for ex-ante development impact using the AIMM system. The average ex-ante AIMM score for AIMM   ASSESSING EXPECTED IMPACT AND these projects was 64, or “good.” The share of AIMM- MEASURING RESULTS scored projects that were rated “very strong” for ex-ante market creation potential totaled 12 percent. The Anticipated Impact Measurement and Monitoring (AIMM) system, launched in July 2017, is IFC’s The tables that follow summarize key outcomes from development impact rating system. Potential projects the first year of implementing the AIMM system on an are rated and selected on the basis of their expected ex-ante basis. development outcomes. This approach enables us to set ambitious yet achievable targets, select projects with the greatest potential for development impact, Average AIMM Scores for and optimize project design. Committed Projects in The AIMM system enables IFC to assess a project’s IDA/FCS Countries and for outcomes as well as its effect on market creation. It looks at how project beneficiaries — including Blended Finance employees, customers, and suppliers — are affected. AVERAGE It also examines broader effects on the economy and AIMM society. With the AIMM system, IFC can examine how DESCRIPTION SCORE a project promotes objectives that contribute to the Committed projects in FCS countries creation of markets — by enhancing competitiveness, Committed projects in FCS/LIC/IDA17 resilience, integration, inclusiveness, and sustainability. countries Ultimately, the system helps IFC maintain a line of Committed projects in IDA countries sight from our intermediate objectives to the World Bank Group’s twin goals and the UN Sustainable Committed projects using blended finance Development Goals. The AIMM system incorporates country context in all of its assessments and captures greater development impact potential in projects that seek to address the widest gaps in the most difficult environments. IFC ANNUAL REPORT FY Committed Projects: Ex Ante AIMM Score NUMBER OF AIMM PROJECTS SCORE RATED VERY STRONG BY REGION SCORED AVERAGE MARKET Sub-Saharan Africa % Latin America and the Caribbean % East Asia and the Pacific % Middle East and North Africa % Europe and Central Asia % Global % South Asia % NUMBER OF AIMM PROJECTS SCORE RATED VERY STRONG BY INDUSTRY SCORED AVERAGE MARKET Manufacturing, Agribusiness, and Services % Financial Institutions Group % Infrastructure and Natural Resources % Telecom, Media, Technology, and Venture Investing % With respect to specific investment projects, several DrBridge Holding Limited (ESIP Vezeeta), Middle themes emerged during the first year of the AIMM East and North Africa: Vezeeta connects patients system’s implementation: with doctors throughout the Middle East and North Africa. Its digital platform offers accountability, • IFC’s expected development impact was most addressing deficiencies that make it difficult for pronounced in three priority regions: Sub-Saharan people to access high-quality health care. Increased Africa, South Asia, and the Middle East and North transparency with respect to patients’ experiences Africa. Projects in these regions drew from a range of care, cost, and availability is expected to motivate of IFC focus areas. Examples include the following: doctors to improve the quality of services and reduce wait times. The project will also enhance Nachtigal Hydropower Project, Cameroon: This connectivity in the health-care system, increasing joint World Bank Group project supports a greenfield, coordination of care across different providers. (See 420-megawatt, run-of-river hydropower plant that page 42 for more information.) adds 30 percent of installed generation capacity and brings clean, affordable power to millions. The • Several projects highlight the focus on climate, World Bank Group’s engagement in Cameroon’s gender, and inclusion of underserved groups in power sector over the past two decades has helped IFC’s activities. Of the 187 AIMM-scored projects create an enabling environment for private sector that were committed in FY19, 60 are expected to participation, demonstrating the feasibility of a contribute to improving market sustainability and/or contractual structure that allows for optimal risk- inclusiveness on a systemic basis. sharing among stakeholders. (See page 54 for more information.) InfraV-Gaia, Sub-Saharan Africa: This project, undertaken through IFC InfraVentures — IFC’s early- HDB Financial Services Limited, India: IFC’s stage project development facility — prioritizes support to HDB Financial Services Limited, a development of renewable energy in countries nonbanking finance company, increases the number where wind power would be competitive but has and volume of micro and small loans to individuals no or limited active development. It leverages and very small enterprises in India’s low-income early-stage risk capital, including concessional states. IFC’s investment seeks to increase HDB’s resources from the Finland-IFC Blended Finance for micro and small and medium enterprise customer Climate Program, and IFC’s expertise to develop base to more than 2 million clients by 2021 while projects with significant potential to demonstrate demonstrating the viability of lending to these the feasibility of wind energy. It establishes a track enterprises. This will also build investor confidence record for wind power and provides a basis for in mainstreaming financing opportunities for self- replication throughout a continent with significant employed, low-income households. Our backing wind potential. The project also adds power is among the first by an international institutional generation capacity from a locally available energy investor in HDB. resource, helping the power systems in target countries better respond to and withstand potential energy supply shocks. IFC ANNUAL REPORT Financiamiento Progresemos, Mexico: IFC’s debt Based on a conservative estimate, IFC will contribute financing will help Progresemos triple its portfolio of to the creation of 1.5 million to 1.9 million jobs over support to underfunded micro, small, and medium the lifetime of the projects it financed in FY19. These enterprises (MSMEs) in Mexico’s frontier regions. estimates include direct and indirect jobs generated About 70 percent of Progresemos’ clients live in rural and are derived from projects accounting for about areas and 45 percent in frontier regions, places that 80 percent of IFC’s FY19 investment commitments.¹ Progresemos can focus on by leveraging its network of small microfinance institutions (MFIs) with a In FY19, IFC’s investments helped our clients reduce strong local presence and proximity to clients. IFC annual greenhouse gas emissions by 15.4 tons of expects that the success of this investment will help carbon dioxide equivalent. demonstrate the viability of this model. For larger financial institutions, including banks and larger MFIs, this model will provide efficiency in accessing Starting in FY20, IFC will use the AIMM system underserved areas as they leverage the expertise to assess the development effectiveness of our and knowledge of smaller MFIs. portfolio, absorbing the Development Outcomes Tracking System (DOTS). For the past 14 years, • Among the projects with the highest anticipated DOTS has assigned ratings to IFC projects during impact are those that involved significant upstream supervision and aggregated those ratings to work and close collaboration with the World Bank. obtain an overall assessment of IFC’s impact. The These include the following: capability of the AIMM system to assess portfolios, when combined with its ex-ante project assessment UTE GNA I Geração de Energia S.A. (GNA I), Brazil: capability, will provide an end-to-end framework for This project involves the design, construction, and impact measurement and monitoring. operation of an integrated liquefied natural gas (LNG)-to-power facility. The World Bank program, IFC’s development effectiveness results for FY19 Revisiting Power and Gas Reforms in Brazil, in place are available at www.ifc.org/AnnualReport/ since 2016, consists of complementary studies and DevelopmentEffectiveness consultations to diagnose issues and challenges faced by these sectors in Brazil. World Bank Group diagnostics have included assessments on financing of energy infrastructure and measures LEARNING FROM SELF EVALUATIONS AND that enable the development of a competitive and INDEPENDENT EVALUATIONS sustainable gas market. Successful implementation of GNA I — one of the first privately owned and IFC, other World Bank institutions, and the integrated LNG-to-power projects in the country — is Independent Evaluation Group (IEG) have developed expected to unlock additional private investment. evaluation principles that guide the selection, The project is also expected to encourage highly conduct, and use of self-evaluations and independent efficient backup power capacity plants that displace evaluations to inform operational strategy and policy. inefficient and polluting thermal power plants based on heavy fuel oil and diesel. (See page 41 for more IFC conducts demand-driven evaluations related information.) to impact evidence that fill strategic knowledge gaps, improve operational decision making, and Ayiti Leasing, Haiti: This project provides financing meet demands from clients and stakeholders. IFC is to Ayiti Leasing, the first leasing company in Haiti. It formulating a new, three-year evaluation strategy and follows a broader engagement by the World Bank plans to introduce a greater degree of formality and Group’s Finance, Competitiveness & Innovation rigor into the process of evaluation topic selection Global Practice to lay the groundwork for a leasing and the conduct and review of these evaluations. market in the country. Since 2014, IFC has offered advisory services to help the company establish a IFC conducts mandatory self-evaluations on business plan, policies, and procedures, information investment and advisory operations once they have technology infrastructure, and organizational reached operational maturity, and we conduct self- framework. The project is supported by a second evaluations on advisory operations once they have IFC advisory project, which aims to build capacity reached closure. Investment self-evaluations are to scale leasing operations in a commercially performed on a sample of projects, typically five years sustainable way. IFC’s funding will help it expand following approval, and are validated by IEG. Advisory a new financial product that is well suited to the self-evaluations are performed on 100 percent of needs and risk profiles of SMEs, increasing the projects, and a sample is validated by IEG. company’s portfolio to 660 leases worth $21 million by 2022. This will contribute to greater sector competitiveness. (See page 39 for more information.) 1. Employment estimates are computed for individual projects using IFC’s economic impact assessment framework. The framework comprises sector-specific models and a variety of assumptions across countries and sectors. For financial intermediaries, the estimate includes on-lending of IFC funds only. Client banks’ portfolios grow more than the IFC funding alone, partly because IFC’s contribution catalyzes additional funding and partly because the growth is contractually agreed with IFC. This additional expansion, which is hard to attribute precisely, could represent the creation of several million jobs. IFC ANNUAL REPORT In FY19, IFC initiated a pilot program to provide additional support to teams preparing these evaluations. IFC has observed a decline in our portfolio development effectiveness ratings over the past several years. This initiative is aimed at curtailing this trend, strengthening the quality of these analyses, and complementing efforts to improve work quality. Already, IFC has committed significant staff resources to supporting operational teams’ self-evaluations and has embarked on regular consultations with IEG to identify processing efficiencies to improve staff understanding of lessons learned from evaluations. Selected lessons learned from FY19 completed evaluations include: Women Entrepreneurs in Romania: This report studied the effects of IFC’s gender finance facility on Garanti Bank Romania’s (GB) clients, particularly the business performance of women-led SMEs that borrowed from the bank between 2011 and 2015. The study found that financial services from GB have had a positive effect on the SMEs’ business growth and performance. Additional research and more rigorous evidence are needed to attribute the performance of the SMEs to GB or to IFC. Secured Transactions in Sub-Saharan Africa: An evaluation showed that the OHADA Uniform Act on Secured Transactions led to $3.82 billion of domestic credit to the private sector in seven member states —  Burkina Faso, Cameroon, Central African Republic, Comoros, Mali, Senegal, and Togo — between 2011 and 2015. The impact of the reform is especially encouraging in the context of conflict-affected countries, where mobilizing private resources is very difficult. For instance, in Central African Republic, OHADA reforms led to an increase of $33 million in domestic credit to the private sector. This number is much higher in Mali, at $607 million, even though the country’s economy is still recovering from unrest in 2012. IFC’s Investment Climate Program supported the OHADA Secretariat and the member states to enact and implement the OHADA Uniform Act on Secured Transactions. IFC ANNUAL REPORT OUR PEOPLE & PRACTICES IFC’s commitment to alleviating poverty and creating opportunity for the developing world’s most vulnerable people is reflected in our corporate culture. IFC ANNUAL REPORT Our Governance OUR BOARD Each of our member countries appoints one governor OUR PLACE IN THE WORLD BANK GROUP and one alternate. Corporate powers are vested in the Board of Governors, which delegates most powers The World Bank Group is a vital source of financial to a board of 25 directors. Voting power on issues and technical assistance to developing countries. IFC brought before them is weighted according to the is one of five members of the Bank Group, although share capital each director represents. IFC is a separate legal entity with separate articles of agreement, share capital, financial structure, The directors meet regularly at World Bank Group management, and staff. headquarters in Washington, D.C., where they review and decide on investments and provide overall Membership in IFC is open only to member countries strategic guidance to IFC management. The President of the World Bank. As of June 30, 2019, IFC’s paid-in of the World Bank Group is also President of IFC. capital of about $2.57 billion was held by 185 member countries. These countries guide IFC’s programs EXECUTIVE COMPENSATION and activities. The salary of the President of the World Bank IFC works with the private sector to create Group is determined by the Board of Directors. The opportunity where it’s needed most. Since our salary structure for the IFC Chief Executive Officer founding in 1956, we have committed more than (CEO) is determined by positioning a midpoint $249 billion of our own funds for private sector between the salary structure of staff at the highest investments in developing countries, and we have level, as determined annually by independent U.S. mobilized more than $53 billion more from others. compensation market surveys, and the salary of the World Bank Group President. The compensation of In working to end extreme poverty and to boost our executive leadership is transparent. shared prosperity, we collaborate closely with other members of the Bank Group. IFC CEO Philippe Le Houérou receives an annual salary of $424,000, net of taxes. Our Member Countries Strong Shareholder Support OUR MEMBER PERCENTAGE OF COUNTRIES CAPITAL STOCK United States Japan Germany France United Kingdom India Russian Federation Canada Italy China 175 OTHER COUNTRIES IFC ANNUAL REPORT Accountability INDEPENDENT EVALUATION GROUP The Independent Evaluation Group (IEG) is an independent unit that reports directly to IFC’s Board of Directors. IEG’s mission is to strengthen World Bank Group institutions through evaluations that inform strategies and future work — and lead ultimately to greater development effectiveness. IEG assesses the results of IFC operations and offers recommendations for improvement. IEG also contributes to internal learning by informing new directions, policies and procedures, and country and sector strategies. This year, IEG evaluated IFC’s contributions to creating markets and mobilizing private capital under its new strategy — IFC 3.0. IEG recommended enhancing understanding of market- creating opportunities, increasing access to markets for underserved groups, and regularly assessing IFC’s risk-taking capabilities to carry out activities in economies that are structurally weak. IEG’s annual reviews of World Bank Group results and performance and of other major reports are available on IEG’s website at http://ieg.worldbankgroup.org. OFFICE OF THE COMPLIANCE ADVISOR OMBUDSMAN Communities affected by adverse environmental and social impacts of IFC projects may voice their concerns to the Office of the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC. CAO reports directly to the President of the World Bank Group. CAO is mandated to address complaints from people affected by IFC projects in a manner that is fair, objective, and equitable — with the objective of enhancing environmental and social project outcomes and fostering greater public accountability of IFC. CAO works to resolve issues between affected communities and IFC project operators using a collaborative problem-solving approach through its dispute-resolution function. CAO’s compliance function independently verifies project due diligence and policy compliance to ensure that IFC project outcomes are aligned with their environmental and social commitments. Through its advisory function, CAO delivers learning on broader environmental and social concerns to improve institutional performance. In FY19, CAO’s caseload comprised 60 cases related to IFC and MIGA projects in 33 countries. Of these, 12 were new eligible complaints, and CAO closed nine cases during the year. More information about how IFC is engaging with CAO’s work is available at www.cao-ombudsman.org. IFC ANNUAL REPORT Global Partnerships FY19 commitments from development partners included the following: Strengthening private sector development in IDA IFC and our development partners and FCS: Recognizing that the private sector is a work together to create markets and leading driver of economic growth and job creation in low-income and fragile countries, our partners have mobilize private sector investment for expanded their support to key advisory platforms. development. Our partnerships provide The IFC Support for the G20 Compact with Africa Initiative (ISCA) received additional support from the essential funding for IFC’s work, help Netherlands and Norway with the goal of improving incubate new ideas, and allow proven the conditions for attracting private sector investment to the continent. The Conflict-Affected States in Africa solutions to be scaled up. They facilitate (CASA) initiative celebrated its 10th anniversary and knowledge transfer and build business received additional support from Ireland and Norway and institutional capacity. They to continue work toward sustainable private sector development in conflict-affected economies. The strengthen our impact by channeling Infrastructure Development Collaboration Partnership resources to initiatives that improve Fund (DevCo) received further support from the Private Infrastructure Development Group (PIDG) to the lives of the poor, empower women help governments in low-income countries structure and youth, and promote sustainable transactions with the private sector for infrastructure projects. The Partnership for Resilient, Efficient and private sector development. Sustainable SMEs (PRESS) was launched with support from Luxembourg with the aim to advance inclusive WORKING WITH DEVELOPMENT PARTNERS growth and job creation in IDA and FCS, with a special focus on Africa. IFC partners with more than 30 governments, 20 foundations and corporations, and a variety of In addition, partners increased support for regional multilateral and institutional entities. In FY19, our efforts in Sub-Saharan Africa, including the West Africa development partners committed $390 million Trade Facilitation project, supported by the United for IFC’s advisory services and $122 million for States; the OHADA (Organisation for the Harmonization blended finance initiatives to support priority areas, of Corporate Law in Africa) Business Law Reform Program including increasing private sector investments in in West and Central Africa, supported by France; and International Development Association (IDA) countries the AgTech East Africa project, supported by Norway. and fragile and conflict-affected situations, as well as projects related to gender, climate, financial Country-specific private sector development inclusion, sustainable infrastructure, agribusiness, initiatives in Africa were also strengthened. They and manufacturing. This includes new types of focused on countries such as Ethiopia, supported by partnerships, such as that with the Bill & Melinda Norway, Sweden, and the United Kingdom; Kenya, Gates Foundation to support agricultural technology supported by the Netherlands; Liberia, supported by firms to scale solutions that address constraints Sweden; Mali, supported by Denmark; Mozambique, faced by smallholder farmers in India. We also supported by Sweden; and Somalia, supported strengthened partnerships through strategic events by Denmark, the European Commission, and the such as the Development Finance Forum, a World United Kingdom. Bank Group flagship event that took place in Rwanda this year. The forum brought together key private Expanding innovative solutions for gender equality: and public entities to support business innovation Partners are committed to supporting IFC’s advisory and private sector development solutions in the East programs focused on closing gaps in female African Community. participation in the economy, access to vital services, and opportunities for entrepreneurship and corporate leadership. The Advancing Women in the Workplace program, which received support from Canada, reduces women’s barriers to paid work through enhancing gender equality in the workplace, reducing gender-based violence and addressing unpaid care. IFC ANNUAL REPORT The Leveraging the Financial System to Empower Women WORKING WITH INTERNATIONAL in Bangladesh program received support from Norway INSTITUTIONS and seeks to advance access to finance for women- owned small and medium enterprises (SMEs) and IFC engages with key international institutions women who are underserved by financial institutions. to strengthen the role of the private sector in development finance. These institutions include Gender equality also features as a key component the United Nations, the Organisation for Economic of broader programs supported by our partners, Co-operation and Development, multilateral including the Partnership on Jobs and Education for development banks (MDBs), and development finance Forcibly Displaced Persons and Host Communities, institutions (DFIs). supported by the Netherlands; the Fiji Partnership, supported by Australia; and the Papua New IFC has built strong partnerships with these Guinea Partnership, with additional support from institutions while sharing lessons from our more than New Zealand. six decades of experience in emerging markets. We have shaped the global agenda on private sector Continuing our commitment to address climate solutions for development impact and engaged change: Together with our partners, IFC is ramping our clients to align their business models to new up programs seeking to address the challenges posed market opportunities presented by the Sustainable by climate change. The Market Accelerator for Green Development Goals (SDGs). This engagement is Construction program is the first partnership with the helping enhance the ever-growing role of the private United Kingdom that combines advisory services sector in achieving development impact. and blended finance to incentivize construction of certified green buildings in emerging markets. The In the spirit of SDG 17 — which calls for strengthened new Climate Advisory Partnership received support global partnerships to support and achieve the from the Netherlands to focus on advisory work that ambitious targets of the 2030 Agenda for Sustainable accelerates market transformation toward low-carbon Development — we enhanced our partnership with the economic activity. The Sustainable Cities Platform International Fund for Agricultural Development (IFAD) received additional support from Switzerland to help in FY19. This partnership involves sharing country cities in Eastern Europe, Central Asia, the Middle East, investment strategies, advice, and consultation on and Africa. new financial products, and potential joint advisory and investment activities. Other programs that address climate change and received new support from our partners are IFC collaborates with MDBs through the MDB Heads the Scaling Energy Access in Developing Countries platform, where our management regularly discusses program, supported by the IKEA Foundation; the issues of strategic importance to the MDB system. Climate Change Partnership Program and the ECA Notable achievements include harmonizing the Cities Platform, both supported by Austria; the Green way we define and measure mobilization of private Building Market Transformation program in Nigeria finance, climate finance, blended concessional and the Casablanca City program, both supported by finance, and additionality in private sector operations. Japan; the Clean Energy Access Program, supported IFC is leading an effort to increase collaboration with by Italy; the Pacific Risk Sharing Facility, supported by other DFIs in strategic countries to increase efficiency New Zealand; the Energy Efficiency Support Program and collective impact. for Ukraine, supported by the European Commission and Germany; and the Finland-IFC Blended Finance for Furthermore, IFC worked with other MDBs to publish Climate Program. a joint report on the mobilization of private finance by MDBs and DFIs, using a common measurement framework and methodology. The report, published in June 2018, found that MDBs and DFIs mobilized more than $160 billion from private investors in 2017. This included mobilization by the European Development Finance Institutions (EDFIs). IFC continues to chair the MDB/DFI work on blended concessional finance that led to the adoption of the DFI Enhanced Principles for Blended Concessional Finance for Private Sector Projects. IFC ANNUAL REPORT Development partner commitments FINANCIAL COMMITMENTS TO IFC ADVISORY SERVICES US$ MILLION EQUIVALENT Summary FY19 FY18 Governments Institutional/Multilateral Partners Corporations, Foundations, and NGOs Total Governments FY19 FY18 Australia Austria Canada Denmark Finland France Germany Ireland Israel Italy Japan Korea, Republic of Luxembourg The Netherlands New Zealand Norway Sweden Switzerland United Kingdom United States Total Institutional/Multilateral Partners FY19 FY18 Climate Investment Funds (CIF) European Commission MENA Transition Fund Private Infrastructure Development Group (PIDG) TradeMark East Africa (TMEA) Women Entrepreneurs Finance Initiative (We-Fi) Total Corporations, Foundations, and NGOs FY19 FY18 Stichting IKEA Foundation Total FINANCIAL COMMITMENTS TO IFC BLENDED FINANCE INITIATIVES US$ MILLION EQUIVALENT Development Partner FY19 FY18 Canada Finland Gates Foundation New Zealand The Netherlands United Kingdom Women Entrepreneurs Finance Initiative (We-Fi) Total IFC ANNUAL REPORT Portfolio Management Following the strong growth of our equity portfolio in the past 10 years, IFC has implemented significant changes to our equity approach, leading to more moderate growth and greater selectivity in the near Building and proactively managing a term. In parallel, we have been proactively assessing portfolio that produces strong financial our equity portfolio to identify assets ready for divestment, after IFC’s development role has been results and development impact is at completed. This rebalancing of the equity portfolio the core of IFC’s approach to portfolio results from analyses that take into account market conditions, opportunities, expected returns, and management. We achieve this by risks — and is periodically adjusted as required. The pairing a strong presence on the changes aim to assure alignment of our portfolio with our strategic priorities. ground with deep sector expertise. This enables us to stay close to our Newly appointed global equity heads of industry are clients and markets, monitor trends, expected to play a critical role in central oversight, managing IFC’s larger and more complex equity and anticipate impacts on our clients. positions throughout the investment lifecycle. As our procedures are being adjusted around this new An IFC management committee — the Corporate structure, we are encouraged by steady improvements Portfolio Committee — regularly reviews the entire in our portfolio performance over the past two years. portfolio of about $58.8 billion for IFC’s own account, looking at broad trends as well as select individual For projects in financial distress, our Special projects. This review is complemented by monthly Operations Department determines the appropriate in-depth discussions about IFC’s key sector and remedial actions. It seeks to keep the project country exposures. Quarterly reviews of IFC’s portfolio operational to achieve the original development results are presented to the Board, along with an impact intended and negotiates agreements with in-depth analysis at the end of each fiscal year. Our creditors and shareholders to share the burden investment and portfolio teams, largely based in field of restructuring. Investors and other partners offices, complement global reviews with asset-by- participating in IFC’s operations are kept informed, asset quarterly assessments, for both debt and equity and IFC consults with or seeks their consent as investments. appropriate. At the corporate level, IFC combines analysis of Active portfolio management depends on timely our portfolio performance with sector expertise, and accurate information to drive business decisions. local market intelligence, and projections of global IFC continues to invest in information technology macroeconomic and market trends to inform systems to better support the management of our decisions about future investments. We also regularly portfolio. We have also strengthened our portfolio conduct stress tests to assess the performance support structure through the creation of the of the portfolio against possible macroeconomic corporate Operations Support Unit, to be extended developments, and to identify and address risks. over time to sector and regional teams. At the project level, our multidisciplinary teams —  including investment and sector specialists — closely monitor investment performance and compliance with investment agreements. We do this through site visits to evaluate project implementation, and through active engagement with sponsors and government officials, where relevant, to identify potential problems early on and formulate appropriate solutions. We also monitor our clients’ environmental and social performance in a risk-based manner and measure financial performance and development results. IFC ANNUAL REPORT Managing Risks TREASURY IFC raises funds in the international capital markets ENTERPRISE RISK MANAGEMENT for private sector lending and to ensure sufficient liquidity to safeguard IFC’s triple-A credit ratings. IFC provides long-term investments to the private sector in emerging markets, and this work includes Issuances include benchmark bonds in core currencies expanding the investment frontier into the most such as U.S. dollars, thematic issuances to support challenging markets. In doing so, IFC is exposed to strategic priorities such as climate change, and a variety of financial and nonfinancial risks. Active issuances in emerging-market currencies to support monitoring and sound management of evolving risks the development of capital markets. Most of IFC’s are critical to fulfilling our mission. lending is denominated in U.S. dollars, but we borrow in many currencies to diversify access to IFC’s framework for enterprise risk management is funding, reduce borrowing costs, and support local designed to enable the prudent management of capital markets. financial and reputational impacts that originate from our business activities. In this context, IFC’s risk- IFC’s funding program has kept pace with investment management efforts are designed specifically to help activity — in FY19, new core and short-term borrowings align our performance with our strategic direction. totaled approximately $11.2 billion. IFC has developed risk-appetite statements that determine our willingness to take on risks in fulfilment of our development goals. These statements reflect our core values of maximizing development impact, preserving our financial sustainability, and safeguarding our brand. FY total borrowing AMOUNT CURRENCY US$ EQUIVALENT PERCENT U.S. dollar USD % Australian dollar AUD % Japanese yen JPY % Russian ruble RUB % Brazilian real BRL % Turkish lira TRY % Indian rupee INR % Other % TOTAL % IFC ANNUAL REPORT LIQUIDITY MANAGEMENT CAPITAL ADEQUACY AND FINANCIAL CAPACITY Liquid assets on IFC’s balance sheet totaled Sound risk management plays a crucial role in $39.7 billion as of June 30, 2019, compared to ensuring IFC’s ability to fulfill our development $38.9 billion a year earlier. Most liquid assets are mandate. The very nature of IFC’s business, as a held in U.S. dollars. The exposure arising from assets long-term investor in dynamic yet volatile emerging denominated in currencies other than U.S. dollars is markets, exposes us to financial and operational risks. hedged into U.S. dollars or matched by liabilities in the same currency to eliminate overall currency risk. Prudent risk management and a solid capital position The level of these assets is determined with a view enable us to preserve our financial strength and to ensure sufficient resources to meet commitments maintain our lending during times of economic and even during times of market stress. IFC maintains financial turmoil. IFC’s financial strength results in low liquid assets in interest-bearing instruments managed borrowing costs, allowing us to provide affordable actively against stated benchmarks. financing to our clients. The level of liquid assets is determined to ensure The soundness and quality of IFC’s risk management IFC has sufficient resources to meet cash-flow and financial position can be seen in our triple-A requirements for both a normal planning horizon and credit rating, which has been maintained since in a period of market stress. We use liquidity coverage coverage began in 1989. ratios to assess IFC’s liquidity needs. We assess IFC’s minimum capital requirement in TREASURY RISK MANAGEMENT accordance with our economic capital framework, which is aligned with the Basel framework and leading Treasury risks are managed through a two-tier risk industry practice. Economic capital acts as a common framework: (1) a comprehensive policy framework currency of risk, allowing us to model and aggregate and (2) a hard economic-capital limit for treasury the risk of losses from a range of different investment activities. The policy framework is based on four products as well as other risks. principles: Consistent with industry and regulatory practice, (1) Investment in high-quality assets IFC calculates economic capital for the following (2) Diversification via position size/concentration limits risk types: (3) Tight limits on market risks (credit spread, interest rate, and foreign-exchange risk) • Credit risk: the potential loss due to a client’s default (4) Proactive portfolio surveillance or downgrade • Market risk: the potential loss due to changes in In line with changes that occur in global financial market variables (such as interest rates, currency, markets, IFC enhanced our Treasury policy framework equity, or commodity prices) in FY19. • Operational risk: the potential loss resulting from inadequate or failed internal processes, people, and systems or from external events IFC’s total resources available consist of paid-in capital, retained earnings net of designations and certain unrealized gains, and total loan-loss reserves. Excess available capital, beyond that required to support existing business, allows for future growth of our portfolio while also providing a buffer against unexpected external shocks. As of June 2019, total resources available stood at $27.8 billion, while the minimum capital requirement totaled $21.8 billion. IFC ANNUAL REPORT Our Approach to IFC’S SUSTAINABILITY FRAMEWORK Sustainability The Sustainability Framework articulates IFC’s strategic commitment to sustainable development Sustainability is a critical component and is an integral part of our approach to risk of good development impact. It is management. The Sustainability Framework consists of the Policy on Environmental and Social key to enhancing outcomes for all Sustainability, the Performance Standards, and stakeholders—including a company’s the Access to Information Policy. customers and the communities in POLICY ON ENVIRONMENTAL AND SOCIAL which it operates—and is critical to SUSTAINABILITY business success. The Policy on Environmental and Social Sustainability describes IFC’s commitment to environmental and IFC research shows that companies perform better social due diligence, categorization, and monitoring financially when their environmental, social, and of our clients. Our approach to diligence involves corporate-governance performance is strong. Nearly identifying any gaps between client practice and the 90 percent of our clients believe that our work is IFC Performance Standards in order to agree on a key in helping them reach their long-term business plan of action that, if successfully implemented by goals, improve their relations with stakeholders and the client, will progressively bring their operations in local communities, and boost their brand value and line with good international industry practice. While recognition. IFC’s Sustainability Framework and our IFC cannot ensure outcomes, we monitor our clients’ Corporate Governance Methodology are designed to progress and performance throughout the life of our help our clients achieve those objectives. investment, providing support where we can and using our contractual leverage if necessary. IFC asks our clients to understand and manage the risks they face and those they pose to their surrounding IFC PERFORMANCE STANDARDS environment and communities. We partner with industry and other stakeholders to find innovative solutions that At the core of our Sustainability Framework are IFC open up opportunities for economically, socially, and Performance Standards — which describe how we ask environmentally sustainable private investment — which our clients to avoid, mitigate, and manage risk as a contribute in turn to jobs and inclusive growth. This may way of doing business sustainably. The standards, and include leveraging the capacity of other institutions of the wide array of guidance that supports them, help the World Bank Group to address environmental, social, clients devise solutions that are good for business, and governance challenges that are beyond the ability good for investors, good for the environment, and or responsibility of a company to solve alone. good for communities. In all of our investment decisions, IFC gives weight and Our Performance Standards have become a global attention to environmental, social, and governance benchmark of sustainability practices. The Equator risks, just as we do to credit and financial risks. This Principles, which are built on the Performance enables us to take informed risks to achieve both Standards, have been adopted by 97 financial development impact and financial sustainability. institutions in 37 countries. In addition, many financial The IFC Performance Standards Assessment and Labor and Working Resource Efficiency Community Health, Management of Conditions and Pollution Safety, and Security Environmental and Prevention Social Risks and Impacts IFC ANNUAL REPORT institutions, including development banks and export credit agencies, ask their clients to meet the IFC Performance Standards. IFC also serves as the Secretariat for the Sustainable Banking Network, a global knowledge-sharing group of banking regulators and banking associations, to help develop guidance and capacity for banks to incorporate environmental and social risk management into credit decision making. ACCESS TO INFORMATION POLICY IFC’s Access to Information Policy reaffirms and The Corporate Governance Methodology includes reflects our commitment to enhance transparency the assessment of six key corporate governance about our activities, improve development parameters — commitment to better practices of effectiveness, and promote good governance. corporate governance, the structure and functioning Openness promotes engagement with stakeholders, of the Board of Directors, the control environment, which in turn improves the design and implementation disclosure and transparency, treatment of minority of projects and policies, and strengthens development shareholders, and governance of stakeholder outcomes. IFC supports several transparency engagement. It is available for six kinds of companies: initiatives that encourage responsible investment and publicly listed, family- or founder-owned, state- reporting practices among the private sector, the owned, small and medium enterprises, financial community of international financial institutions, and institutions, and funds. the community of development finance institutions. These include the International Aid Transparency As of June 2019, the updated methodology had Initiative (IATI), Principles for Responsible Investment been adopted by 35 development bank signatories (PRI), and the Global Reporting Initiative (GRI). Visit of the Corporate Governance Development www.ifc.org/projects for more information. Framework, creating a common platform for evaluating and improving governance practices in INTEGRATED GOVERNANCE investee companies. Corporate governance is a paramount consideration The IFC Toolkit for Disclosure and Transparency in an investor’s decision-making process — and, and Guidance has also expanded this year. This increasingly, so is the way companies behave on helps companies in emerging markets prepare a variety of environmental and social indicators. comprehensive and best-in-class annual reports Investors see businesses’ management of that are appropriate for their size and organizational environmental and social issues as a test of how complexity and that are adapted to the context they would handle all strategic and operational of operation. The objective is to provide useful challenges. It is essential, therefore, to assess information for investors and other stakeholders. environmental, social, and governance practices in an integrated fashion. The application of our integrated approach to corporate governance goes beyond the companies In 2018, IFC updated its Corporate Governance we invest in. We also use it in our advisory work Methodology to include key corporate governance with regulators and stock exchanges — to help them considerations and integrate environmental and social apply higher disclosure standards to corporate issues consistent with IFC’s Policy on Environmental listings, reporting requirements, and other disclosure and Social Sustainability. obligations. Land Acquisition Biodiversity Indigenous Peoples Cultural Heritage and Involuntary Conservation Resettlement and Sustainable Management of Living Natural Resources IFC ANNUAL REPORT CORPORATE RESPONSIBILITY IFC will continue to consider sustainability an integral part of our internal business operations. We hold ourselves accountable to the same environmental and social standards we ask of our clients. This commitment connects IFC’s mission with how we run our business. OUR STAFF IFC’s employees are our most important asset, bringing innovative solutions and global best practices to our clients. Our employees’ knowledge, skills, diversity, and motivation are key to our comparative advantage. INDICATOR FY19 FY18 FY17 Total full-time staff Non-U.S.-based staff (%) % % % Short-term consultants/temporaries (FTEs) Employee engagement index % % % Diversity Women managers (target 50%) % % % Part II managers (target 50%) % % % Women GF+ Technical (target 50%) % % % Sub-Saharan/Caribbean GF+ (target 12.5%) % % % Note: FTE is full-time equivalent (staff); GF+ refers to salary grade GF or higher — i.e., professional staff; Managers include Directors, Vice Presidents, and CEO. WHERE WE WORK Advancing diversity and inclusion: STAFF AT ALL IFC works with clients across the globe. That broad GRADE LEVELS reach is reflected in our staff, a group of people who United States % represent 151 nationalities and who work from 93 countries. Having a diverse workforce with critical skill Other Countries % sets and diverse perspectives is key for IFC to deliver Total on our strategic agenda. NATIONAL ORIGIN IFC is committed to go beyond the inherent diversity we have as an international institution. This year, STAFF AT OFFICER MANAGERIAL we refreshed our Diversity and Inclusion Compact LEVEL AND HIGHER CADRE targets — which commit IFC to measurable diversity Part 1 Countries1 % % and inclusion targets at the corporate and vice presidency unit level — following the end of the 2014 Part 2 Countries2 % % Compact period. In the process, we recalibrated our Total baseline, reflected on the progress made, and set 1. Staff with primary nationality from countries that declared goals based on remaining gaps. themselves as IDA donors at the time of joining the World Bank Group. Targeted recruitment efforts and strategic 2. Staff of all other nationalities. partnerships were implemented globally in FY19, and IFC has exceeded our 12.5 percent target of Sub- GENDER Saharan Africans and Caribbean nationals at the GF+ level. STAFF AT OFFICER MANAGERIAL LEVEL AND HIGHER CADRE Enriching staff development: Female % % Male % % IFC’s Leadership and Management Framework provides development programs for leaders across Total the organization. Two new leadership development programs were added in the past two years: Sponsorship and Reverse Mentorship. Both focus on diverse representation in the selection process and are now showing positive results. IFC ANNUAL REPORT IFC’s Sponsorship program builds a pipeline of diverse OUR OFFICES leaders by offering sponsor–advisee relationships between top talent (selected through a review Minimizing IFC’s impact on the environment is a process) and vice presidents. The program allows priority for us. IFC continues to be carbon-neutral exposure to strategic thinking through shadowing, for global business operations, including air opportunities for cross collaborations, and enriched travel. We design and manage our buildings in career networks. Most participants in the second a sustainable way and offset emissions that cannot cohort, which concluded the program in FY19, be eliminated. More details can be found at have had opportunities to work in cross-functional www.ifc.org/corporateresponsibility. and corporate projects. As of June 2019, 16 of the participants — or half of the group — had progressed to higher responsibilities. IFC’s Reverse Mentorship program was inaugurated in June 2018. It pairs junior staff — most of them millennials — with mid-level managerial and nonmanagerial staff so that the junior staff can act as mentors. The program boosts innovation through greater cross-functional collaborations and inclusion of youth in the organization. Survey results indicate a greater feeling of inclusiveness among the 20 mentor– mentee pairs in the first cohort. IFC ANNUAL REPORT Reporting Under IFC is a member of several climate-related corporate leadership initiatives, such as the World Economic the Task Force on Forum’s Alliance of CEO Climate Leaders, the Principles for Responsible Investment, the TCFD Climate related (where IFC is a supporting institution), One Planet Summit, the One Planet Lab, the Global Green Bond Partnership, the Carbon Pricing Leadership Coalition, Financial Disclosures and the Fashion Industry Charter for Climate Change (where IFC is a supporting institution). CLIMATE RELATED FINANCIAL DISCLOSURE STRATEGY IFC released our first disclosure under the guidelines IFC’s climate business plan is part of the Climate recommended by the Task Force on Climate-related Change Action Plan 2016–2020 and continues to build Financial Disclosures (TCFD) in the IFC’s Annual upon the IFC Climate Implementation Plan noted Report 2018. Since then, IFC has worked to maintain in IFC’s FY18 disclosure. IFC’s climate commitments and strengthen our climate-related financial risk are aligned with the World Bank Group’s climate assessment, management, and reporting practices. targets for 2021–2025. IFC continues to focus on five This second disclosure can be found online with links strategic investment areas — clean energy, climate- to all relevant reports and references. smart agribusiness, green buildings, climate-smart cities, and green finance . Below is progress toward GOVERNANCE this strategy. IFC’s climate business and risk are overseen by IFC’s Increasing IFC’s share of investment in climate CEO, who reports to the President of the World Bank business: In FY19, IFC’s total climate-related Group on climate business performance and climate commitments amounted to $2.6 billion, or 29 percent risk evaluation. The World Bank Group President of our new investments (see Table 1). IFC has new reports to the IFC Board of Directors. As part of the targets as noted in the Targets and Metrics section capital increase endorsed by IFC’s Board in 2018, (see page 105). the Board has mandated that IFC meet a number of climate-related requirements, including screening all Opening new markets to create new investment investments for climate risk and scaling up climate- opportunities: Over time, IFC’s climate business has related commitments. IFC has a dedicated climate diversified. Just over 10 years ago, renewable energy business department that supports investment teams investments comprised almost 40 percent of IFC’s to mitigate risk through carbon pricing and tools to annual climate business. Today, IFC’s renewable evaluate physical risk. The department also helps energy business remains strong at $2.4 billion in FY19 identify low-carbon investment opportunities by of IFC’s own account investments and mobilized providing the assistance from sector experts, metrics, capital, and IFC has additional business in green financial tools, and strategy. Progress against the buildings ($761 million), manufacturing ($380 million), corporation’s climate targets are reported by the climate-smart agribusiness ($162 million), and Climate Business Department to both the Board and climate investments through financial institutions the Management Team regularly. The World Bank ($1.98 billion). IFC is targeting new business Group also reports annually to the Board on progress opportunities in energy storage, transportation toward climate targets. The most recent annual logistics, distributed renewables, and off-shore wind. update to the Board was on November 20, 2018. Catalyzing external investment: IFC brings partners IFC’s Climate Anchors Network continues to integrate into our investments in climate projects. Mobilizing climate business throughout the corporation. The external capital limits IFC’s own exposure in the Climate Anchors Network comprises senior staff in near term and builds more robust markets in the each industry and regional department. Climate long run. In FY19, IFC directly mobilized $3.2 billion anchors report to their department director and to in climate investments through syndications, public- the Climate Business director. This year, the Climate private partnerships, and platforms that crowd in Anchors Network expanded to include a senior external capital. IFC also works with policy makers on lawyer to bring awareness and knowledge of climate enabling conditions, which reduces risks in new and litigation. emerging sectors. Table : Climate business commitments: Five year trend TOTAL CLIMATE COMMITMENTS US$ MILLIONS FY19 FY18 FY17 FY16 FY15 FY14 Own account long-term finance Direct mobilized finance Total climate commitments IFC ANNUAL REPORT RISK MANAGEMENT In FY19, IFC expanded our existing climate risk SECTOR SPOTLIGHT: management of both physical and transition risk. Creating markets for Physical risk: IFC is completing our risk screening certified green buildings pilot for ports, waterways, airports, roads, insurance, forestry, and pulp and paper.¹ IFC will evaluate the IFC has identified an investment opportunity of pilot in early FY20. almost $25 trillion for green buildings in emerging markets, because of high population growth, Transition risk: IFC uses carbon pricing to address urbanization trends, and deployment of existing transition risk and avoid stranded assets. Since May technologies for resource efficiency. To tap into 2018, a carbon price is included in the economic this potential, IFC created EDGE — Excellence analysis of project finance transactions with in Design for Greater Efficiencies — a green estimated annual emissions of more than 25,000 tons building certification program for more than of carbon dioxide equivalent in the cement, chemicals, 150 countries. and thermal power generation sectors. These are the most greenhouse gas-intensive projects and account EDGE defines a green building as 20 percent for over half of IFC’s greenhouse gas footprint from its more resource efficient in energy, water, and investments. For these investments, IFC includes in the embodied energy in materials. The EDGE soft- Board papers the impact of the carbon price on the ware enables property developers to identify project’s economic performance. In FY19, IFC initiated the most cost-effective solutions to design a new carbon pricing pilot for projects in all real green and for IFC and other banks to identify sectors — both project finance and corporate finance green building investments. with known use of proceeds — with estimated annual emissions of more than 25,000 tons of carbon dioxide The EDGE program enables IFC and other banks equivalent. This pilot will be evaluated in early FY20. to invest in more efficient buildings, supporting new products such as green mortgages, green As part of our efforts to address climate risks and bonds, and green construction financing. In only minimize our indirect exposure to coal-related five years, IFC’s investments in green buildings projects, IFC does not provide loans to financial have risen from $160 million to $761 million in institutions for coal-related activities. To further FY19, with a high of $1.37 billion in FY18 for both reduce exposure to coal, IFC no longer provides IFC’s own account and mobilized capital. general purpose loans to financial institutions. Targeted loans are directed to key strategic sectors, such as micro, small, and medium enterprises, women-owned businesses, climate-related projects, in the Joint Report on Multilateral Development Banks’ and housing finance. The use of proceeds is disclosed Climate Finance. In its annual Green Bond Impact Report, on IFC’s Project Information Portal. IFC also reports on the environmental impact of projects financed through the green bonds that IFC issues. In addition, IFC evaluates — and discloses to the Board —  the development impact of our projects, including Emissions disclosure: IFC continues to report climate impacts. For that, we use the Anticipated aggregate greenhouse-gas emissions reductions Impact Measurement and Monitoring (AIMM) system. from IFC investments through this annual report. IFC also discloses project-level emissions for projects TARGETS AND METRICS with estimated annual emissions of more than 25,000 metric tons of carbon dioxide equivalent Targets: In FY19, IFC’s climate investments comprised through the publicly available Environmental and Social 29 percent of total commitments, exceeding the Review Summary. corporate target of 28 percent. In December 2018, the World Bank Group announced that climate IFC has been carbon-neutral in all our business investments² will comprise, on average, 35 percent of operations including business travel (Scope 1 and IFC’s own-account investments over the FY21–25 period, 2 emissions) since FY09, and previous targets have accelerating last year’s commitment over the next five cut energy use in IFC’s headquarters by 18 percent. years. The Bank Group also plans to mobilize at least In FY19, IFC set a global, internal carbon-reduction $200 billion over the same period. The IFC corporate commitment to cut our facility-related emissions by target is translated to investment teams through 20 percent by 2026, from a 2016 baseline. This target departmental and regional climate business targets. is IFC’s contribution to the Bank Group’s commitment to reduce facility-related emissions by 28 percent over Investment disclosure: IFC reports climate finance the same period. commitments in this annual report (see page 104) and 1. IFC’s risk screening pilot systematically screens projects at the appraisal stage for physical climate risk in the seven industries. 2. IFC’s Definitions and Metrics for Climate-Related Activities identifies projects and sectors that qualify as climate investments; these definitions are harmonized with other multilateral development banks. https://www.ifc.org/wps/wcm/connect/topics_ext_content/ ifc_external_corporate_site/climate+business/resources/ifc-climate-definition-metrics IFC ANNUAL REPORT Independent Auditor’s We have reviewed the Statements made in all the chapters of the Annual Report: “Investing For Impact” Limited Assurance (pages 12–23 and 34–75), “IFC Year in Review” (pages 24–33, with the exclusion of the “Financial Highlights”) and “About Us” (pages 76–105), with a particular focus Report on a Selection on impacts (including AIMM) and climate finance (including IFC’s reporting under TCFD). of Sustainable The following Indicators have been reviewed: Development MATERIAL AREAS INDICATORS Information FY19 long-term commitments by Long-term commitments ($ millions) and projects (number) Environmental and by Environmental and Social Social category category To the President, (page 29) Ex-ante AIMM Average ex-ante AIMM scores In response to your request, we, scores of FY19 by categories, regions and committed projects industries EY & Associés, performed a limited (pages 87–88) assurance engagement on a selection FY19 investment in Own account long-term of sustainable development information climate business commitments in climate-related (pages 104–105) investments ($ millions) in the annual report (the “Annual Report”) for the year ended June 30, IFC is responsible for: 2019, including quantitative indicators • the preparation of the Indicators and Statements (the “Indicators”) and qualitative in accordance with the reporting criteria applicable statements (the “Statements”). We during the year ended June 30, 2019 (the “Reporting Criteria”), consisting of IFC’s instructions, procedures selected the Indicators and Statements and guidelines specific to each Indicator, a summary that were deemed to be of particular of which is provided in the Annual Report or on IFC’s website; stakeholder interest, to involve a • the presentation of the Statements in accordance potential reputation risk for IFC, and/or with “IFC’s Access to Information Policy,” which is available on IFC’s website¹ and the to value IFC’s corporate responsibility, principles of relevance, completeness, neutrality, management and performance. understandability and reliability as defined by international standards.² OUR INDEPENDENCE AND QUALITY CONTROL We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. We apply International Standard on Quality Control and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance and ethical requirements, professional standards and applicable legal and regulatory requirements. 1. https://disclosures.ifc.org 2. ISAE 3000 from IFAC, Global Reporting Initiative (GRI), or AA1000 Accountability Standard. IFC ANNUAL REPORT OUR RESPONSIBILITY LIMITED ASSURANCE CONCLUSION Our responsibility is to express a limited assurance Based on the procedures performed and evidence conclusion on the Indicators and the Statements obtained, nothing has come to our attention that based on the procedures we have performed and causes us to believe that: the evidence we have obtained. We conducted our limited assurance engagement in accordance with • the Indicators were not prepared, in all material respects, in accordance with the Reporting Criteria; International Standard on Assurance Engagements 3000³ (“ISAE 3000”) issued by the International • the Statements were not presented, in all material respects, in accordance with “IFC’s Policy on Auditing and Assurance Standards Board. This Disclosure of Information” and the principles of standard requires that we plan and perform this relevance, completeness, neutrality, clarity and engagement to obtain limited assurance about reliability as defined by international standards. whether the Indicators and Statements are free from material misstatement. A limited assurance OTHER INFORMATION ABOUT engagement is substantially less in scope than a THE REPORTING CRITERIA AND THE reasonable assurance engagement in relation to STATEMENTS PREPARATION PROCESS both the risk assessment procedures, including an understanding of internal controls, and the procedures With regards to the Reporting Criteria and the performed in response to the assessed risks. Statements preparation policies and principles, we wish to make the following comments: NATURE AND SCOPE OF OUR LIMITED ASSURANCE ENGAGEMENT IFC is on track to reach the target of having 28% climate investments by FY20, as set out in its 2016 We performed the following procedures: Climate Implementation Plan. For the FY21–25 period, • We assessed the Reporting Criteria, policies IFC has already committed to a more ambitious target and principles, with respect to their relevance, (35% on average), while simultaneously increasing completeness, neutrality and reliability. total investments. With the progress of knowledge and • We read the content of the Annual Report to identify in coordination with other Multilateral Development key Statements regarding the sustainability and Banks, IFC periodically refines the definitions and development areas listed above. typologies used for identifying, promoting, and • At the corporate level, we conducted interviews with tracking climate-related investment and advisory more than twenty people responsible for reporting projects. The typology has been stable for the past to assess the application of the Reporting Criteria or years but the methodology may be modified over the to substantiate the Statements. next year for the period 2021–2025. The target would • At the corporate level, we implemented analytical be re-calibrated if the methodology is revised. procedures and verified, on a test basis, the calculations and the consolidation of the Indicators. Where relevant, IFC calculates gross GHG emissions • We collected supporting documents for the and GHG savings. While gross GHG emissions are Indicators or Statements, such as reports to monitored over time, GHG savings are calculated the Board of Directors or other meetings, loan ex-ante and are not tracked. IFC is currently agreements, internal and external presentations and developing a methodology to calculate net GHG reports, or survey results. emissions in three sectors. • We reviewed the presentation of the Statements and the Indicators in the Annual Report and the Given the lack of data in its countries of operations associated notes on methodology. and the absence of adequate recognized methodologies, IFC is not yet able to quantify the LIMITATIONS OF OUR PROCEDURES compatibility of its annual commitments with a 2°C or lower scenario, as recommended by the TCFD. Our limited assurance engagement was limited to the Statements and the Indicators identified in the Paris-La Défense, August 8, 2019 table above and did not cover other disclosures in the Annual Report. The Independent Auditor EY & Associés Our tests were limited to document reviews and interviews at IFC’s headquarters in Washington, D.C. Within the scope of work covered by this report, we did not participate in any activities with external stakeholders or clients and only conducted limited testing aimed at verifying the validity of information on a sample of individual projects. Caroline Delérable Partner, Sustainable Performance & Transformation 3. ISAE 3000: “Assurance Engagement other than reviews of historical data,” International Federation of Accountants, International Audit and Assurance Board, December 2003. IFC ANNUAL REPORT Financial Performance Summary From year to year, IFC’s net income is affected higher balances of equity investments recorded by a number of factors that can result in volatile at fair value through net income, and the volatility financial performance. Beginning in FY19, IFC’s net inherent in security prices and resulting impact on income includes all unrealized gains and losses investment valuations. The adoption of ASU 2016-01 on investments in equity securities, resulting from also impacted the comparability of IFC’s financial adopting ASU 2016-01, Recognition and Measurement results between FY19 and the year ended June 30, of Financial Assets and Liabilities (ASU 2016-01), 2018 (FY18), see MD&A Section VII. RESULTS OF as discussed in more detail in Note A to the FY19 OPERATIONS. The main elements of IFC’s net income consolidated financial statements. This has resulted and comprehensive income and influences on the in, and will continue to cause, volatility in net income level and variability of net income and comprehensive given the size of IFC’s current equity portfolio, the income from year to year are: ELEMENTS SIGNIFICANT INFLUENCES Net income: Yield on interest earning assets Market conditions including spread levels and degree of competition. Nonaccruals and recoveries of interest on loans formerly in nonaccrual status and income from participation notes on individual loans are also included in income from loans. Liquid asset income Realized and unrealized gains and losses on the liquid asset portfolios, in particular the portion of the liquid assets portfolio funded by net worth, which are driven by external factors such as: the interest rate environment and liquidity of certain asset classes within the liquid asset portfolio. Income from the equity investment Global climate for emerging markets equities, fluctuations in currency portfolio and commodity markets, and company-specific performance for equity investments. Overall performance of the equity portfolio. Provisions for losses on loans Risk assessment of borrowers, probability of default, loss given default and loss and guarantees emergence period. Other income and expenses Level of advisory services provided by IFC to its clients, the level of expense from the staff retirement and other benefits plans, and the approved and actual administrative expenses and other budget resources. Gains and losses on other non- Principally, differences between changes in fair values of borrowings, excluding trading financial instruments IFC’s credit spread (beginning in FY19, changes attributable to IFC’s credit accounted for at fair value spread are reported in other comprehensive income, prior to FY19, such changes were reported in net income) and associated derivative instruments and unrealized gains or losses associated with the investment portfolio including puts, warrants, and stock options which in part are dependent on the global climate for emerging markets. These securities may be valued using internally developed models or methodologies utilizing inputs that may be observable or non-observable. Grants to IDA Level of the Board of Governors-approved grants to IDA. IFC ANNUAL REPORT ELEMENTS SIGNIFICANT INFLUENCES Other comprehensive income: Unrealized gains and losses on Global climate for emerging markets, fluctuations in currency and commodity debt securities accounted for as markets and company-specific performance and consideration of the extent to available-for-sale which unrealized losses are considered other than temporary. Debt securities may be valued using internally developed models or methodologies utilizing inputs that may be observable or non-observable. Unrealized gains and losses Fluctuations in IFC’s own credit spread measured against US dollar LIBOR attributable to instrument-specific resulting from changes over time in market pricing of credit risk. As credit credit risk on borrowings at fair spreads widen, unrealized gains are recorded and when credit spreads narrow, value under the fair value option unrealized losses are recorded. Unrecognized net actuarial gains Returns on pension plan assets and the key assumptions that underlay and losses and unrecognized prior projected benefit obligations, including financial market interest rates, staff service costs on benefit plans expenses, past experience, and management’s best estimate of future benefit cost changes and economic conditions. The overall market environment has a significant net income was also impacted by lower realized gains influence on IFC’s financial performance. Emerging on sales of equity investments and higher debt security equity markets were volatile during FY19 with a impairment losses due to the significant depreciation significant decline in the first half of the year and an of a currency that was deemed other than temporary improvement in the second half, primarily in FY19 Q3; in FY19 Q1. However, IFC also recorded higher foreign commodity prices, including oil, declined for the year currency transaction gains on non-trading activities and IFC’s major investment currencies depreciated on foreign exchange hedges of the exposure in these against IFC’s reporting currency, the US dollar. investments, which substantially offset the impact of the debt security impairment losses. IFC also recorded IFC reported net income of $93 million in FY19, higher income from liquid asset trading activities, higher $1,187 million lower than FY18 ($1,280 million) and loan and debt security net interest income, and higher $1,329 million lower than the year ended June 30, net foreign currency gains on non-trading activities. 2017 (FY17) ($1,422 million). The decline in net income in FY19 was primarily due to lower valuations on IFC reported income before net unrealized gains and equity investments in the three months ended losses on non-trading financial instruments accounted September 30, 2018 (FY19 Q1) and the three months for at fair value and grants to IDA of $311 million in ended December 31, 2018 (FY19 Q2) contributing to FY19, as compared to income of $1,272 million in a net loss of $446 million in FY19 Q1 and a net loss of FY18. The $961 million decrease in income before net $401 million in FY19 Q2 with a significant improvement unrealized gains and losses on non-trading financial in the three months ended March 31, 2019 (FY19 Q3) instruments accounted for at fair value and grants to ($655 million net income) and the three months ended IDA in FY19 when compared to FY18 was principally a June 30, 2019 (FY19 Q4) ($285 million net income). IFC’s result of the following: Change in net income FY vs FY US millions INCREASE DECREASE FY19 VS FY18 Higher unrealized losses on equity investments and associated derivatives, net ( ) Lower realized gains on equity investments and associated derivatives, net ( ) Higher charges on borrowings ( ) Higher other-than-temporary impairments on debt securities ( ) Lower dividend income on equity investments ( ) Higher income from loans and guarantees, realized gains and losses on loans and associated derivatives Lower other-than-temporary impairments on equity investments Higher income from liquid asset trading activities Other, net ( ) Change in income before net unrealized gains and losses on non-trading financial instruments accounted for at fair value and grants to IDA ( ) IFC ANNUAL REPORT IFC’s net income (loss) for each of the past five fiscal years ended June 30, 2019, is presented below (US$ millions): IFC’s net income loss , fiscal years Fiscal year ended June 30 (US$ millions) 2015 2016 ( ) 2017 2018 2019 Management uses Income Available for Designations for Designations is calculated under accounting (a non-GAAP measure) as a basis for designations of standards for equity investments in effect prior to retained earnings. Income Available for Designations July 1, 2018, which formed the basis of IFC’s approach generally comprises net income excluding: net to designations and sliding scale formula approved unrealized gains and losses on equity investments by IFC’s Board in FY17, and is consistent with the and net unrealized gains and losses on non-trading approach to calculating Income Available for financial instruments accounted for at fair value, Designations in FY18 and FY17. income from consolidated entities other than AMC, and expenses reported in net income related to Income Available for Designations was $909 million in prior year designations. In FY19, Income Available FY19, $1,318 million in FY18 and $1,233 million in FY17. Reconciliation of reported net income to income available for designations US millions FY19 FY18 FY17 Net income attributable to IFC Add: Net gains attributable to non-controlling interests – – Net income Adjustments to reconcile Net Income to Income Available for Designations Unrealized losses (gains) on investments ( ) ( ) Advisory Services Expenses from prior year designations Unrealized losses (gains) on borrowings ( ) Grants to IDA – Adjustments to conform to approach to designations approved by IFC’s Board in FY17 ( ) – – Other Income Available for Designations Based on the Board-approved distribution policy, subject to the conditions, a designation of $98 million the maximum amount available for designation of IFC’s retained earnings for grants to IDA. These was $122 million. On August 8, 2019, the Board of designations are expected to be noted with approval Directors approved a designation of $24 million of by the Board of Governors, and subject to the above IFC’s retained earnings for Advisory Services, and, conditions, concluded in FY20. IFC ANNUAL REPORT Selected financial data as of and for the last five fiscal years US millions AS OF AND FOR THE YEARS ENDED JUNE 30 2019 2018 2017 2016 2015 Consolidated income highlights: Income from loans and guarantees, including realized gains and losses on loans and associated derivatives Provision for losses on loans, guarantees, accrued interest and other receivables ( ) ( ) ( ) ( ) ( ) (Loss) income from equity investments and associated derivatives ( ) Income from debt securities, including realized gains and losses on debt securities and associated derivatives Income from liquid asset trading activities Charges on borrowings ( ) ( ) ( ) ( ) ( ) Other income Other expenses ( ) ( ) ( ) ( ) ( ) Foreign currency transaction gains (losses) on non- trading activities ( ) ( ) Income before net unrealized gains and losses on non- trading financial instruments accounted for at fair value and grants to IDA Net unrealized (losses) gains on non-trading financial instruments accounted for at fair value ( ) ( ) ( ) Income before grants to IDA Grants to IDA – ( ) ( ) ( ) ( ) Net income (loss) ( ) Less: Net (gains) losses attributable to non-controlling interests – – ( ) Net income (loss) attributable to IFC ( ) AS OF AND FOR THE YEARS ENDED JUNE 30 2019 2018 2017 2016 2015 Consolidated balance sheet highlights: Total assets Liquid assets¹ Investments Borrowings outstanding, including fair value adjustments Total capital of which Undesignated retained earnings Designated retained earnings Capital stock Accumulated other comprehensive (loss) income (AOCI) ( ) ( ) Non-controlling interests – – 1. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives. IFC ANNUAL REPORT KEY FINANCIAL RATIOS 2019 2018 2017 2016 2015 Financial ratiosa: Return on average assets (GAAP basis)*b % % % % % Return on average assets (non-GAAP basis) c % % % % % Return on average capital (GAAP basis)* d % % % ( )% % Return on average capital (non-GAAP basis) e % % % % % Overall liquidity ratio f % % % % % Debt to equity ratio g ∶ ∶ ∶ ∶ ∶ Total reserves against losses on loans to total disbursed portfolio h % % % % % Capital measures: Total Resources Required (US$ billions) i Total Resources Available (US$ billions) j Strategic Capitalk Deployable Strategic Capitall Deployable Strategic Capital as a percentage of Total Resources Available % % % % % * This ratio is not directly comparable due to the adoption of ASU 2016-01. a. Certain financial ratios, as described below, are calculated excluding the effects of unrealized gains and losses on investments, other non-trading financial instruments, Accumulated Other Comprehensive Income (AOCI), and impacts from consolidated Variable Interest Entities (VIEs). b. Net income for the fiscal year as a percentage of the average of total assets at the end of such fiscal year and the previous fiscal year. c. Return on average assets is defined as Net income, excluding unrealized gains/losses on investments accounted for at fair value, income from consolidated VIEs and net gains/losses on non-trading financial investments, as a percentage of total disbursed loan and equity investments (net of reserves), liquid assets net of repos, and other assets averaged for the current and previous fiscal year. d. Net income for the fiscal year as a percentage of the average of total capital (excluding payments on account of pending subscriptions) at the end of such fiscal year and the previous fiscal year. e. Return on average capital is defined as Net income, excluding unrealized gains/losses on investments accounted for at fair value, income from consolidated VIEs and net gains/losses on non-trading financial investments, as percentage of the paid-in share capital and accumulated earnings (before certain unrealized gains/losses and excluding cumulative designations not yet expensed) averaged for the current and previous fiscal year. f. Overall Liquidity Policy states that IFC would at all times maintain a minimum level of liquidity, plus undrawn borrowing commitments from the IBRD, that would cover at least 45% of the next three years’ estimated net cash requirements. g. Leverage (Debt/equity) ratio is defined as the number of times outstanding borrowings plus committed guarantees cover paid-in capital and accumulated earnings (net of retained earnings designations and certain unrealized gains/losses). h. Total reserves against losses on loans to total disbursed loan portfolio is defined as reserve against losses on loans as a percentage of the total disbursed. i. Total resources required (TRR) is the minimum capital required to cover the expected and unexpected loss on IFC’s portfolio, calibrated to maintain IFC’s triple-A rating. TRR is the sum of the economic capital requirements for IFC’s different assets, and it is determined by the absolute size of the committed portfolio, the product mix (equity, loans, short-term finance, and Treasury portfolio assets), and by operational and other risks. j. Total resources available (TRA) is the total capital of the Corporation, consisting of (i) paid-in capital; (ii) retained earnings net of designations and some unrealized gains and losses; and (iii) total loan loss reserves. TRA grows based on retained earnings (profit minus distributions) and increases in reserves. k. Total resources available less total resources required. l. 90% of total resources available less total resources required. IFC ANNUAL REPORT COMMITMENTS In FY19, the Long-Term Finance program was $8,920 million, as compared to $11,630 million in FY18, and Core Mobilization was $10,206 million, as compared to $11,671 million for FY18, a decrease in the total of Long-Term Finance and Core Mobilization of $4,175 million or 18%. Program outcomes reflect a challenging year for IFC with its organizational realignment and workforce planning exercise and the introduction of an Accountability and Decision- Making Framework. Macroeconomic volatility in some of our key markets also impacted program delivery. In addition, the average outstanding balance for Short-Term Finance was $3,256 million at June 30, 2019, as compared to $3,435 million at June 30, 2018. CORE MOBILIZATION Core Mobilization is financing from entities other than IFC that becomes available to clients due to IFC’s direct involvement in raising resources. FY and FY long term finance and core mobilization US millions FY19 FY18 Total Long-Term Finance and Core Mobilization Total Long-Term Finance Total Core Mobilization IFC ANNUAL REPORT Asset Management Company AMC Funds managed by AMC and their activities FY vs FY US millions unless otherwise indicated THROUGH JUNE 30, 2019 TOTAL FUNDS RAISED SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2019 INVESTMENT FROM CUMULATIVE COMMITMENTS INVESTMENT OTHER INVESTMENT MADE BY DISBURSEMENTS TOTAL FROM IFC INVESTORS COMMITMENTS** FUND*** MADE BY FUND Investment Period China-Mexico Fund, LP (China-Mexico Fund)      –          – IFC Financial Institutions Growth Fund, LP (FIG Fund) IFC Middle East and North Africa Fund, LP (MENA Fund) IFC Emerging Asia Fund, LP (Asia Fund) Post Investment Period IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) – – IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) – – IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) – Africa Capitalization Fund, Ltd. (Africa Capitalization Fund) – – – IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, Catalyst Funds) IFC Global Infrastructure Fund, LP (Global Infrastructure Fund)* IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds (Japan Parallel), LP (collectively, GEM Funds) Women Entrepreneurs Debt Fund, LP (WED Fund) IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund)**** – – Total * Includes co-investment fund managed by AMC on behalf of Fund LPs. ** Net of commitment cancellations. *** Excludes commitment cancellations from prior periods. **** The Russian Bank Cap Fund has completed the exit from all its investments and was liquidated during FY18. IFC ANNUAL REPORT THROUGH JUNE 30, 2018 TOTAL FUNDS RAISED SINCE INCEPTION FOR THE YEAR ENDED JUNE 30, 2018 INVESTMENT FROM CUMULATIVE COMMITMENTS INVESTMENT OTHER INVESTMENT MADE BY DISBURSEMENTS TOTAL FROM IFC INVESTORS COMMITMENTS** FUND*** MADE BY FUND Investment Period IFC Catalyst Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, Catalyst Funds)         IFC Global Infrastructure Fund, LP (Global Infrastructure Fund)* China-Mexico Fund, LP (China-Mexico Fund) – – IFC Financial Institutions Growth Fund, LP (FIG Fund) – – IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds (Japan Parallel), LP (collectively, GEM Funds) IFC Middle East and North Africa Fund, LP (MENA Fund) Women Entrepreneurs Debt Fund, LP (WED Fund) IFC Emerging Asia Fund, LP (Asia Fund) Post Investment Period IFC Capitalization (Equity) Fund, LP (Equity Capitalization Fund) – – IFC Capitalization (Subordinated Debt) Fund, LP (Sub-Debt Capitalization Fund) – – IFC African, Latin American and Caribbean Fund, LP (ALAC Fund) – Africa Capitalization Fund, Ltd. (Africa Capitalization Fund) – – – IFC Russian Bank Capitalization Fund, LP (Russian Bank Cap Fund)**** – – Total * Includes co-investment fund managed by AMC on behalf of Fund LPs. ** Net of commitment cancellations. *** Excludes commitment cancellations from prior periods. **** The Russian Bank Cap Fund has completed the exit from all its investments and was liquidated during FY18. IFC ANNUAL REPORT LETTER TO THE BOARD OF GOVERNORS The Board of Directors of IFC has had this annual report prepared in accordance with the Corporation’s by-laws. The President of IFC and Chairman of the Board of Directors has submitted this report with the audited financial statements to the Board of Governors. IFC ANNUAL REPORT Stay Connected WEB & SOCIAL MEDIA RESOURCES IFC’s website, www.ifc.org, provides comprehensive information on every aspect of our activities. It includes contact information for offices worldwide, news releases and feature stories, data on results measurement, disclosure documents for proposed investments, and key policies and guidelines. The online version of IFC’s 2019 Annual Report, www.ifc.org/annualreport, provides downloadable PDFs of all materials in this volume and translations as they become available. IFC ONLINE CREDITS IFC website IFC ANNUAL Cover Pages 44–45 ifc.org REPORT TEAM: Rafe Swan/Getty San Miguel Annual Report Mame Annan-Brown Page 3 Pages 46–47 ifc.org/AnnualReport Manager, IFC External Grant Ellis/World Bank Thomas Stockwell/IFC Relations Social Media Index Page 4 Page 49 ifc.org/SocialMediaIndex Jennine Meyer, Joseph Simone D. McCourtie/ LiftIt Rebello, Inaê Riveras World Bank Facebook Page 51 Editors facebook.com/IFCwbg Page 7 IFC Rob Wright Dominic Chavez/IFC Twitter Page 53 Branding, Design and twitter.com/IFC_org Production Page 11 Barbara Rutusznick/ Cameron Davidson World Bank LinkedIn Vinit Tyagi David Hills linkedin.com/company/ Online Coordinator Page 54 Grant Ellis/World Bank IFClinkedin Dasan Bobo/World Bank Thuy Huong Dinh Pages 12–13 YouTube Page 56 Communications Analyst Aiman Nassar youtube.com/IFCvideocasts DRIK Aaron Rosenberg Pages 14–15 Instagram Pages 58–59 Chief of Public Affairs Max Seigal instagram.com/IFC_org/ Ammar Keylani Brenna Lundstrom Page 17 Marwan Naamani Medium Public Affairs Dragon Images/ medium.com/@IFC_org Shutterstock Page 61 M.A. Deviah Alf Ribeiro/Shutterstock SoundCloud Editorial Consultant Pages 18–19 soundcloud.com/IFC_org Pages 64–65 Dasan Bobo/World Bank Alison Buckholtz Reuters Editorial Consultant Pages 20–21 Pages 66–67 Teow Cek Chuan/ Gregory James Felder Guinea Alumina Shutterstock Communications Corporation S.A. 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