IFC AnnRep2013 Volume1 PDF

Annual Report 2013
IFC Year in Review
In FY13, our investments climbed to an all-time high of nearly $25billion, leveraging the power of the private sector to create jobs and tackle the worlds most pressing development challenges.
Total Assets
Dollars in millions
80,000
IFC Financial Highlights

Dollars in millions, as of and for the years ended June 30*
2013
2012
2011
2010
2009
Net income (loss) attributable to IFC Grants to IDA

60,000
$ $
1,018 340
$ 1,328 $ 330
$ $ $
1,579 600 2,179
$ $ $
1,746 200 1,946
$ $ $
(151) 450 299
Income before grants to IDA Total assets
$ 1,350 $ 77,525 $34,677 $ 13,309
$ 1,658 $ 75,761 $31,438 $ 11,977
$68,490 $ 29,934 $ 13,126
$ 61,075 $25,944 $ 10,146
$51,483 $ 22,214 $ 7,932
40,000
Loans, equity investments and debt securities, net Estimated fair value of equity investments KEY RATIOS
20,000
Return on average assets (GAAP basis) Return on average capital (GAAP basis)
0 09 10 11 12 13
1.3% 4.8% 77% 2.6:1 $ $ 16.8 20.5 7.20% $ $
1.8% 6.5% 77% 2.7:1 15.5 19.2 6.60% $ $
2.4% 8.2% 83% 2.6:1 14.4 17.9 6.6% $ $
3.1% 10.1% 71% 2.2:1 12.8 16.8 7.4% $ $
-0.3% -0.9% 75% 2.1:1 10.9 14.8 7.4%
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)
Net Income (Loss) Attributable to IFC

Dollars in millions
2,000
Total reserve against losses on loans to total disbursed loan portfolio
*See Managements Discussion and Analysis and Consolidated Financial Statements for details on the calculation of these numbers: http://www.ifc.org/ifcext/annualreport.nsf/Content/AR2013_Financial_Reporting
IFC Operational Highlights

1,500
2013
2012
2011
2010
2009
Dollars in millions, for the year ended June 30
1,000
NEW INVESTMENT COMMITMENTS Number of projects 612 113 $18,349 576 103 $ 15,462 518 102 $ 12,186 528 103 $ 12,664 447 103 $ 10,547
500
Number of countries For IFCs own account
CORE MOBILIZATION*
500 09 10 11 12 13
Syndicated loans1 Structured nance IFC initiatives & other Asset Management Company (AMC) Funds Public- Private Partnership (PPP)2 Total core mobilization
$ 3,098 $ 1,696 $ $ 768 942
2,691
$ 4,680 $ 1,340 $ 454 $ 6,474
$ $
1,986 797
$ $ $ $
1,858 169 1,927 8
$ $ $
1,727 437 41
$ 2,358 $ 236 $ 5,377
$ 6,504
$ 4,896
$ 3,962
INVESTMENT DISBURSEMENTS For IFCs own account Syndicated loans 3 $ 9,971 $ 2,142 $ 7,981 $ 6,715 $ 6,793 $ 2,855 $ 5,640 $ 1,958
$ 2,587
$ 2,029
COMMITTED PORTFOLIO Number of rms For IFCs own account Syndicated loans 4 1,948 $49,617 $ 13,633 1,825 $ 45,279 $ 11,166 1,737 $ 42,828 $ 12,387 1,656 $38,864 $ 9,302 1,579 $34,502 $ 8,299
ADVISORY SERVICES Advisory Services program expenditures Share of program in IDA countries 5 $ 232.0 65% $ 197.0 65% $ 181.7 64% $ 166.4 62% $ 157.8 52%
*Financing from entities other than IFC that becomes available to client due to IFCs direct involvement in raising resources. 1. Includes B- Loans, Parallel Loans and A- Loan Participation Sales (ALPS). 2. Third-party financing made available for public-private partnership projects due to IFCs mandated lead advisor role to national, local, or other government entity. 3. Includes B- Loans and Agented Parallel Loans. 4. Includes B- Loans, A- Loan Participation Sales (ALPS), Agented Parallel Loans, and Unfunded Risk Participations (URPs). 5. All references in this report to percentages of advisory program expenditures in IDA countries and fragile and conflict-affected areas exclude global projects.
THE POWER OF PARTNERSHIPS
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IFC Annual Report 2013
ABOUT IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work in more than 100 developing countries allows companies and nancial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFCs vision is that people should have the opportunity to escape poverty and improve their lives.
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This report summarizes IFCs role in helping the private sector create jobs and opportunity in developing countries. It highlights how we spur innovation (pages3239), inuence policy (pages 4047), provide a demonstration effect for others (pages 4855), and strive to maximize our development impact (pages 5663).
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4 to 9
Leadership Perspectives
10 to 25
26 to 29
The Power of Partnerships
IFCs Global Results
30 to 63
65 to 69
30
70 to 77
How IFC Creates Opportunity
65
78 to 110
Measuring Up
Our Business and Expertise
70
111
Our People and Practices
78
Stay Connected
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IFC ANNUAL REPORT 2013
A Letter from WORLD BANK GROUP PRESIDENT JIM YONG KIM
We are at an auspicious moment in history. Thanks to the successes of the past few decades and a favorable economic outlook, developing countries now have an unprecedented opportunity: the chance to end extreme poverty within a generation. This opportunity must not be squandered.
Earlier this year, we in the World Bank Group set two specic and measurable goals for ourselves and our partners in the development community: effectively ending extreme poverty by shrinking the share of people living on less than $1.25 a day to 3percent by 2030, and promoting shared prosperity by raising the incomes of the poorest 40percent of the population in every developing country. These are ambitious goals, and success is far from inevitable. Nearly ve years after the global nancial crisis began, in 2008, the worlds economic recovery remains fragile. Developed countries struggle with high unemployment and weak economic growth. Developing countries are growing more slowly than before the crisis. Moreover, the ght against poverty will become increasingly difficult as we push toward our target, since those who remain poor will be the hardest to reach. Other challenges could pose new threats to poverty reduction. Conict and political instability present major risks, because they increase poverty and create long-term obstacles to development. Moreover, a warming planet could increase the prevalence and size of drought-affected areas, and make extreme weather events more frequent, with unpredictable costs in terms of lives and nancial resources. Yet, I remain optimistic that achieving the goals is within our reach. Doing so will require systemic and relentless collaboration from the World Bank Group, our 188 member countries, and other partners. IFC will play an important role by mobilizing the power of the private sector to create jobs and opportunity where they are needed most.
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This year, IFC provided a record of nearly $25 billion in nancing for private sector development, $6.5 billion of which was mobilized from investment partners.
This year, IFC provided a record of nearly $25billion innancing for private sector development, $6.5billion of which was mobilized from investment partners. Nearly half of IFCs 612 investment projects took place in the poorest countries served by the International Development Association. More than $5billion went to support private sector development in Sub-Saharan Africa, and more than $2billion went to South Asia. IFC Asset Management Company, an IFC subsidiary that mobilizes capital from third-party investors for investment in developing countries, increased its assets under management to $5.5billion. This represents a signicant milestone for a company set up just four years ago. In addition, IFC mobilized more than $3billion from other investors in theform of syndicated loans. This Annual Report shows the crucial role IFC has played in providing support for small and medium entrepreneurs, expanding access to nance for the poor, creating jobs, and generating opportunities for women. In Cte dIvoire, for example, IFC arranged a nancing package that will allow the Azito power plant to increase energy production by 50percent without using additional gas. This will help reduce power shortages in the country and support its economic recovery. In Latin America, IFC is extending quality healthcare to poor communities in the Brazilian state of Bahia with a highly innovative public-private partnership model. And, working under a joint strategy with the World Bank, IFC is bringing new opportunity to Myanmar, a country whose economic development has lagged signicantly behind that of its East Asian counterparts.
IFC is also making important strides in helping the private sector address climate change. Earlier in 2013, IFC issued the worlds largest green bond, raising $1billion that will be directed to climate-related projects across the globe. Inaddition, IFC helped over 10 building developers in Asia, Latin America, and other regions adopt more energy-efficient designs. These are the types of steps we must take to ensure that climate change does not wipe out the hard-won development gains the world has achieved in recent decades.
JIM YONG KIM World Bank Group President
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A Letter from IFC EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER JIN-YONG CAI
Across the world, the challenges of development are vast and growing. So are the needs of entrepreneurs, investors, and businesses in developing countries, which struggle to overcome constraints in nance, infrastructure, employee skills, and the regulatory environment.
For IFC, this represents a tremendous opportunity: to engage the creativity and resources of the business community to change the world for the better. By helping companies overcome obstacles to sustainable growth, we help them create opportunity and improve lives. We enlist them as partners in the global effort to end extreme poverty and promote shared prosperity. We believe strongly in the power of partnerships to make a transformational difference. As the worlds largest global development institution, we worked this year with nearly 2,000 private sector clients and a wide array of governments, donors, and other stakeholders. The result was another record year for IFC we invested and mobilized more money for private sector development than ever before, helping sustain development in more than 100 countries. Our new investments climbed to an all-time high of nearly $25billion in FY13, including funds mobilized from other investors, providing capital to more than 600 projects and companies across the world. We invested $18.3billion for our own account and mobilized $6.5billion from other investors. In a time of declining official aid ows to developing countries, these investments had an impact in every region of the world. We now have an investment portfolio of nearly $50billion in nearly 2,000 companies in 126 countries. This diversication has contributed to our strong risk-adjusted returns and to our development impact. At the end of 2012, our investments provided jobs for 2.7million people in developing countries. With our support, our clients treated 17.2million patients, educated 1million students, and improved opportunities for 3.1million farmers. They generated power for 52.2million customers, and distributed water to 42million.
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We believe strongly in the power of partnerships to make a transformational difference.
We focused strongly on promoting prosperity in the worlds poorest and most fragile regions. In FY13, nearly half of our projects totaling more than $6billion were in the poorest countries served by the World Banks International Development Association, most of them in Sub-Saharan Africa. About two-thirds of our advisory program expenditures were in IDA countries. Our investments in fragile and conict-affected regions climbed to nearly $600million. Our Advisory Services achieved signicant results for our clients businesses and governments alike. Developmenteffectiveness ratings for Advisory Services reached a record of 75percent while client-satisfaction ratings climbed to an all-time high of 90percent. The advice we provide is a crucial element of the value we bring to our clients, and in FY13 we achieved notable progress in providing client solutions that integrate investment and advice we had active advisory projects with 250 investment clients. In FY13, our advice helped mobilize almost $1billion in private investment through public-private partnerships, which are expected to improve infrastructure and health services for millions of people. In addition, we helped more than 40,000 small and medium enterprises obtain $4.5billion in nancing secured with movable property, through our work with collateral registries. We also provided training and capacity-building to about 350,000 people including farmers, entrepreneurs, and managers of small and medium enterprises. In addition, IFC Asset Management Company continued to grow, increasing its assets under management to $5.5billion across six investment funds, with a strong mix of reputable investors. It has launched two new funds including the IFC Catalyst Fund, which focuses on climate-smart investments, and the Global Infrastructure Fund, which will invest scarce
equity risk capital in the critically important infrastructure sector. I am condent IFC can achieve even greater impact going forward. This year was my rst as IFCs CEO, and Itraveled to nearly three dozen countries in every region of the world to meet with our clients and staff. I saw rsthand what we can achieve by being ambitious, unafraid of risk, client-focused, and open to new ideas. We can tackle the big problems that have long hindered development such as access to nance, energy and climate change, and food security. IFC is a unique organization, one that has managed to combine a businesslike commercial approach with a passionate, focused commitment to achieving meaningful and measurable development impact. Strong, protable growth builds resources for greater development impact in the future. Developing countries need transformative solutions. Working with our partners, IFC is well positioned to providethem.
JIN-YONG CAI IFC Executive Vice President and Chief Executive Officer
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MANAGEMENT TEAM
Our seasoned team of executives ensures that IFCs resources aredeployed effectively, with a focus on maximizing development impact and meeting the needs of our clients. IFCs Management Team benets from years of development experience, a diversity of knowledge, and distinct cultural perspectivesqualities that enhance IFCs uniqueness. The team shapes our strategies and policies, positioning IFC to help improve the lives of more poor people in the developing world. Our executives are vital in maintaining IFCs corporate culture of performance, accountability, and engagement.
Jingdong Hua
Janamitra Devan
Jean Philippe Prosper
Saadia Khairi
Karin Finkelston
Dorothy Berry
Vice President, Treasury and Syndications
Vice President, Financial and Private Sector Development
Vice President, SubSaharan Africa, Latin America and the Caribbean
Vice President, Risk Management and Portfolio
Vice President, Asia-Pacic
Vice President, Human Resources, Communications, and Administration
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Ethiopis Tafara
Vice President, General Counsel
Dimitris Tsitsiragos
Jin-Yong Cai
Nena Stoiljkovic
Gavin Wilson
Rashad Kaldany
IFC Executive Vice President and CEO
Vice President, Business Advisory Services
CEO, IFC Asset Management Company
Vice President and Chief Operating Officer
Jorge Familiar Calderon
Vice President, Europe, Central Asia, Middle East and North Africa
Vice President and Corporate Secretary (not pictured)
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ANNUAL REPORT 2013
With a global presence in more than 100 countries, anetwork of more than 900nancial institutions, andnearly 2,000 private sector clients, IFC is uniquely positioned to create opportunity where its neededmost. We use our capital, expertise, and inuence to help change the world for the better to eliminate extreme poverty and to boost shared prosperity.
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Thats the power of partnerships.
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Partnerships take connections

No institution can solve the challenges of development on its own. But IFC has a distinctive power to bring together a variety of players to address the challenges collectively. We work with our network of partners to craft innovative solutions that make good things happen in difcult places.
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We can end extreme poverty in a generation and boost shared prosperity.
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Partnerships take ambition

In a world in which the needs of developing countries far exceed the available resources, it takes ambition to make a lasting difference in the lives of the poor. We are stepping up to the challenge, unafraid to take risks, and nding new ways to maximize our development impact.
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Partnerships take focus

Our clients hold the key to sustainable private sector development in the poorest countries and regions of the world. We use our distinctive combination of broad global knowledge and deep local expertise to align their needs with the opportunities for transformational development in emerging markets.
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In all our projects, we aim to do the things that no one else is able or inclined to. We seek to achieve maximum impact protably and efficiently, while ensuring we have the funds required to continue ourgrowth.
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Partnerships can improve lives

Our work helps expand employment, improve health and education, and broaden access to nance for those who need it most. In 2012, our clients supported 2.7 million jobs, treated 17.2 million patients, and expanded opportunities for more than 3 million farmers.
2.7
million jobs were supported by IFC clients in 2012.
17.2
million patients were treated by IFC clients.
3.1
million farmers beneted from our work with clients.
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Partnerships can promote prosperity

We help create the conditions needed for sustained prosperity. In 2012, our advice helped governments in 43 countries adopt 76 reforms to strengthen the investment climate. Clients we invested in distributed power to nearly 46 million customers and contributed about $27 billion to government revenues.
76
investment-climate reforms achieved in 43countries.
$27
billion in government revenues, generated by IFC clients.
46
million customers received power because of IFC investments.
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Partnerships can transform the world

Harnessing the creativity of the private sector, we can help end extreme poverty within a generation. We can help lift the incomes of the poorest 40 percent of the population in every developing country. Achieving these goals would change the world.
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IFCS GLOBAL IMPACT
Our record investments and advice helped achieve signicant impact for the poor. Nearly half our investment projects were in the worlds poorest countries. We helped our clients support 2.7million jobs and provide more than $265billion in loans to micro, small, and medium enterprises in 2012. Our advice helped governments in 43 countries adopt 76 reforms related to the investment climate.
$4.8
BILLION
Latin America and the Caribbean
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$25 BILLION
in investments, including $18.3 billion in commitments for our own account
$3.3
BILLION
Europe and Central Asia
$1.7
BILLION
South Asia
$3.5
BILLION
Sub-Saharan Africa
$2.9
BILLION
East Asia and the Pacic
$2.0
BILLION
Middle East and North Africa
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FY13 COMMITMENTS
Dollar amounts in millions Total
BY INDUSTRY
FY13 COMMITMENTS BY ENVIRONMENTAL AND SOCIAL CATEGORY

$18,349 (100%) Category $6,477 (35.3%) $3,647 (19.9%) $2,247 (12.2%) $1,635 (8.9%) $1,314 (7.2%) $1,278 (7.0%) $890 (4.9%) $472 (2.6%) $389 (2.1%) A B C FI FI-1 FI-2 FI-3 Total Commitments Number of ($ millions) Projects $884 $5,490 $6,764 $1,751 $450 $2,203 $807 $18,349 17 167 269 48 14 59 38 612
Trade Finance Financial Markets Infrastructure Consumer & Social Services Manufacturing Agribusiness & Forestry Funds Telecommunications & Information Technology Oil, Gas & Mining
BY REGION
IFCS LARGEST COUNTRY EXPOSURES1

$4,822 (26.28%) $3,501 (19.08%) $3,261 (17.77%) $2,873 (15.66%) $2,038 (11.11%) $1,697 (9.25%) $156 (0.85%) Country (Global Rank) India (1) China (2) Turkey (3) Brazil (4) Russian Federation (5) Committed % of Portfolio Global ($ millions) Portfolio $4,453 $3,002 $2,856 $2,690 $2,145 $1,584 $1,334 9% 6% 6% 5% 4% 3% 3% 2% 2% 2% June 30, 2013 (Based on IFCs Account)
Latin America and the Caribbean Sub-Saharan Africa Europe and Central Asia East Asia and the Pacific Middle East and North Africa South Asia Global
Some amounts include regional shares of investments that are officially classified as global projects.
BY PRODUCT
Mexico (6) $8,519 (46.43%) $6,959 (37.93%) $2,732 (14.89%) $138 (0.75%) Nigeria (7)
Loans1 Guarantees2 Equity3 Risk-management products

1. Includes loan-type, quasi-equity products. 2. Includes trade finance. 3. Includes equity-type, quasi-equity products.
Egypt, Arab Republic of (8) $1,130 Ukraine (9) Colombia (10) $963 $947
1. Excludes individual country shares of regional and global projects.
COMMITTED PORTFOLIO
For IFCs own account as of June 30, 2013 Total
BY INDUSTRY
$49,617 (100%)
Financial Markets Infrastructure Manufacturing Agribusiness & Forestry Consumer & Social Services Funds Trade Finance Oil, Gas & Mining Telecommunications & Information Technology Other
BY REGION
$14,563 (29%) $9,358 (19%) $6,385 (13%) $4,251 (9%) $4,215 (8%) $3,733 (8%) $3,081 (6%) $2,359 (5%) $1,667 (3%) $5 (0%)
Europe and Central Asia Latin America and the Caribbean Sub-Saharan Africa East Asia and the Pacific Middle East and North Africa South Asia Global
$10,994 (22%) $10,993 (22%) $7,833 (16%) $7,726 (16%) $5,793 (12%) $5,582 (11%) $696 (1%)
Amounts include regional shares of investments that are officially classified as global projects.
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FY13 INVESTMENT SERVICES DOTS SCORE BY INDUSTRY

IFC Total Funds Infrastructure Financial Markets Agribusiness & Forestry Oil, Gas & Mining Consumer & Social Services Telecommunications & Information Technology Manufacturing 716 (29,674) 84 (1,199) 101 (4,805) 219 (11,813) 79 (3,215) 28 (2,200) 94 (2,045) 31 (1,067) 80 (3,329)
IFCS CLIENT LEADERSHIP AWARD

66% 79% 73% 70% 68% 64% 56% 55% 49%
Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects.
FY13 INVESTMENT SERVICES DOTS SCORE BY REGION

IFC Total Latin America and the Caribbean East Asia and the Pacific Middle East and North Africa Europe and Central Asia Sub-Saharan Africa South Asia 716 (29,674) 159 (8,007) 98 (3,922) 80 (3,283) 168 (8,477) 121 (3,094) 81 (2,707) 66% 74% 70% 65% 64% 61% 60%
Numbers at the left end of each bar are the total number of companies rated. Numbers in parentheses represent total IFC investment ($ millions) in those projects.
FY13 ADVISORY SERVICES PROGRAM EXPENDITURES

Dollar amounts in millions Total
BY REGION
231.9 (100%)
Sub-Saharan Africa East Asia and the Pacific Europe and Central Asia South Asia Latin America and the Caribbean Middle East and North Africa Global
BY BUSINESS LINE
65.4 (28%) 38.5 (17%) 36.4 (16%) 33.6 (14%) 25.5 (11%) 20.4 (9%) 12.2 (5%)
Every year, IFC recognizes an organization that reects our values and symbolizes our shared commitment to sustainable development. We present our Client Leadership Award to a corporate client that best demonstrates leadership, innovation, and operational excellence. This year, the award went to Vegpro Group, a dynamic agribusiness company in Kenya. It has been an IFC client for nearly two decades. Vegpro is engaged in a tricky market: supplying fresh food to supermarkets in the European Union. As shoppers demand high-quality, ready-to-eat vegetables, growers must assure yearround supply and quick delivery while complying with strict environmental and safety standards. But the companys creative approach has transformed it into Kenyas largest vegetable producer, with an annual turnover of $100million. All of the fresh produce it supplies to the retail market is certied, which usually means higher income for suppliers 4,000 of whom are small-scale farmers. Vegpro is one of Kenyas largest private employers, with 7,000 employees. About three-quarters of them are women who enjoy starting wages that are almost 50percent higher than the average daily minimum, in addition to benets such as free primary healthcare and counseling.
Investment Climate Access to Finance Sustainable Business Public-Private Partnerships
74.8 (32%) 62.6 (27%) 55.0 (24%) 39.5 (17%)
WEIGHTED AND UNWEIGHTED INVESTMENT SERVICES DOTS SCORES

FY11
FY11 582
$21,181
67% 76% 68% 75% 66% 73%

Unweighted Weighted
FY12
FY12 668
$26,610
FY13
FY13 716
$29,674
Numbers at the left end of each bar for unweighted DOTS score are the total number of companies rated. Numbers at the left end of each bar for weighted DOTS score represent total IFC investment ($ millions) in those projects. FY11 and FY12 weighted scores have been restated to reflect methodology changes (see page 82).
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INTRODUCTION
HOW IFC CREATES OPPORTUNITY

INNOVATION, INFLUENCE, DEMONSTRATION, IMPACT
IFC brings a distinctive set of comparative advantages to help reduce poverty and foster inclusive economic growth by leveraging the power of the private sector.
Consider the scale of the challenge:
Across the world, 1.2 billion people struggle on less than $1.25 a day. About 600million jobs must be created within a decade just to accommodate young people entering the workforce. Nearly 1billion people go hungry each day. $1trillion a year in nancing is needed to modernize infrastructure in developing countries. These are needs that cant possibly be lled without tapping the capital and creativity of the private sector. Private enterprises create nine out of every 10 jobs in developing countries. They spur innovation, produce the goods and services people need to improve their lives, and generate most of the tax revenue that governments need to provide essential services for their citizens. The private sector, in short, provides the most timetested means of ending poverty quickly and sustainably. But private sector development doesnt occur in a vacuum. It happens only when governments and the private sector can work together to ensure that businesses operate and grow in ways that promote prosperity for all. This is what we do best. We work in more than 100 developing countries, connecting clients and using our expertise to help them achieve sustainable growth by nancing private sector investment, mobilizing capital in international nancial markets, and providing advice to businesses and governments. This work enables companies to grow and create jobs, improve corporate governance and environmental performance, and contribute to their local communities. We go wherever we are needed most, and deploy our resources wherever they will achieve the greatest impact. In everything we do, we ask ourselves four questions: Are we helping reduce poverty and promoting shared prosperity? Are we achieving maximum impact? Are we doing the type of things that no one else is able or inclined to? Are we doing so protably and efficiently?
1.2
billion people subsist on less than $1.25 a daynearly one out of every ve people on the planet.
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TABLE OF CONTENTS
PARTNERING FOR INNOVATION
Pages 32 through 39
PARTNERING FOR DEMONSTRATION

Pages 48 through 55
PARTNERING FOR INFLUENCE

Pages 40 through 47
PARTNERING FOR IMPACT

Pages 56 through 63
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INNOVATION
PARTNERING FOR
It takes creativity to address the most urgent challenges of development to end poverty, to tackle the dangers of climate change, to introduce modern healthcare to remote corners of the world. For more than half a century, IFC has innovated to strengthen private sector development wherever its needed most. We have helped businesses in developing countries create and preserve jobs by providing loans and investment to enable them to grow quickly and sustainably, and by providing advice that helps them to innovate, raise standards, and mitigate risks.
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INNOVATION
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INNOVATION
Healthcare
IMPROVING SERVICES IN THE MOST CHALLENGING AREAS

We are bringing together governments, the private sector, and civil society organizations in innovative ways to help the poor.
17.2
million patients received healthcare through our clients in2012.
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utside the Hospital do Subrbio in the Brazilian city of Salvador, all seems tranquil: white stucco buildings, manicured lawns, and palm trees swaying in the gentle breeze. Inside, its another story. The state-of-the-art hospital which serves some of the citys poorest neighborhoods has conducted more than 1.8million medical procedures since it opened three years ago. It also has created 1,200 jobs under a public-private partnership that IFC helped the government set up. Last year, the hospital was named one of the worlds 100 most innovative projects by KPMG, a consulting rm. Hospital do Subrbios success illustrates what can be achieved when government authorities join forces with the private sector to address a major development challenge. Brazil and other developing countries have achieved remarkable health advances in recent years. Yet signicant obstacles remain. The benets often dont reach people who need them most the poor. The private sector is an essential part of the solution. In sub-Saharan Africa, where public resources remain scarce, the private sector provides about 60percent of the nancing available for healthcare. A poor woman with a sick child is just
as likely to go to a private hospital or clinic as to a public facility. In some of the worlds most challenging markets, IFC is helping bring together governments, the private sector, and civil society organizations to improve the quality of healthcare. Since we launched our Health in Africa Initiative in 2007, we have supported legal, regulatory, and institutional reforms to improve patient safety and the quality of private health services in eight countries. Our advice led to the enactment of the Kenya Health Bill of 2012, which creates equal opportunity for public and private healthcare providers and is expected to result in expanded coverage for up to 20million Kenyans. In South Sudan where the maternal mortality rate is one of the worlds highest our advice helped the government set up the Drug and Food Control Authority, which will help improve the quality of medicines available in the country. We also see signicant opportunity to improve the quality of healthcare in Indias low-income states. In the state of Meghalaya, where health insurance is limited, we helped the government arrange a public-private partnership that makes health insurance available to all 3million of the states residents, regardless of income.
Left: A patient is treated at Hospital do Subrbio. Brazils rst public-private partnership in health has dramatically improved emergency hospital services for 1million people in the state ofBahia. Above: A road show in the Indian state of Meghalaya encourages low-income households to enroll in the states universal health insurance program, which IFC supported jointly with the World Bank.
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INNOVATION
Climate Change
ADDRESSING GLOBAL WARMING

IFC is providing nancing and advice to help countries mitigate and adapt to a formidable global threat.
he science is unequivocal: without concerted action to reduce greenhouse emissions, the world could grow warmer by 4degrees Celsius within this century. The consequences could be devastating unprecedented heat waves, drought, and oods that put prosperity out of reach for millions of people in developing countries and roll back decades of progress in development. Combating the dangers of climate change will be costly: up to $100billion a year for developing countries. But it can be done if the resources and creativity of the private sector are tapped. IFC is nding ways to unlock private capitalfor climate-smart projects. Were helping nance the development of innovative technologies and encouraging a shift toward energy efficiency and renewable energy. We also provide nancing and advice to help countries mitigate and adapt to climate change. Since 2005, IFC has invested $10.5billion in climate-related investments, including $2.5billion just in FY13. We issued the worlds largest green bond this year, raising $1billion specically for climate-related investments an achievement that
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$10.5
billion has been channeled to climaterelated investments since 2005.
Above: IFC is supporting the construction of South Africas rst concentrated-solarpower plants, which will use mirrors to reect and concentrate sunlight to heat steam that can power turbines.
underscored the private sectors growing demand for triple-A-rated green bonds. We also launched the IFC Catalyst Fund an innovative fund of funds, managed by IFC Asset Management Company, focused on climate-related investments. In South Africa, we provided an innovative nancing package which included $225million in funds mobilized through loan syndications and $41.5million in donor funds to support the construction of the regions rst concentrated-solarpower plants. The Khi Solar One and KaXu Solar One projects, which use mirrors to reect and concentrate rays of sunlight to heat steam that can power turbines, will help diversify South Africas energy generation away from coal-red power. We are working to address the environmental challenge posed by expanding cities. Buildings account for 15percent of global greenhouse emissions a number that is expected to climb in coming decades as more people in developing countries migrate to cities in search of work. We see a signicant opportunity to make a difference by helping construction companies adopt more affordable, energy-efficient designs. Through
our Excellence in Design for Greater Efficiencies or EDGE tool, we have established an international green-building standard that is helping our clients save money while reducing emissions. In FY13, we made our rst investments through nancial intermediaries in new green buildings including mortgages for energy-efficient homes in India. Along with the World Bank, we have also advised Russian policymakers on groundbreaking legislation that will enable millions of homeowners to obtain new nancing for energyefficiency improvements.
Above top: The Real Solare housing development in Mexico was one of IFCs rst projects to receive EDGE certication by achieving a 20percent reduction in energy, water, andmaterials. Above bottom: IFCs investment in the South African solar-power plants will help diversify energy generation away from coal-red plants.
38 _
INNOVATION
Access to Finance
REACHING THE POOR THROUGH FINANCIAL INSTITUTIONS

Through more than 900 nancial institutions, IFC has increased access to nance for small and medium enterprisesand for millions of people.
onstance Adaes small shop burned to the ground in Accra. Seeing her business wiped out overnight, she feared the worst not knowing how to recover her lost income or repay her loans. Adae didnt know it then, but she had insurance built into the loan that nanced her business. Modest payouts arranged by IFC client MicroEnsure enabled Ghanas Vanguard Assurance to send Adae a rapid settlement. She was able to reopen her shop which sells plastic containers after only a brief interruption. Innovative solutions have the potential to narrow the access-to-nance gap in emerging markets, which is still large. More than 2billion adults dont have access to savings accounts or credit, and 200million small and medium businesses lack access to credit. Backed by nancing from us, MicroEnsure is now partnering with mobile operator Telenor to use its technology platforms as distribution channels to take nancial services to even more low-income individuals in Africa and Asia. Its client base is expected to reach 11million people by 2017, up from 4million today. To establish and maintain inclusive nancial systems, IFC has built up a network of intermediaries more than 900 nancial institutions operating in over 100 developing countries. It allows us to support far more micro, small, and medium enterprises than we would be able to on our own. It also enables us to reach sectors that are
_ 39
Above: Constance Adaes small shop burned to the ground, but payouts arranged by IFC client MicroEnsure helped her reopen her business after only a brief interruption.
2
billion adults dont have access to savings accounts or credit.
200
million small and medium businesses lack access to credit.
strategic priorities but often lack private sector capital for example, women-owned businesses or underserved regions such as conict-affected states. In 2012, our nancial-intermediary clients provided more than $265billion in loans to micro, small, and medium enterprises. In Haiti, we joined forces with the Microinsurance Catastrophe Risk Organisation, or MiCRO, in a $2million project that is expected to provide affordable insurance to help 70,000 women micro entrepreneurs protect their livelihoods against earthquakes, hurricanes, oods, and other natural disasters. Beyond direct investments in nancial intermediaries, IFC has also played a catalytic role in expanding access to nancial services by improving access to credit information, promoting best practices in risk management, and introducing environmental and social standards. We helped Vietnam develop an online registration system that tracks which movable collateral such as machinery or vehicles has been pledged by borrowers to secure their loans. As a result, banks can better assess lending risks, allowing small enterprises without land to obtain loans more easily.
40 _
INFLUENCE
PARTNERING FOR
As the worlds largest development institution focused exclusively on the private sector, IFC plays a signicant role in inuencing the course of private sector development. Our leadership position enables us to help shape the policy agenda. We are helping the Group of 20 advanced and developing economies on a variety of important development matters ranging from food security to access to nance for small enterprises. And a growing number of development nance institutions are adopting our approach to creating jobs, measuring results, and raising corporate-governance standards.
_ 41
INFLUENCE
42 _
INFLUENCE
Job Creation
THE SUREST PATHWAY OUT OF POVERTY

Our investment clients directly supported 2.7 million jobs last yearand that was only a small part of our overall effect on employment.
Above: Once unemployed, Ramu Rawat got a job with IFC client OCL. Today, he supervises 200workers at his own construction rm in one of Indias poorest states.
_ 43
90%
of the jobs in the developing world are generated by the private sector.
amu Rawat used to spend his days idling around his village in Odisha, one of Indias poorest states. With no experience to offer, he couldnt nd a job. Then he noticed the IFC-nanced plant that local rm OCL India Ltd. had built in his area. Rawat went to the gate and asked for a job. The company hired him to do some manual work. Recognizing his drive and attitude, it put him on his way not just to a job, but to a career. Today Rawat has his own contracting company, supervising 200 workers. Jobs are the surest path out of poverty. They also are the cornerstone of developmentboosting living standards, raising productivity, and fostering social cohesion.
Yet 200million people are unemployed today, most of them women and young people in developing countries. Without work, they cant care for themselves or their families. Addressing this challenge isnt possible without the private sector, which accounts for 90percent of the jobs in developing countries. IFC is playing a leading role in identifying ways to help the private sector strengthen employment. We conducted a study with the support of our donor partners that found that a weak investment climate; inadequate infrastructure; limited access to nance for micro, small, and medium enterprises; and insufficient training pose a particular threat to employment. Removing these obstacles would signicantly increase job creation. Encouraged by our ndings, nearly 30 leading international nance institutions pledged to work with us to address the job crisis. In 2012, our investment clients directly supported 2.7million jobs. Direct job creation, however, tends to be only a small fraction of our overall employment effects. Our study showed that indirect job effects through the supply and distribution chains can be large multiples of thedirect effects. We also supported nancial institutions that provided about $265billion in loans to micro, small, and medium enterprises which in turn employed over 100million people. This year, we provided $285million and mobilized an additional $350million to support Etileno XXI, Mexicos rst major private sector petrochemicals project in more than 20years. It is expected to create 9,000 jobs during the construction phase and 3,000 direct and indirect jobs when operations start in 2015.
Above right: Etileno XXI is Mexicos rst major private sector petrochemicals project in more than 20years. It is expected to create 3,000 jobs, directly and indirectly.
44 _
INFLUENCE
World Bank Group
COLLABORATING TO REVITALIZE MYANMAR

Through joint initiatives, the World Bank and IFC are leveraging our comparative advantages and enhancing the impact of our work.
Myanmar clear its arrears to the World Banks International Development Association, or IDA. The World Bank is providing $165million in zero-interest loans to the country to help it address its most urgent needs. This is in addition to an $80million grant for community-driven development that enables villagers to improve schools, clinics, roads, and the water supply. At the same time, IFC is working to improve the investment climate and expand access to nance in Myanmar, in order to support the growth of the domestic private sector, attract world-class foreign investors, and stimulate job creation. We also are working with the Bank and the Multilateral Investment Guarantee Agency to promote the countrys essential infrastructure services, with an initial focus on the electricity and telecommunications sectors. IFC also began to invest in Myanmar for the rst time. We provided a $2million loan to help our Cambodian client ACLEDA Bank set up a newmicronance institution in the country. Thenew institution aims to provide loans to more than 200,000 people most of them women entrepreneurs by 2020. In addition to the loan, IFC is strengthening the institutions capacity to deliver micronance services, enhancing its risk management practices, and helping it to develop a responsible nance strategy.
ix decades of conict and economic isolation have impoverished Myanmar three quarters of its people go without electricity, half its roads are impassable when it rains, and large numbers of children are malnourished. The future, however, looks brighter. In 2011, the country began a transition to a more democratic form of government and a market-oriented economic system. Those developments offer the potential for a major change: restoring one of the worlds poorest countries to its historic role as one of Asias most dynamic economies. That is a complex undertaking and it will take time. Despite Myanmars ample natural resources, the country faces signicant obstacles to development. To achieve its potential, it must strengthen economic governance, rebuild infrastructure, modernize its legal and regulatory frameworks, and nd ways to bring prosperity to all its people. Those are areas in which IFC and the World Bank can play a critical role, leveraging the distinctive capabilities of each institution. Working under a joint strategy, our institutions began this year by helping
_ 45
Small and Medium Enterprises
HELPING BUSINESSES THRIVE

IFC supports the development of small and medium enterprises by improving the investment climate, building managerial skills, and expanding access to nance.
N
Above: Egyptian entrepreneurs such as Nabil al Jabari are attracting new customers, thanks to an electronic payment system developed by IFC client Fawry. Above right: Manoj Kumar, owner of a small watch-shop in the Indian state of Bihar, has beneted from tax-policy reforms that encourage small businesses to join the formal economy.
abil al Jabari and his family have run a small grocery store in downtown Cairo for the past six decades. It has a group of devoted customers, but al Jabari wanted to bring in new business. So he installed an electronic payment system developed by IFC client Fawry, which allows al Jabaris customers to make purchases with credit cards and to pay cellphone bills. That is crucial in a country where almost everyone relies on cash for transactions, a relatively inefficient way of doing business. The new system attracted dozens of new customers to his store, raising revenues by 15percent, al Jabari says. Small and medium enterprises, or SMEs, are a critical force for prosperity in developing countries, accounting for two-thirds of employment. IFC plays a prominent global role in expanding opportunities for these businesses through our partnership with the Group of 20 leading economies and through our own investment and advisory initiatives. That is why we invested $6million in Fawry this year. Our nancing will help the rm expand its network of 20,000 payment terminals potentially stimulating the growth of many small businesses across Egypt. We serve as a technical adviser to the G-20 on a variety of initiatives to expand access to nance for SMEs. For
example, IFC supports the G-20s Global Partnership for Financial Inclusion and manages the SME Finance Innovation Fund announced by U.S. President Barack Obama in 2010. We also manage the Womens Finance Hub, a G-20 initiative to share knowledge and best practices on ways to expand access to nance for women entrepreneurs. We provide investment and advisory services to such enterprises in about 80 countries, focusing on every phase of their development: improving the investment climate, building management skills, and expanding access to nance and markets. In 2012, our clients provided 5.8million loans to small and medium enterprises, totaling $241billion. In India, we advised the state of Bihar in implementing reforms to its tax regime to encourage formalization for small businesses. We also helped it strengthen an online ling and payment system. The changes increased tax revenues and allowed more small companies to enjoy the benets of joining the formal economy. In Sri Lanka, we worked with Nation Trust Bank to open the rst business-training center in the countrys Eastern Province. Through our SME Toolkit, an online resource that provides training and management tools for small businesses, we are helping up to 30,000 small-business owners become more competitive and reach new markets.
46 _
INFLUENCE
Food Security
EXPANDING OPPORTUNITY FOR SMALL FARMERS

We help our clients raise agricultural productivity in developing countries and work to ensure food is available to people who need it most.
_ 47
ore than 2billion people a third of mankind depend on food produced by small farmers. Such farmers tend to be the norm in regions of the world where hunger is greatest. Helping these farmers increase their productivity and linking them to markets is an essential way to feed the nearly 1billion people in the world who go hungry every day. Its essential for managing food stocks at a time when global demand for higher-quality food is rising and when climate change poses risks that could hurt agricultural productivity. Strengthening agribusiness is a priority for IFC because it is essential for food security and because it is essential for raising incomes for the poor, three-quarters of whom live in rural areas. Our approach is comprehensive. We work with the private sector to increase the supply of affordable food and to ensure it is available to people who need it most. We also work with nancial institutions, commodity trading rms, companies, and civil society organizations to help large and small farmers overcome obstacles to higher productivity and become part of the agriculture supply chain. Across East Asia and the Pacic, for example, IFC has worked with major coffee buyers such as Ecom Coffee to help farmers achieve the quality and sustainability certications they need to sell coffee in international markets. These certications have helped thousands of farmers increase productivity and boost revenues. IFC plays a prominent role in global initiatives to strengthen food security. We manage the private sector window of the Global Agriculture and Food Security Program (GAFSP), a multilateral fund set up to help the Group of 20 leading economies deliver on its food-security commitments. The private sector part of this fund enables IFC to reach even the smallest farmers and rural enterprises, by blending donor nancing with commercial credit.
Above: Haitian farmer Hermilus Lovana has beneted from affordable insurance provided by IFC client Microinsurance Catastrophe Risk Organisation..
This year, IFC and GAFSPs private sector window jointly invested $10million in Root Capital, a social investment fund, to help it expand access to working capital and markets for 300,000 small farmers over the next four years. Weather, pests and crop disease, land degradation, and market failures can make farming a risky enterprise. Through our innovative Global Index Insurance Facility which we launched with the World Bank and several donor partners we helped about 119,000 small-scale farmers in seven countries in Sub-Saharan Africa and in Sri Lanka to insure their crops and livestock against risks of severe weather events such as oods and drought.
3.1
million farmers were supported by IFC clients in 2012.
Left: A farmer in Vietnam harvests coffee for Ecom, a global commodity trading company that uses inclusive business models, helping producers increase productivity and boost revenues.
48 _
DEMONSTRATION
PARTNERING FOR
We have a long history of setting a good example. We were investing in emerging markets decades before they became a popular asset class for global investors. In fact, we coined the phrase. In the mid-1980s, we launched the worlds rst global investment fund to channel capital toward listed companies in developing countries. The new capital ows lifted many local businesses to international prominence, creating jobs that reduced poverty in countless cities and villages. Today, we continue to demonstrate the rewards of investing in challenging markets.
_ 49
DEMONSTRATION
50 _
DEMONSTRATION
Infrastructure
PROMOTING PROSPERITY IN AFRICA

IFC delivers landmark projects with high impact on the poornotably in frontier countries and regions, where our services are most needed.
Above: Expansion of the Azito Thermal Power Plant, in CtedIvoire, will improve access to electricity for Ivoirians and help sustain the countrys economic growth.
_ 51
bout 1.2billion people nearly a fth of humanity live without electricity. An estimated 880million people lack access to safe water, and more than 1billion people dont have access to either an all-weather road or telephone services. Infrastructure shortages in the developing world are a key constraint to economic growth. With more efficient infrastructure, millions can benet from access to clean water and safe sanitation. Companies can take their goods to market more quickly and cheaply. Countries with a modern infrastructure are better able to attract foreign investment. Expanding and modernizing infrastructure are priorities for IFC particularly in Africa, and particularly in the transport and power sectors. We invest in projects that can promote prosperity in some of the poorest countries, and help governments design and implement public-private partnerships. In Sub-Saharan Africa where the need for infrastructure improvement is most urgent IFC is taking the lead to support the expansion of energy generation. In FY13, we invested more than $1billion in infrastructure projects in the region, including funds mobilized from other investors. Our work included several innovative solar-power projects (seepage 37). In Cte dIvoire, which is emerging from yearsof political turmoil, we arranged a $345million package to modernize the Azito Thermal Power Plant. Modernization will enable the plant to generate 50percent more energy without using any additional gas. The plant will become one of the largest independent power generators in the region, helping ease power shortages and producing significant savings for Ivoirians who now have to rely on expensive backup electricity systems.
We provided $125million for our own account for the Azito project. Acting as lead arranger, we mobilized the balance from ve European development nance institutions and the West African Development Bank. In areas of Sub-Saharan Africa that are not yet connected to the grid, were stepping up our Lighting Africa project with the World Bank and our donor partners. We are helping people switch from inefficient and expensive fuel-based lighting sources such as kerosene lamps to more affordable and climate-smart alternatives such as solar lampsand dynamo-powered lights similar to those used on bicycles. The program has already improved access to clean lighting for 6.9million people in the African continent, avoiding the emission of over 138,000tons of greenhouse gases equivalent to taking 26,000 cars off the road. We are leading a similar initiative in Asia, aiming to provide off-grid lighting products to 2million people in rural areas of India by 2015.
6.9
million have improved access to clean lighting because of the World Banks Lighting Africaproject.
Above center: An Azito plant technician performs a check on gas pipes. Above right: A young girl breaks into a smile on seeing her house well-lit after sunset. IFCs Lighting Asia program in India is expected to bring lighting to 2million people.
52 _
DEMONSTRATION
Mobilization
OPENING NEW MARKETS FOR PRIVATE INVESTMENT

By bringing together other investors, we combine knowledge and expertiseand maximize the development impact of our projects.
oreign investments in the capital markets of developing countries have increased in recent years. But only a fraction of these investments go to the smallest and poorest countries. Eighty percent of total portfolio ows into developing countries go to just 14 of the largest emerging-market countries. Investors continue to have little interest in smaller countries, where capital markets tend to be less liquid and more risky as a result. IFC is playing an important role in addressing that imbalance. This year we committed $100million to a $500million global fund that brings together large, institutional investors to invest primarily in listed equity securities of private sector rms in these smaller markets the so-called Next 50. Mobilizing capital from other investors is a key component of IFCs business model. Encouraging additional private sector investment to leverage our activities allows us to achieve more than we could on our own. It also enables us to pool knowledge and expertise. In FY13, we worked with banks, international nancial institutions, sovereign funds, pension funds, and other partners to mobilize $6.5billion for investment in developing countries. We did that through several programs including our Syndicated Loan Program (seepage73)and also through our subsidiary, IFC Asset Management Company, which has $5.5billion in assets under management across sixfunds focused on specic sectors or regions. In Sri Lanka, this approach allowed us to increase funding for small and medium enterprises which are critical to rebuilding the economy after decades of conict. We provided a $75million long-term loan to Commercial Bank of Ceylon, the countrys largest private sector bank. The investment was made through IFC Capitalization Fund a $3billion global equity and subordinated debt fund established in
2009 by IFC and Japan Bank for International Cooperation. The fund is managed by IFC Asset Management Company. The investment is expected to increase accessto nance for up to 16,000 small businesses and generate about 170,000 jobs both directly and indirectly by 2017. In Bangladesh, we led a consortium of investors to provide about $345million in nancing including $190million from our own account to telecommunications operator Grameenphone. The investment will help the company extend mobile services to remote areas of the country. IFC also mobilizes capital through syndicated loans, which allows other investors to participate in the loans we make. In FY13, syndicated loans totaled $3.1billion, accounting for nearly half of the funds we mobilized.
Above: An employee at a small business supported by Sri Lankas Commercial Bank of Ceylon, which received a $75million loan from IFC and IFC Asset Management Company.
$3.1
billion in syndicated loans were issued in FY13, accounting for nearly half of the funds we mobilized.
_ 53
South-South Investment
A VITAL FORCE FOR DEVELOPMENT

Our projects encourage the transfer of technology from one country to another boosting regional integration and job creation.
or all their economic achievements in recent years, the needs of developing countries remain vast. Sub-Saharan Africa alone will need investments of over $90billion per year over the next decade to meet infrastructure demands such as roads, rail networks, power, and water and sanitation projects. The Middle East and North Africa will need up to $100billion a year to boost economic competitiveness and sustain recent economic growth rates. These needs represent signicant opportunities for private enterprises from other developing countries which have shown a robust appetite to expand into untapped emerging markets. Developing countries now account for more than a third of foreign direct investment in emerging markets. Leveraging our global reach, IFC has been an important facilitator of South-South investment which we see as an important way to stimulate regional integration, job creation, and economic development. In FY13, our investments in such projects climbed to nearly $1.7billion, accounting for nearly 10percent of IFC commitments for our own account. By supporting such projects, we help stimulate the transfer of knowledge and technology from one developing country to another, and expand the availability of previously hard-to-obtain goods
Above: A worker at a factory in South Africa operated by a subsidiary of Indias Apollo Tyres. IFCs investment will help increase production by athird.
and services. We also enable regional companies to develop into transnational corporations that can compete on a global level. We also mobilize funds from other investors to promote South-South investment. In FY13, our syndications program contributed signicantly in this area. Emerging-market nancial institutions increased their participation in our loan syndications doubling their commitments from the previous year and accounting for 29percent of the $3.1billion in IFC syndicated loans for the year. This year, IFC and two funds managed by IFC Asset Management Company bought a $204million equity stake in Moroccos Banque Centrale Populaire to help the bank expand across sub-Saharan Africa where access to nance, especially for smaller rms, remains a challenge. We also invested $11million in a subsidiary of Indias Apollo Tyres to help the company expand production at one of its tire factories in South Africa. The company makes tires for cars, buses, and trucks. Our nancing will help Apollo Tyres produce about 13,000 tires a day at its factory in the city of Ladysmith an increase of about a third.
54 _
DEMONSTRATION
Local Capital Markets
AN EFFECTIVE WAY TO SPUR GROWTH

As the rst international issuer of local-currency bonds in many countries, IFC often provides a modelfor other issuers.
trong local capital markets are the foundation for a prosperous private sector. They reduce countries dependence on foreign debt, protecting economies from sudden swings in international capital ows. Such markets create access to long-term localcurrency nance and help mobilize funds to nance infrastructure and other areas essential for the growth of the private sector the key engine of job creation in developing countries. IFC is a global advocate for efficient local capital markets, and we play an important role in their development in emerging countries. We often are the rst international issuer of local-currency bonds in these countries. In issuing bonds, we work closely with regulators and investors to help improve the regulatory framework, encourage greater participation in the local markets, and provide a model for other international issuers.
_ 55
$10
billion in localcurrency nancing has been provided by IFC.
Over the years, IFC has issued bonds in 12local currencies including the Brazilian real, the Russian ruble, the Nigerian naira, the Malaysian ringgit, and the Chinese renminbi. We have provided over $10billion in local-currency nancing across 58 currencies more than any other international nance institution. In Nigeria this year, we were the rst foreigninstitution to issue a naira-denominated bond, raising the equivalent of $75million that will be used to support IFCs development program in the country. All investors were Nigerian pension funds, asset managers, and banks looking to diversify their portfolios. We worked with the Nigerian government and regulators to help them develop a framework that encourages more corporate issuances in the local markets. In addition, we issued the rst ination-indexed bond by a foreign issuer in Russia. In China, we have made a total of six localcurrency investments so far to expand access to nance, promote food safety, and help increase the availability of high-quality and affordable drugs. Those investments reected an earlier achievement our 2011 agreement with Chinese banks to swap U.S. dollars into Chinese renminbi to provide local-currency loans. We were the rst multilateral institution to sign such an agreement. Smaller enterprises often face the greatest difficulty in obtaining local-currency nancing, a challenge IFC is helping them overcome. In the Dominican Republic this year, we issued the rst local-currency bond by an international nance institution, raising $10million that we invested in two micronance institutions Fondesa, which tends to make small loans of less than $1,000; and La Nacional, which nances low-income mortgages with an average home value of about $30,000.
56 _
IMPACT
PARTNERING FOR
IFC plays a leading role in development by leveraging the power of the private sector to create opportunity inemerging countries, in ways that promote prosperity for all. We achieve development impact by venturing where other investors often hesitate to go: in the poorest countries and regions of the world, and in places torn by conict and instability. We achieve it by helping ourclients nd ways to create opportunity across the entire supply chain. We achieve it by rigorously tracking our results against the goals we setfor ourselves.
_ 57
IMPACT
58 _
IMPACT
Conict-Affected Areas
GENERATING CONDITIONS FOR SUSTAINABLE GROWTH

Our projects in fragile and conict-affected areas aim to create jobs and help governments rebuild infrastructure.
roadband Internet is a revolutionary technology capable of empowering individuals, unlocking business opportunities, and boosting economies. In war-torn Afghanistan, however, its a technology beyond the reach of virtually the entire population. IFC is working to change that by helping the countrys largest mobile-phone operator extend high-speed broadband services to 80percent of the population in key cities. The $65million in long-term nancing we provided this year to the company, Roshan, will help it acquire a 3G license and strengthen its broadband network. That will also help Roshan expand the array of innovative services it offers to improve the lives of ordinary Afghans. One of them is M-Paisa, a mobile-banking service that gives people without bank accounts a quick, safe, and secure way to send and receive money through their phones. Another
_ 59
$577
million was invested in conict-affected areas during FY13.
is Roshans Telemedicine project, which helps bring better healthcare services to isolated areas ofthe country. Conict and instability are a leading causeof poverty across the world. Recognizing that most of the worlds poor will live in fragile and conictaffected areas in coming decades, we are intensifying our focus on creating opportunity in these areas. In FY13, we invested about $580million in fragile and conict-affected areas. Our advisory expenditures in these areas totaled approximately $40million, or 18percent of our advisory program. Our goal is to create jobs, remove constraints to sustainable business growth, and help governments rebuild infrastructure. To do so, we aim to expand the availability of power and credit. We are also helping strengthen the business environment for local enterprises while enabling them to reach new markets. Our work in fragile and conict-affected countries often begins with advisory work to lay the foundation for investment. Working with the World Bank and our donor partners, we supported the adoption of over 60 investment-climate reforms in 22conict-affected states between 2010 and 2012. More than 40 of these reforms were in Africa. In Burundi, for example, we helped the country implement reforms that doubled the number of businesses registered to nearly 1,350 in 2012 from 674 in 2010. As the countrys business climate has improved, foreign investment has grown. Trade nance can also make a critical difference for conict-affected states, which tend to be locked out of international trade. Since FY10, IFC has supported trade in 24 of these countries, enabling more than $510million in trade amid challenging conditions.
Above top: IFC is helping Roshan, Afghanistans largest mobile-phone operator, to expand its network, bringing cellular and Internet services to many people long left off thegrid. Above bottom: A street vendor serves food in Yangon, Myanmar.
60 _
IMPACT
Gender
BOOSTING DEVELOPMENT THROUGH EQUALITY

Addressing obstacles to womens empowerment is an important way to promote shared prosperity and poverty reduction.
Above: Beatriz Cortez, a beauty consultant affiliated with IFC client Belcorp in Peru, enjoys a light moment with her daughter. Belcorps expansion is expected to create signicant jobs and entrepreneurial opportunities for women.
omens participation in the workforce has grown over the past decades. Yet women remain signicantly underrepresented. This inequality is not only unfair. Its also bad economics. Failing to tap the economic potential of women puts a brake on poverty reduction and limits growth and opportunity. Expanding womens participation can raise productivity and improve a variety of development outcomes. IFC works to strengthen womens roles as leaders, entrepreneurs, employees, consumers, and stakeholders. We provide a combination of investment and advice to help our clients expand access to nance for women, deliver business-skills training for women entrepreneurs, and recognize the business case for creating opportunities for women. We also work with our clients to improve working conditions and to dismantle barriers to womens participation in business. This year, we teamed up with The Coca-Cola Company in a $100million, three-year project to provide access to nance for thousands of women entrepreneurs in Africa and other emerging markets. IFC will work through its network of local and regional banking institutions to provide nancing
and business-skills training to small and medium enterprises that are owned or operated by women across the Coca-Cola value chain. The rst step was a $50million IFC investment in Access Bank Nigeria to help it increase lending to women entrepreneurs. We also arranged and syndicated a $130million nancing package to support the expansion of Perus Belcorp, a door-to-door sales cosmetics company that employs close to 9,000 people 74percent of them women. The investment will also help the building of a new plant in Mexico and the rms expansion to newmarkets in Latin America. In China, we stepped up our nancing to support the growth of Chindex, a leading private healthcare network that has been instrumental in raising the quality of local health services. Founded by two women, the company is dedicated to empowering its female staff through leadership and training initiatives. Women make up 75percent of Chindexs workforce. Since 2010, our Banking on Women program has invested more than $600million in support of women-owned small enterprises in developing countries. That included a $470million investment in Brazils Banco Itau the programs largest investment, and its rst in Latin America. We provided $100million from our own account and mobilized $370million through loan syndications. IFC also is a lead sponsor of the Global Banking Alliance for Women, an initiative that brings together about 30 nancial institutions committed to leveraging the womens market around the world.
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Middle-Income Countries
PROMOTING PROSPERITY FOR ALL

Our work in middle-income countries helps them tackle challenges such as urbanization, rural development, and climate change.
Above: Students learn at a Plato training center in Istanbul. IFCs investment in the education rm will help it expand vocational training in Turkey and other Middle Eastern and Central Asian countries.
ore than two-thirds of the worlds poorest people who survive on less than $1.25 a day live in middle-income countries. These countries also are home to large numbers of people without access to clean water, reliable power, or decent health and education services. IFC focuses on the needs of the poor, regardless of their location. Our approach is to help middleincome countries nd creative ways to ensure that their rising prosperity is shared by all citizens. We also work to strengthen rural development and address the challenges of unemployment, urbanization, and climate change. Supporting companies that adopt inclusive business models is an important element of our work. Over the past nine years, we have invested more than $9billion in businesses that provide goods, services, and jobs to people at the base of the economic pyramid by integrating the working poor into their supply chains. We have worked with more than 350inclusive-business clients in more than 80 countries. This year, we provided a $15.6million loan to nance the construction or renovation of 47preschool facilities in Chuvashia Republic, a predominantly rural province in Russia. The project will open up spaces for more than 7,000 students and create jobs for teachers many of whom will be women. In Turkey, we provided nancing and advice to help introduce a technology that will enable one of the countrys largest paper companies to expand production without increasing the consumption of water a key input for the paper industry. Our $8million loan to cardboard maker Modern Karton will help it build a wastewater-recovery system to conserve and reuse water. Thriving private enterprises in middle-income countries can set an important example for others not only by venturing into less-developed areas of their own country but also by stepping out into poorer countries. IFC helps make that happen. This year, we invested $6million in an Istanbul-based education rm, Plato, to help it expand vocational training in Turkey and several Middle Eastern and Central Asian countries. The investment was our rst under our E4E Initiative for Arab Youth, which aims to strengthen job skills in a region where youth unemployment is high. Plato is expected to strengthen employment opportunities for up to 6,000 students.
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IMPACT
IDA Countries
CREATING OPPORTUNITY FOR THE POOREST

We focus on improving lives in the worlds most challenging areas. In FY13, nearly half of our projects were in the poorest countries.
Above: IFCs investment in Kenya Tea Development Agency is nancing a new warehouse that is expected to raise farmers incomes, create jobs, and provide stability in a sector that benets over 4million Kenyans.
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n the poorest countries, the need to improve lives is urgent. Unable to attract investment, many of these countries have no option but to rely on official aid which often is not sufficient. These are the 82 countries eligible to borrow from the International Development Association, or IDA the World Banks fund for the poorest. For IFC, they represent an opportunity to make a critical difference where we are needed most. Our investments in IDA countries have grown nearly tenfold over the past decade, totaling $6.6billion in FY13 alone. Of this amount, a record $1.2billion was mobilized through loan syndications. IDA countries accounted for about half of all IFC investment projects and over 60percent of advisory projects in recent years. In addition, weve contributed more than $2.5billion to IDAs general fund since 2007 including $340million in FY13. Through our Global Trade Finance Program, we have provided more than $13billion in guarantees to businesses in IDA countries since 2005 $3.3billion in FY13 alone. This enabled small and medium enterprises to obtain much-needed nance to expand and join the global trading system. We aim to invest wherever we can do the most good. In Kenya where tea exports generate more than $1billion a year in earnings, beneting 10percent of the population we helped the countrys largest producer of black tea, the Kenya Tea Development Agency. Our $12million investment nanced a 200,000-square-foot facility that is expected to raise farmers income and provide stability in a sector that accounts for two-thirds of the regions jobs. We are helping Lao Peoples Democratic Republic develop its hydropower sector as a way to promote economic growth and alleviate poverty. We are supporting the revision of the countrys water law after launching a program to increase the share of new hydro projects that follow high social and environmental standards. In small IDA countries where the local banking systems tend to be underdeveloped, IFC works with local nancial institutions to strengthen their capabilities and help them grow. Our work with Bai Tushum and Partners, inthe Kyrgyz Republic, has enabled it to develop into the countrys rst micronance bank, serving more than 25,000 customers. In landlocked Bhutan, we invested $28million this year in Bhutan National Bank the countrys largest-ever foreign direct investment to strengthen its capacity to serve micro, small, and medium enterprises and help it adopt international best practices in banking and corporate governance.
$13
billion has been committed to IDA countries through IFCs Global Trade Finance Program since2005.
Above top: In the Kyrgyz Republic, a loan from IFC client Bai Tushum enabled Adalat Murzuraimova to buy cattle and lease land. She has used her farm income to educate her daughter. Above bottom: Kenya Tea Development Agency obtains its tea from small-scale farmers such as this couple.
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Table of Contents
MEASURING UP
PG.
Scorecard
65
66 67 68
Our Strategic Focus Areas
Creating Opportunity Where Its Needed Most
OUR BUSINESS AND EXPERTISE
PG.
Where We Work Our Three Businesses Our Industry Expertise
70
71 72 76
OUR PEOPLE AND PRACTICES
PG.
The IFC Way Our Staff Our Governance Accountability Partnerships Managing Risks Working Responsibly
78
79 80 88 90 92 94 96 98 101 104
How We Measure Development Results
Independent Assurance Report on a Selection of Sustainable Development Information Financial Summary
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Measuring up
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OUR STRATEGIC FOCUS AREAS
IFC strives to deliver what cannot be obtained elsewhere. We offer clients a unique combination of investment and advice designed to promote sustainable private sector development in emerging markets. We call that special edge our additionality. Using it to maximize our development impact is a cornerstone of our strategy. Our activities are guided by ve strategic priorities that allow us to help where we are most needed, and where our assistance can do the most good.
STRENGTHENING THE FOCUS ON FRONTIER MARKETS
IDA countries, fragile and conict situations, and frontier regions of middleincome countries
ADDRESSING CLIMATE CHANGE AND ENSURING ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
ADDRESSING CONSTRAINTS TO PRIVATE SECTOR GROWTH IN INFRASTRUCTURE, HEALTH, EDUCATION, AND THE FOOD SUPPLY CHAIN
Developing new business models and nancing instruments, and setting and raising standards
Increasing access to basic services and strengthening the agribusiness value chain
STRATEGIC AREAS OF FOCUS
DEVELOPING LOCAL FINANCIAL MARKETS
BUILDING LONG-TERM CLIENT RELATIONSHIPS IN EMERGING MARKETS
Building institutions, mobilizing resources, and introducing innovative nancial products
Using the full range of our products and services to guide clients development and assist cross-border growth
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SCORECARD
IFCs Performance on Strategic Focus Areas
Indicator FY13
Performance FY12
DEVELOPMENT RESULTS Investment Companies Rated High (DOTS Score)1 Advisory Projects Rated High2 66% 76% 68% 72%
Focus Areas
FRONTIER MARKETS IDA: Number of Investment Projects IDA: Commitments (millions) IDA: Share of Advisory Services Program in IDA Countries, % 3 Frontier Regions: Number of Investment Projects Fragile and Conict Situations: Number of Investment Projects Fragile and Conict Situations: Share of Advisory Services Program, % Commitments in Sub-Saharan Africa (millions) Commitments in Middle East and North Africa (millions) 288 $6,649 65% 59 44 18% $3,501 $2,038 283 $5,864 65% 42 45 18% $2,733 $2,210
LONG-TERM CLIENT RELATIONSHIPS INCLUDING SOUTH-SOUTH Number of South-South Investment Projects Commitments in South-South Investment Projects (millions) 47 $1,674 41 $1,515
CLIMATE CHANGE, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY Climate-related investments (millions) 4 $2,509 $1,621
INFRASTRUCTURE, HEALTH AND EDUCATION, FOOD SUPPLY CHAIN Commitments in Infrastructure, Health and Education, and Agribusiness and Food Supply Chain (millions)5 $6,934 $6,034
LOCAL FINANCIAL MARKETS Commitments in Financial Markets (millions) 6 Commitments in Micro, Small and Medium Enterprises (millions)7 $10,124 $7,192 $9,375 $6,077
Notes: 1. DOTS scores: percentage of client companies with high development outcome ratings as of June 30 of the respective year, based on projects approved over a rolling six-year period (FY13 ratings are based on approvals from 20042009). 2. For Advisory Services, development effectiveness ratings are for calendar years 2012 and 2011. 3. FY12 and FY13 gures reect improved methodology for measuring Advisory Services expenditures in IDA countries, incorporating regional projects. 4. Climate-related is an attribute of a project involving Climate Mitigation, Climate Adaptation and/or Special Climate activities. For more details on these terms and activities, please visit www.ifc.org/ghgaccounting. 5. Commitments in Infrastructure (excluding Oil, Gas and Mining), Communications & Information Technologies, Subnational Finance, Health & Education, and Agribusiness & Food Supply Chain. 6. Commitments of IFCs Financial Markets excluding Investment Funds and Private Equity. 7. Includes direct MSME borrowers, nancial institutions with more than 50% of their business clients being MSMEs, and any other investments that specically target MSMEs as primary beneciaries.
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CREATING OPPORTUNITY WHERE ITS NEEDED MOST
IFC and our clients make a wide range of contributions in developing countries. Our clients success can have ripple effects across an economy, giving many people including the poor a chance to improve their lives.
EAST ASIA AND THE PACIFIC
EUROPE AND CENTRAL ASIA
LATIN AMERICA AND THE CARIBBEAN
31.1 Million
CUSTOMERS SUPPLIED WITH GAS
6.14 Million
20-FOOT SHIPPING CONTAINERS TRANSPORTED (EQUIVALENT)
903,000
STUDENTS EDUCATED
684,000
MICRO, SMALL, AND MEDIUM ENTERPRISES REACHED
$12 Billion
IN GOODS AND SERVICES PURCHASED FROM DOMESTIC SUPPLIERS
$83 Billion
IN MSME LOANS MADE
$420 Million
IN FINANCING SECURED WITH MOVABLE PROPERTY FOR 38,000 FIRMS
1.7 Million
PEOPLE EXPECTED TO RECEIVE IMPROVED ACCESS TO INFRASTRUCTURE SERVICES AND $390 MILLION MOBILIZED THROUGH PUBLIC-PRIVATE PARTNERSHIPS
$400 Million
IN NEW INVESTMENTS DUE TO INDUSTRY REFORM AND INVESTMENT-PROMOTION WORK WITH GOVERNMENTS
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MIDDLE EAST AND NORTH AFRICA
SOUTH ASIA
SUB-SAHARAN AFRICA
244,000
JOBS PROVIDED
120 Million
PHONE CONNECTIONS
11.1 Million
CUSTOMERS SUPPLIED WITH POWER (GENERATION + DISTRIBUTION)
3.6 Million
PATIENTS CARED FOR
620,000
FARMERS REACHED
$4 Billion
IN FINANCING SECURED WITH MOVABLE PROPERTY FOR 3,600 FIRMS
$180 Million
IN NEW FINANCING FOR FIRMS WITH IMPROVED CORPORATE GOVERNANCE PRACTICES
$310 Million
IN NEW INVESTMENTS DUE TO INDUSTRY REFORM AND INVESTMENT-PROMOTION WORK WITH GOVERNMENTS
3 Million
PEOPLE RECEIVED OFF-GRID LIGHTING
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Our Business and Expertise

Our experience in every region of the world, and in nearly every industry allows us to provide a unique set of advantages to our clients.
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WHERE WE WORK
As the largest global development institution focused on the private sector, IFC operates in more than 100 countries. We are able to apply lessons learned in one region to solve problems in another. We help local companies make better use of their own knowledge, by matching it to opportunities in other developing countries.
OUR OFFICES
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OUR THREE BUSINESSES
IFCs three businesses Investment Services, Advisory Services, and Asset Management are mutually reinforcing, delivering global expertise to clients in developing countries. They give us a special advantage in helping the private sector create opportunity our investment and advice can be tailored to a clients specic needs, and in ways that add value. Our ability to attract other investors brings additional benets, introducing our clients to new sources of capital and better ways of doing business sustainably.
PRODUCT LINES
IFC INVESTMENT SERVICES
LOANS
Our investment services provide a broad suite of nancial products and services that can ease poverty and spur long-term growth by promoting sustainable enterprises, encouraging entrepreneurship, and mobilizing resources that wouldnt otherwise be available. Our nancing products are designed to meet the needs of each project. We provide growth capital, but the bulk of the funding comes from private sector owners, who also bear leadership and management responsibility. In FY13, we invested about $18.3billion in 612 projects, of which $6.6billion went to projects in IDA countries. In addition, we mobilized $6.5billion to support the private sector in developing countries. We now have a $50billion portfolio of investment commitments spanning nearly 2,000 companies in 126 countries.
IFC nances projects and companies through loans from our own account, typically for seven to 12 years. We also make loans to intermediary banks, leasing companies, and other nancial 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 local-currency nancing in more than 50 local currencies. In FY13, we made commitments for nearly $8.5billion in new loans, bringing our total committed loan portfolio to around $31.5billion.
EQUITY
Equity investments provide developmental support and long-term growth capital that private enterprises need. We invest directly in companies equity, and also through private-equity funds. In FY13, equity investments accounted for nearly $2.7billion of commitments we made for our own account. This brought our own-account equity portfolio to $12billion, on a cash basis, in 819 companies in 118 countries. IFC generally invests between 5 and 20percent of a companys equity. We often encourage the companies we invest in to broaden share ownership through public listings, thereby deepening local capital markets. We also invest through prot-participating loans, convertible loans, and preferred shares.
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TRADE FINANCE
The IFC Global Trade Finance Program guarantees trade-related payment obligations of approved nancial institutions. The program extends and complements the capacity of banks to deliver trade nance by providing risk mitigation on a per-transaction basis for more than 200 banks across more than 80 countries. In FY13, trade nance accounted for nearly $6.5billion of the commitments we made for IFCs own account. Our Global Trade Liquidity Program has supported $24.4billion in trade in developing countries since it was launched in 2009.
SYNDICATIONS
In FY13, IFC invested about
$18.3
billion in 612projects, of which $6.6billion went to projects in IDA countries. During FY13, IFC made commitments for nearly
Borrowers in the infrastructure sector received 51percent of our total syndications volume. More than a third of nancing we provided through syndications a record $1.2billion went to borrowers in IDA countries. We also achieved our highest-ever volume for borrowers in sub-Saharan Africa $868million.
STRUCTURED FINANCE
BLENDED FINANCE
$8.5
billion in new loans.
IFCs Syndicated Loan Program, the oldest and largest syndicated lending program among multilateral development banks, is an important tool for mobilizing capital to serve development needs. In FY13, it accounted for nearly half the funds mobilized by IFC. In FY13, IFC syndicated about $3.1billion in B-loans and parallel loans, provided by more than 60 co-nanciers including commercial banks, funds, and development nance institutions. This resulted in a $13.6billion syndicated loan portfolio.
IFC uses structured and securitized products to provide cost-effective forms of nancing that would not otherwise be readily available to clients. Products include partial credit guarantees, structured liquidity facilities, portfolio risk transfer, securitizations, and Islamic nance. We use our expertise in structuring along with our international triple-A credit rating to help clients diversify funding, extend maturities, and obtain nancing in their currency of choice.
CLIENT RISK-MANAGEMENT SERVICES
IFC sometimes combines concessional funds typically from donor partners with our own resources to nance initiatives and achieve development impact that would otherwise be unattainable. We have applied this approach in three areas of strategic priority: climate change, agribusiness and food security, and nance for small and medium enterprises. In FY13, we committed more than $155million of donor funds, catalyzing more than $2.5billion of IFC and private sector nancing.
IFC provides derivative products to our clients to allow them to hedge their interest rate, currency, or commodity-price exposures. IFC mediates between clients in developing countries and derivatives market makers in order to provide clients with full market access to riskmanagement products.
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BUSINESS LINES
IFC ADVISORY SERVICES
ACCESS TO FINANCE
We provide advice in
PUBLIC-PRIVATE PARTNERSHIPS
Private sector development requires more than nance. Experience shows the powerful role advisory services can play in strengthening the development impact of IFCs investments, unlocking investment by the private sector, and helping businesses expand and create jobs (see page 84). Companies need more than nancial investment to thrive. They need a regulatory environment that enables entrepreneurship. They need advice on best business practices. Our work includes advising national and local governments on how to improve their investment climate and strengthen basic infrastructure. We help companies improve corporate governance, strengthen risk management, and become more sustainable nancially, environmentally, and socially. We operate in 105 countries, with more than 660 active projects. Funding comes from donor partners, IFC, and clients. In FY13, advisory services program expenditures totaled $232million, up from $197million in FY12. In all, 65percent of our program was in IDA countries, and 18percent in fragile and conict-affected areas.
IFC helps increase the availability and affordability of nancial services for individuals and for micro, small, and medium enterprises. We help our nancial clients provide broad-based nancial services and build the nancial infrastructure necessary for sustainable growth and employment. At the end of FY13, we had an active portfolio of 263 projects valued at $342.6million that promoted access to nance in 72 countries. In FY13, our advisory program expenditures reached about $62.6million, of which 61percent was in IDA countries, and 13percent was in fragile and conict-affected areas.
INVESTMENT CLIMATE
105
countries, with more than 660active projects. In FY13, our total advisory program expenditures reached morethan
$232
million, of which 65percent was in IDA countries and 18 percent in conict-affected areas.
IFC provides support for governments to design and implement public-private partnerships in infrastructure and other basic public services. Our advice helps maximize the potential of the private sector to increase access to public services such as electricity, water, health, and education while enhancing their quality and efficiency. At the end of FY13, we had an active portfolio of 103 PPP projects in 53 countries, valued at about $126million. In FY13, our advisory program expenditures in the area reached $39.5million.
SUSTAINABLE BUSINESS
IFC helps governments implement reforms that improve the business environment and encourage and retain investment, thereby fostering competitive markets, growth, and job creation. We also help resolve legal and policy weaknesses that inhibit investment. At the end of FY13, IFC had an active portfolio of 143 investment-climate projects in 65 countries, valued at $288.9million. In FY13, our advisory program expenditures in these projects totaled $74.8million, of which 76percent was in IDA countries, and 29percent was in fragile and conict-affected areas.
IFC works with clients to promote sound environmental, social, governance, and industry standards; catalyze investment in clean energy and resource efficiency; and support sustainable supply chains and community investment. We work in several sectors including agribusiness and forestry; manufacturing and services; infrastructure; oil, gas,and mining; and nancial markets. At the end of FY13, we had an active portfolio of 157 sustainablebusiness projects in 58 countries, valued at $279.7million. In FY13, our advisory program expenditures related to this area totaled $55million.
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AMC FUNDS
IFC ASSET MANAGEMENT COMPANY
IFC CAPITALIZATION FUND
IFC Asset Management Company LLC, a wholly owned subsidiary of IFC, mobilizes and manages funds for investment in developing and frontier markets. It was created in 2009 to provide investors with access to IFCs emerging-markets investment pipeline and to expand the supply of long-term capital to these markets, enhancing IFCs development goals and generating prots for investors by leveraging IFCs global reach, standards, investment approach, and track record. As of June30, 2013, AMC had approximately $5.5billion in assets under management. It manages six investment funds on behalf of a wide variety of institutional investors, including sovereign wealth funds, pension funds, and development nance institutions.
The $3billion IFC Capitalization Fund consists of an equity fund of $1.3billion and a subordinated debt fund of $1.7billion. Launched in 2009, the fund helps strengthen systemically important banks in emerging markets, bolstering their ability to cope with nancial and economic downturns. The fund is jointly supported by a $2billion capital commitment from the Japan Bank for International Cooperation and a $1billion investment from IFC. From its inception through the end of FY13, the fund made 29 investment commitments totaling nearly $2.1billion.
IFC AFRICAN, LATIN AMERICAN, AND CARIBBEAN FUND
for International Development, and Sumitomo Mitsui Banking Corporation. Since its start through the end of FY13, the fund made six investment commitments totaling $101.8million.
IFC RUSSIAN BANK CAPITALIZATION FUND
The $550million IFC Russian Bank Capitalization Fund was launched in 2012 to invest in commercial banking institutions in Russia. The fund, which had its nal close in June 2013, has commitments from IFC, the Russian Ministry of Finance, and Russias Vnesheconombank, or VEB. As of the end of FY13, the fund made two investment commitments totaling $78.2million.
IFC CATALYST FUND
The $1billion IFC African, Latin American, and Caribbean Fund was launched in 2010 and has commitments from IFC, the Abu Dhabi Investment Authority, the Dutch pension fund manager PGGM, Korea Investment Corporation, State Oil Fund of the Republic of Azerbaijan, a Saudi government fund, and an international pension fund. The fund co-invests with IFC in equity and equity-related investments across a range of sectors in sub-Saharan Africa, Latin America, and the Caribbean. From its inception through the end of FY13, the fund made 19 investment commitments totaling $609.9million.
THE AFRICA CAPITALIZATION FUND
The IFC Catalyst Fund invests in funds that provide growth capital to companies developing innovative ways to address climate change in emerging markets. It also invests directly in those companies. As of FY13, the investors in the fund include IFC, the United Kingdoms Department of Energy and Climate Change, the U.K. Department for International Development, the State Oil Fund of the Republic of Azerbaijan, and the Government of Canada.
IFC GLOBAL INFRASTRUCTURE FUND
The $182million Africa Capitalization Fund was launched in 2010 to invest in systemically important commercial banking institutions in Africa. Among its investors are the Abu Dhabi Fund for Development, African Development Bank, CDC Group, European Investment Bank, OPEC Fund
The IFC Global Infrastructure Fund co-invests with IFC in equity and equityrelated investments in the infrastructure sector in emerging markets. As of FY13, the funds investors include IFC, the State Oil Fund of the Republic of Azerbaijan, the Transport for London Pension Fund, and an Asian sovereign wealth fund.
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OUR INDUSTRY EXPERTISE
IFCs leadership role in sustainable private sector development reects a special advantage the depth and breadth of expertise we have acquired over more than 50 years of helping emerging-market rms succeed and grow. We have moved to leverage our global industry knowledge across our investment and advisory services to tackle the biggest development challenges of the coming years.
AGRIBUSINESS AND FORESTRY
Agribusiness has an important role to play in poverty reduction. The agricultural sector often accounts for at least half of GDP and employment in many developing countries, which makes it a priority for IFC. IFC provides support for the private sector to address rising demand in an environmentally sustainable and socially inclusive way. To help clients nance inventories, seeds, fertilizers, chemicals, and fuel for farmers, IFC offers working-capital facilities. To facilitate trade and lower costs, we pursue investments in infrastructure such as warehouses and cold-storage facilities. To bring land into sustainable production, we work to improve productivity by transferring technologies and making the best use of resources. In FY13, our new commitments in agribusiness and forestry totaled nearly $1.3billion, accounting for about 7percent of commitments for IFCs own account.
FINANCIAL MARKETS
micro, small, and medium enterprises than we would be able to on our own. Working through nancial intermediaries enables IFC to encourage them to become more involved in sectors that are strategic priorities such as women-owned businesses and climate change, and in underserved regions such as fragile and conict-affected states as well as in housing, infrastructure, and social services. In FY13, our commitments in nancial markets totaled about $3.6billion, about 20percent of commitments for IFCs own account.
CONSUMER AND SOCIAL SERVICES
Sound, inclusive, and sustainable nancial markets are vital to development as they ensure efficient resource allocation. IFCs work with nancial intermediaries has helped strengthen nancial institutions and overall nancial systems. It has also allowed us to support far more
IFC is the worlds largest multilateral investor in private healthcare and education. We work to increase access to high-quality health and education while also supporting job-creating sectors such as tourism, retail, and property. We help improve standards of quality and efficiency, facilitate the exchange of best practices, and create jobs for skilled professionals. In addition to making direct investments in socially responsible companies, our role includes sharing industry knowledge and expertise, funding smaller companies, raising medical and education standards, and helping clients expand services to lower-income groups. In FY13,
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In FY13, our commitments in nancial markets totaled about
$3.6
billion, about 20percent of commitments for IFCs own account.
our new commitments in consumer and social services totaled about $1.6billion, or nearly 9percent of IFCs commitments for our own account.
INFRASTRUCTURE
Modern infrastructure spurs economic growth, improves living standards, and can represent an opportunity to address emerging development challenges, including rapid urbanization and climate change. It is also an area in which the private sector can make a signicant contribution, providing essential services to large numbers of people, efficiently, affordably, and protably. This is IFCs focus: supporting private infrastructure projects whose innovative, high-impact business models can be widely replicated. We help increase access to power, transport, and water by nancing infrastructure projects and advising client governments on public-private partnerships. We mitigate risk and leverage specialized nancial structuring and other capabilities. In FY13, our new commitments in this sector totaled $2.2billion, or about 12percent of commitments for IFCs own account.
MANUFACTURING
and reducing poverty in developing countries. IFCs manufacturing clients tend to create or maintain more employment than those in any other sector. We have increased our activities in the sector, which includes construction materials, energyefficient machinery, chemicals, and equipment for solar and wind power. We invest in companies that are developing new products andmarkets, and restructuring and modernizing to become internationally competitive. As these industries represent some of the most carbon-intensive sectors, we are helping clients develop and undertake investments that help reduce carbon emissions and energy consumption. In FY13, our new commitments in the manufacturing sector totaled $1.3billion, or about 7percent of commitments for IFCs own account.
OIL, GAS, AND MINING
IFCs mission in the oil, gas, and mining sector is to help developing countries realize these benets. We provide nancing and advice for private sector clients, and also help governments adopt effective regulations and strengthen their capacity to manage these industries across the value chain. We support private investment in these industries, and we work to ensure that local communities enjoy concrete benets. In FY13, our new commitments in the sector totaled $390million, or about 2percent of commitments for IFCs own account.
TELECOMMUNICATIONS, MEDIA, AND TECHNOLOGY
The manufacturing sector plays a vital role in creating opportunity
Industries that can harness natural resources are vital for many of the worlds poorest countries. They are a key source of jobs, energy, government revenues, and a wide array of other benets for local economies. In many countries, large-scale sustainable investments in these industries can create equally large-scale gains in economic development.
Modern information and communication technologies make it easier for the poor to obtain access to services and resources. They expand opportunity and make markets and institutions more efficient. IFC works to extend the availability of such technologies. We channel investments toward private companies that build modern communications infrastructure and information-technology businesses, and develop climatesmart technologies. IFC increasingly helps clients move beyond their own national borders and into other developing markets. In FY13, our new commitments in this sector totaled about $470million.
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Our people and practices

IFCs commitment to alleviating poverty and creating opportunity for the developing worlds most vulnerable people is reected in our corporate culture.
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THE IFC WAY
Our history shows we learn from experience and take on new challenges. Ourstaff is better positioned than ever to maximize IFCs development impact. More than half of us are based in developing countries, close to the clients and communities we serve. We are also more diverse than ever nearly two-thirds of our staff hail from developing countries. A strong corporate culture is central to any organizations ability to succeed and adapt to new challenges. The IFC Way is a way of being, dening, and solidifying IFCs culture and brand, and a process that engages staff at all levels and in all regions to inform management decision making. It includes our vision, our core corporate values, our purpose, and the way we work.
OUR VISION
THE WAY WE WORK
That people should have the opportunity to escape poverty and improve their lives
OUR VALUES
Excellence, Commitment, Integrity, Teamwork, and Diversity

OUR PURPOSE
To create opportunity for people to escape poverty and improve their lives by catalyzing the means for inclusive and sustainable growth, through: Mobilizing other sources of nance for private enterprise development Promoting open and competitive markets in developing countries Supporting companies and other private sector partners where there is a gap Helping generate productive jobs and deliver essential services to the poor and vulnerable To achieve our purpose, IFC offers development-impact solutions through rm-level interventions (Investment Services, Advisory Services, and the IFC Asset Management Company); promoting global collective action; strengthening governance and standard-setting; and businessenabling-environment work.
We help our clients succeed in a changing world Good business is sustainable, and sustainability is good business One IFC, one team, one goal Diversity creates value Creating opportunity requires partnership Global knowledge, local know-how Innovation is worth the risk We learn from experience Work smart and have fun No frontier is too far or too difficult
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HOW WE MEASURE DEVELOPMENT RESULTS
Measuring the results of our work is critical to understanding how well our strategy is working and whether IFC is reaching people and markets that most need our help. Our results measurement system features three mutually reinforcing components: the IFC Development Goals, a monitoring system to measure development results, and systematic evaluations of the impact of both our investment and advisory work. Besides development results, we also track IFCs additionality the distinctive advantages and benets of ourinvolvement in a project.
GOALS
EVALUATION
MONITORING
We are also now studying the extent to which IFCs activities change the behavior of other market participants in areas unrelated to our own projects. These changes in behavior what we call demonstration effects may include things like a bank starting to lend in a new sector, a new developer nancing a project similar to the one implemented with IFC support, or a government replicating reform instituted by an IFC client government. Understanding the impact of our activities and feeding into our operations the lessons we learn from results measurement continues to be a priority. To strengthen our ability to do this, we began testing and implementing additional monitoring instruments, and additional evaluative approaches. These efforts will contribute to the achievement of two overarching World Bank Group goals ending extreme poverty by 2030 and boosting shared prosperity. We have also continued to work closely with other development nance institutions, or DFIs. We are currently leading a collective effort aimed at harmonizing a set of core indicators for monitoring development results of investment operations. Our collaboration with DFIs was further strengthened following the launch of IFCs Jobs Study (see page 43 for more details). About 30 other institutions agreed to collaborate with us to help create more and better jobs. We are now working on implementing the recommendations of the study.
THE IFC DEVELOPMENT GOALS
The IFC Development Goals are targets for reach, access, or other tangible development outcomes that projects signed or committed by IFC are expected to deliver during their lifetime. Two such goals pertaining to health, education, and nancial services moved from testing into implementation in FY13 and are fully integrated into IFCs corporate scorecard and incentives for management. They will soon apply also to long-term performance awards for staff. Whether being tested or implemented, the IFC Development Goals have proved useful in steering IFCs business to where it has the biggest impact. The goals also are encouraging staff to work across departments and advisory business lines, adopting cross-cutting and programmatic approaches to enhance development impact. We plan for one additional goal to be implemented in FY14 tracking the number of people for whom we increase or improve sustainable farming opportunities.
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1: Agribusiness Increase or improve sustainable farming opportunities 2: Health and Education Improve health and education services 3. Financial Services Increase access to nancial services for individuals, microenterprises, and SME clients 4: Infrastructure Increase or improve infrastructure services 5: Economic Growth Increase the value added by IFC clients to their respective countrys economy 6: Climate Change Reduce greenhouse emissions
MONITORING AND TRACKING RESULTS
because their outcome and impact results had not been achieved by the review dates. We continue to report on development results for our entire portfolio and have them assured by an external rm.
EVALUATING RESULTS
We use our Development Outcome Tracking System to monitor the development results of IFCs investment and advisory services. For Investment Services, DOTS covers after certain exclusions 1,727 companies under supervision. This report focuses on 716 out of about 780 investments approved between 2004 and 2009, which are mature enough to be rated and recent enough to be relevant. The FY13 ratings reect our clients 2012 data and performance. Every year, the group of investments we report on shifts by one year. The report also addresses the current reach of all active investments in IFCs portfolio. Reach indicators measure the number of people reached by IFC clients or the dollar benet to particular stakeholders, regardless of IFCs investment size. DOTS does not typically track certain projects, including projects that are expansions of existing ones, split projects, and certain nancial products such as rights issues. For Advisory Services, DOTS covers all projects that are active, completed, or on hold, dating back to FY06. The FY13 ratings are dened as a review of 149 completion reports led in 2012, of which 124 could be assessed. The rolling average is based on a review of 494 completion reports led in calendar years 2010 through 2012, of which 396 were assessed. Advisory projects that could not be assessed for development effectiveness were excluded from the analysis, because they were non-client-facing projects or
At any given time, there are more than
20
evaluations ongoing, covering both investment and advisory services.
Evaluation has been integral to IFCs results measurement since 2005, when IFC rst began working with external evaluators to generate useful lessons and produce impartial assessments of development effectiveness. By revealing the factors for success or failure, evaluations help us understand what we need to do more of and less of to achieve IFCs mission. IFCs investment in evaluation has grown rapidly, and we now have more than 20 evaluations ongoing at any given time, covering both investment and advisory services. Our evaluations are undertaken at project, programmatic, or thematic levels, as well as at the level of donor-funded facilities, countries, and regions. Our evaluation strategy is focused on maximizing opportunities for learning. It has four main objectives: (1) to credibly articulate IFCs development impact; (2) to learn how to maximize the effectiveness of IFC interventions; (3) to provide useful business intelligence to clients and partners; and (4) to exchange knowledge with others outside IFC. These strategic objectives shape our evaluation work program. Our portfolio of evaluations is selected to address knowledge gaps, learn lessons from successful and unsuccessful initiatives, assess operations never before evaluated, and deliver evaluation services to interested clients. In particular, the new strategy focuses
82 _
HOW IFC MONITORS RESULTS
DOTS allows for real-time tracking of development results throughout the project cycle. At the outset of a project, IFC staff members identify appropriate indicators with baselines and targets. They track progress throughout supervision, which allows for real-time feedback into operations, until project closure. This report provides the DOTS score the percentage of projects that have achieved a high rating (in the top half of the rating scale) for IFC overall and by region, industry, and business line. Ratings are based on qualitative assessments provided by project teams. They are reviewed centrally by the Development Impact Department, with the support of an automated system of ags that helps identify deviations from rating requirements. For Investment Services, the overall DOTS score is a synthesis of four performance areas (nancial, economic, environmental and social, and broader private sector development impacts). The weighting of each area is informed by standardized industryspecic indicators, comparing actual results against absolute benchmarks. To obtain a high rating, a project must make a positive contribution to the host countrysdevelopment. This year, we excluded trade-nance clients from the weighting to ensure methodological consistency in the calculation of both weighted and unweighted scores. Accordingly, we restated the weighted DOTS scores shown on page 29. For Advisory Services, the overall DOTS score or development-effectiveness rating is a synthesis of the overall strategic relevance, efficiency, and effectiveness (as measured by project outputs, outcomes, and impacts). At project completion, intended results are compared with achieved results. The DOTS score is part of IFCs corporate scorecard and cascades into department scorecards and incentives for individual staff members.
attention on the poverty-reduction and job-creation effects of our work that typically cannot be captured by monitoring and tracking alone. The new evaluation strategy complements the work of the Independent Evaluation Group (see page 92) which reports directly to the Board of Directors and is charged with providing its own assessments and lessons of experience. IEGs evaluations incorporate ndings from IFCs own monitoring and evaluations. IFCs evaluation staff works closely with IEG to discuss work programs, share knowledge, and align efforts whenever possible.
INVESTMENT RESULTS
Over the past ve years, DOTS ratings have been broadly stable, staying within a ve-percentagepoint range. In FY13, IFCs development results for investment services continued to exceed our long-term target of 65percent, with 66percent of our investment clients rated high. Across the world, our clients continued to increase their development reach. In Latin America and the Caribbean, the number of loans to micro, small, and medium enterprises rose about 110percent to 14.4million. In Sub-Saharan Africa, the number of farmers reached increased by almost 80percent to over 675,000. In the Middle East and North Africa, the number of patients
reached increased by 61percent to 3.5million. Meanwhile, our clients in South Asia provided 120million phone connections, accounting for 63percent of total phone connections reported by IFC clients. By region, our strongest performance was in Latin America and the Caribbean, where the percentage of clients rated high rose 2 points to 74percent. The progress reected stronger performance by clients in Colombia, Mexico, and Peru. It also reected improved performance of nancial markets operations, as well as solid performance of clients in funds, infrastructure mainly electric power and transportation and consumer and social services (especially health and education). Our clients in the Middle East and North Africa also showed improved results, with 65percent of investment operations rated high an increase of 5 points over the previous year. The increase reected improved results in nancial markets, specically in Egypt. The rating also increased because of positive results in the health sector. In Europe and Central Asia, the share of clients rated high rose to 64percent from 61percent mainly because of solid performance by clients in the infrastructure and funds sectors in Russia, and because of continued improvement in the results of manufacturing clients in Turkey. Our ratings weakened in East Asia and the Pacic, Sub-Saharan Africa, and South Asia. In East Asia and the Pacic, 70percent of our clients were rated high, a decline of 10 points from the previous year.
_ 83
The drop reected the deteriorating performance of manufacturing companies predominantly in China, where slower growth compressed margins. It also reected the weaker performance of clients in nancial markets, specically in Indonesia. In Sub-Saharan Africa, 61percent of clients were rated high a decline of 3 points that reected deterioration among clients in Ghana, Tanzania, and Cameroon. Clients in the funds sector showed improved results, while ratings declined in agribusiness and forestry. In South Asia, 60percent of our clients were rated high in FY13 down from 73percent in FY12. The decline reected the weak performance of Indian companies, which account for 90percent of the regions rated portfolio. At the industry level, ratings improved for clients in the funds sector, were steady in nancial markets, and declined in all other sectors. Clients development reach, however, continued to be signicant (see page 86). The funds sector had the best performance, with 79percent of clients rated high thanks to better performance of new and existing investments, particularly in Europe and Central Asia and in Latin America and the Caribbean. The performance of investments in thenancial markets sector remained stable, with 70percent ofclients rated high. In the infrastructure sector, the share of projects rated high fell by 3points to 73percent, mainly because of weaker performance of clients in the warehousing, storage,
The funds sector had the best performance, with
79%
of clients rated high thanks to better performance of new and existing investments, particularly in Europe and Central Asia and in Latin America and theCaribbean.
shipping, and logistics sectors. Even so, the DOTS score for the sector continued to be well above the IFC average. In the agribusiness and forestry sector, 68percent of our clients were rated high a decline of 4 points from FY12. The drop was mostly due to deteriorating ratings of clients in Sub-Saharan Africa and South Asia. In oil, gas, and mining, 64percent of clients were rated high, down from 69percent in FY12. The exit of high-performing clients from the reporting cohort was the main reason for the decline this year, while the sector continued to suffer from political uncertainties in the Middle East and North Africa and from the commercial difficulties of some clients in Latin America. In the consumer and social services sector, the percentage of investments rated high went from 57percent to 56percent amid a deterioration in the tourism sector and in East Asia. The percentage of clients rated high in the telecommunications, media, and technology sectors declined a point to 55percent. Our clients in this sector are often start-ups, so their odds of success generally tend to be lower. In the manufacturing sector, 49percent of clients were rated high a decline of 14 points from the previous year. Performance deteriorated across all regions, with the largest declines occurring among clients in the Middle East and North Africa and in South Asia.
84 _
LEARNING FROM OUR WORK IN CONFLICT-AFFECTED COUNTRIES
ADVISORY RESULTS
To maximize opportunities for learning, IFC increasingly conducts global, regional, programmatic, and thematic evaluations and meta-evaluations of our work in addition to evaluations of individual projects. Recently an external consulting rm completed a mid-term review of our Con ict-Affected States in Africa program. The program, also known as CASA, was launched in 2008 to enhance the delivery of IFC Advisory Services in fragile and conict-affected states. It now serves eight countries Burundi, Central African Republic, Cte dIvoire, Democratic Republic of Congo, Guinea, Liberia, Sierra Leone, and South Sudan. The review found that CASAs focus on private sector development addresses one of the most important challenges in post-conict reconstruction. According to stakeholder feedback, no other agency addresses private sector development in these countries as comprehensively as IFC does through the CASA program. CASA promotes private sector development in one of three ways: rst, it facilitates tailored and coordinated Advisory Services projects; second, it provides funds to support implementation of projects; and third, it promotes knowledge management, including the dissemination of IFC tools, lessons learned, and best practice. Based on the review, the consulting rm recommended that IFC build on the programs success by going beyond a country-by-country approach and leveraging the distinctive strengths of all four of IFCs advisory business lines Access to Finance, Investment Climate, Public-Private Partnerships, and Sustainable Business. Such an approach, it said, would help build key relationships and enhance CASAs effectiveness. The rm also recommended that IFC extend CASAs reach by establishing similar programs in new countries and advocating for wider adoption of this model within the World Bank Group. IFCs senior management has endorsed expanding the program to 18 countries in sub-Saharan Africa and is implementing other recommendations.
Development effectiveness ratings and client satisfaction both reached record highs for IFC Advisory Services in FY13. Development effectiveness ratings increased for the fourth consecutive year, with 76percent of 124 advisory projects that closed during the year and could be assessed for development effectiveness being rated high. Outcomes could be assessed for all 124 projects, and impacts could be evaluated for 73percent of them. Ratings improved for operations in IDA countries climbing to 78percent in FY13 from 74percent in FY12. Ninety percent of clients reported satisfaction with IFC Advisory Services work in FY13. To strengthen our impact, Advisory Services undertakes programmatic approaches that harness contributions from across our four business lines: Access to Finance, Investment Climate, Public-Private Partnerships, and Sustainable Business. Here are a few selected highlights from 2012 across Advisory Services: We helped governments sign nine public-private partnership contracts (six in IDA countries, including one in fragile and conictaffected situations), expected to improve access to infrastructure and health services for over 3 million people (1.7 million in fragile and conict-affected situations), and mobilize $750 million in private investment. We helped 3million people receive off-grid lighting; helped 1.3million people gain access to village
phones; and provided capacity building to almost 350,000 people (76percent in IDA countries), including to farmers, entrepreneurs, and management of small and medium enterprises. We helped governments in 43countries adopt 76 investment climate reforms (55 reforms in IDA countries, including 26reforms in fragile and conictaffected situations). We provided governments with industry-level reform and investment-promotion support that have contributed to an estimated $750million in new investments. We helped rms improve corporate governance practices, which contributed to additional nancing of $200million, $150million of which was from IFC. We worked with 149 nancial intermediaries, in partnership with IFC Investment Services, that provided over 14.2million micronance and SME loans (15percent in IDA countries) totaling nearly $103billion; we also worked with 20 nancial intermediaries that provided 207,000 housing nance loans, totaling more than $7.3billion. We helped improve nancial markets infrastructure through working with collateral registries that facilitated over 40,000 SMEs to receive $4.5billion in nancing secured with movable property, and helped create, strengthen or license four credit bureau operators. We helped rms avoid greenhouse gas emissions estimated at 3.7million metric tons annually (calculation based on methodologies in place before adoption of a standardized methodology in 2012).
_ 85
DOTS PERFORMANCE CATEGORIES: INVESTMENT SERVICES

Examples of Specic Indicators Assessed against Targets
Return on invested capital, return on equity, project implemented on time and on budget Economic return on invested capital, number of connections to basic services, loans to small enterprises, people employed, tax payments Environmental and social management systems, ef uent or emission levels, community development programs Demonstration effects (other rms replicating a new approach, product, or service), linkages to other private companies, corporate governance improvements

FY13 IDG Commitments
760,000 people 7.06 million people 41.25 million people 1.04 million people 36.74 million people 6.20 million metric tons
Performance Category
Financial Performance
General Indicators and Benchmarks

Returns to nanciers, e.g., nancial returns at or above weighted average cost of capital Returns to society, e.g., economic returns at or above 10 percent or the weighted average cost of capital Project meets IFCs Performance Standards
Goal
Increase or improve sustainable farming opportunities Improve health and education services Increase access to nancial services for micronance clients Increase access to nancial services for SME clients Increase or improve infrastructure services Reduce greenhouse-gas emissions
FY13 IDG Target

Benet 1 million people Benet 4.22 million people Benet 28.05 million people Benet 1.15 million people Benet 19.75 million people Reduce by 4.90 million metric tons of CO2 equivalent per year
Percent of Target Achieved

76%
167%
Economic Performance
147%
Environmental and Social Performance
90%
186%
Private Sector Development Impact
Project contributes to improvement for the private sector beyond the project company
127%
DOTS PERFORMANCE CATEGORIES: ADVISORY SERVICES

Examples of Specic Indicators Assessed against Targets
Client contributions, alignment with country strategy Cost-benet ratios, project implemented on time and budget Improvements in operations, investments enabled, increase in revenues for beneciaries, cost savings from policy reforms
Performance Category
Strategic Relevance
General Indicators and Benchmarks

Potential impact on local, regional, national economy Returns on investment in advisory operations Outputs, outcomes, and impacts. Project contributes to improvement for the client, the beneciaries, and the broader private sector
Efciency
Effectiveness
86 _
DEVELOPMENT REACH BY IFCS INVESTMENT CLIENTS

Portfolio CY11 Investments
Employment (millions of jobs)1 2.5 2.7
FIVE-YEAR PERFORMANCE ADVISORY SERVICES DOTS SCORE, FY09FY13

Portfolio CY12
% Rated High
100%
Micronance loans2
Number (million) Amount ($ billions) 19.7 19.84 22.0 24.03
76%
80%
67% 62% 72%

60%
SME loans2
Number (million) Amount ($ billions) 3.3 181.25 5.8 241.30
56%
40%
Customers reached with services

Power generation (millions)3 Power distribution (millions) Water distribution (millions) 4 Gas distribution (millions)5 Phone connections (millions) 6 Patients reached (millions)7 Students reached (millions) Farmers reached (millions) 47.0 49.2 38.7 22.4 172.2 13.0 0.9 3.3 52.2 45.7 42.1 33.8 192.0 17.2 1.0 3.1
20%
0% FY09 FY10 FY11 FY12 FY13
FIVE-YEAR PERFORMANCE INVESTMENT SERVICES DOTS SCORE, FY09FY13

% Rated High
Payments to suppliers and governments

Domestic purchases of goods and services ($ billions) Contribution to government revenues or savings ($ billions) 49.84 21.73 46.19 27.00
100%
80%
67%
60%
68%
66%
These gures represent the reach of IFC clients as of the end of CY11 and CY12. CY11 and CY12 portfolio data are not strictly comparable, because they are based on a changed portfolio of IFC clients. In many cases, results reect also contributions from Advisory Services. 1. Portfolio gures for employment include jobs provided by Funds. 2. Portfolio reach gures represent SME and micronance outstanding loan portfolio of IFC clients as of end of CY11 and CY12, for MSME-oriented nancial institutions/ projects. 268 and 285 clients were required to report their end-of-year SME and micronance portfolios in CY11 and CY12, respectively. 252 and 269 clients did so for CY11 and CY12, respectively. The missing data were extrapolated. 3. CY11 total Power Generation customers revised due to the restatement of one client value in East Asia and the Pacic. 4. CY11 total Water Distribution customers revised due to the restatement of one client value in Sub-Saharan Africa. 5. One client in East Asia and the Pacic contributed 31.14 million of Gas Distribution customers in CY12. 6. One client in South Asia contributed 112.7 million of phone connection customers in CY12. 7. CY11 total Patients Reached revised due to the restatement of one client value in Europe and Central Asia.
71%
71%
40%
20%
0% FY09 FY10 FY11 FY12 FY13
_ 87
INVESTMENT SERVICES DOTS SCORE BY PERFORMANCE AREA, FY13

% Rated High Development Outcome
INVESTMENT SERVICES DOTS SCORE BY REGION, FY12 VS. FY13

% Rated High
66% 73%
IFC Total
68% 66%
Financial Performance
50% 58%
72% 74%
Economic Performance
60% 69%
East Asia and the Pacific
80% 70%
Environment & Social Performance Private Sector Development Impact

Unweighted Weighted
67% 69% 77% 83%
60% 65%
61% 64%
Sub-Saharan Africa
64% 61%
INVESTMENT SERVICES DOTS SCORE BY INDUSTRY, FY12 VS. FY13

% Rated High IFC Total
South Asia
73% 60%
FY12
FY13
68% 66%
ADVISORY SERVICES DOTS SCORE BY BUSINESS LINE

Funds
73% 79%
Infrastructure
76% 73%
76% 71%
Financial Markets
70% 70%
Sustainable Business
87% 75%
Agribusiness & Forestry
72% 68%
Investment Climate
75% 70%
Oil, Gas & Mining
69% 64%
Access to Finance
74% 75%
Consumer & Social Services
57% 56%
Public-Private Partnerships
50% 55%
Telecoms and IT
56% 55%
FY13
FY11 to FY13
Manufacturing
63% 49%
ADVISORY SERVICES DOTS SCORE BY REGION

FY12
FY13
76% 71%
South Asia
92% 84%
76% 80%
76% 79%
Sub-Saharan Africa
72% 67%
East Asia and the Pacific
67% 68%
64% 50%
FY13
FY11 to FY13
88 _
OUR STAFF
IFCs employees are diverse. They are our most important asset. Representing more than 140 countries, our staff brings innovative solutions and global best practices to local clients. Our offices are in 109 cities in 99 countries. More than half of us 57percent are based in eld offices, an increasing percentage that reects our commitment to decentralization. Most IFC staff also hail from developing countries, 63percent in all, a diversity that enriches our perspective and underscores our focus on areas where private sector development can have the biggest impact.
WHERE WE WORK
Location
Washington, D.C. Field Ofces Total IFC Staff
FY05
1,350 (55%) 1,083 (45%) 2,433
FY13
1,737 (43%) 2,278 (57%) 4,015
NATIONAL ORIGINSALL FULL-TIME STAFF

National Origins
Developed Countries Developing Countries Total
FY05
1,004 (41%) 1,429 (59%) 2,433
FY13
1,502 (37%) 2,513 (63%) 4,015
NATIONAL ORIGINSALL STAFF AT OFFICER LEVEL AND HIGHER

National Origins
Developed Countries Developing Countries Total
FY05
690 (50%) 682 (50%) 1,372
FY13
1,163 (44%) 1,462 (56%) 2,625
GENDERALL FULL-TIME STAFF

Gender
Male Staff Female Staff Total
FY05
1,194 (49%) 1,239 (51%) 2,433
FY13
1,880 (47%) 2,135 (53%) 4,015
GENDERALL STAFF AT OFFICER LEVEL AND HIGHER

Gender
Male Staff Female Staff Total
FY05
911 (66%) 461 (34%) 1,372
FY13
1,507 (57%) 1,118 (43%) 2,625
_ 89
IFCs staff represents more than
COMPENSATION
BENEFITS PROGRAMS
140
countries.
63%
of our staff hail from developing countries.
IFCs compensation guidelines are part of the World Bank Groups framework. The international competitiveness of compensation is essential to our capacity to attract and retain a highly qualied, diverse staff. The salary structure of the World Bank Group for staff recruited in Washington, D.C., is determined with reference to the U.S. market, which historically has been globally competitive. Salaries for staff hired in countries outside the United States are based on local competitiveness, determined by independent local market surveys. Based on the World Bank Groups status as a multilateral organization, staff salaries are determined on a net-oftax basis.
VARIABLE PAY PROGRAMS
57%
are based in eld offices.
IFCs variable pay programs consist of several components, including recognition, annual, and long-term performance awards that support IFCs highperformance culture. These awards are designed to encourage teamwork, reward top performance, and support IFCs strategic priorities, such as projects in Fragile and Conict-Affected States.
IFC provides a competitive package of benets, including medical insurance and a retirement plan. Washingtonbased employees are covered by Aetna, contracted through an open procurement process. Other staff members are covered by Vanbreda, an international healthcare provider. Medical insurance costs are shared 75percent is paid by IFC and 25percent by the insured. IFCs pension is part of the World Bank Group plan, based on two benet components: rst, years of service, salary, and retirement age; second, a cash savings plan, which includes a mandatory contribution of ve percent of salary, to which IFC adds 10percent annually. Legacy pension benets from earlier World Bank Group pension plans include termination grants and additional cash payouts.
STAFF SALARY STRUCTURE (WASHINGTON, D.C.)

During the period July 1, 2012, to June 30, 2013, the salary structure (net of tax) and average net salaries/benets for World Bank Group staff were as follows:
STAFF AT GRADE LEVEL (%) 0.0% 0.7% 9.2% 7.5% 9.6% 19.8% 31.4% 18.4% 2.9% 0.4% 0.1% AVERAGE SALARY/ GRADE 34,269 41,379 53,698 66,204 77,073 100,089 137,075 188,958 249,266 309,632 354,189
GRADES GA GB GC GD GE GF GG GH GI GJ GK
REPRESENTATIVE JOB TITLES Ofce Assistant Team Assistant, Information Technician Program Assistant, Information Assistant Senior Program Assistant, Information Specialist, Budget Assistant Analyst Professional Senior Professional Manager, Lead Professional Director, Senior Advisor Vice President Managing Director, Executive Vice President
MINIMUM ($) 25,100 31,700 39,100 46,200 62,100 82,500 111,300 151,700 202,200 276,700 304,000
MARKET REFERENCE ($) 32,600 41,200 50,900 60,100 80,700 107,300 144,700 197,200 264,500 310,000 344,700
MAXIMUM ($) 42,400 57,700 71,300 84,200 113,000 150,200 202,500 254,900 303,300 347,100 379,100
AVERAGE BENEFITSa 19,591 23,657 30,699 37,849 44,063 57,221 78,366 108,027 142,505 177,016 195,637
Note: Because World Bank Group (WBG) staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the aftertax take-home pay of the employees of the comparator organizations and rms from which WBG salaries are derived. Only a relative small minority of staff will reach the upper third of the salary range. a. Includes medical, life and disability insurance; accrued termination benets; and other nonsalary benets.
90 _
OUR GOVERNANCE
Our Place in the World Bank Group The World Bank Group is a vital source of nancial and technical assistance to developing countries. Established in 1944, its mission is to ght poverty with passion and professionalism, for lasting results. IFC is one of ve members of the Bank Group, though it is a separate legal entity with separate Articles of Agreement, share capital, nancial structure, management, and staff. Membership in IFC is open only to member countries of the World Bank. As of June 30, 2013, IFCs total cumulative paid-in capital of about $2.4billion was held by 184 member countries. These countries guide IFCs strategy, programs, and activities. IFC works with the private sector to create opportunity where its needed most. Since our founding in 1956, we have committed more than $144 billion of our own funds for private sector investments in developing countries, and we have mobilized billions more from others.
In working toward a world free of poverty, we collaborate closely with other members of the Bank Group, including: The International Bank for Reconstruction and Development, which lends to governments of middle-income and creditworthy low-income countries. The International Development Association, which provides interest-free loans called credits to governments of the poorest countries. The Multilateral Investment Guarantee Agency, which provides guarantees against losses caused by noncommercial risks to investors in developing countries. The International Centre for Settlement of Investment Disputes, which provides international facilities for conciliation and arbitration of investment disputes.
OUR BOARD
EXECUTIVE COMPENSATION
The salary of the President of the World Bank Group is determined by the Board of Directors. The salary structure for IFCs Executive Vice President and CEO is determined by positioning a midpoint between the salary structure of staff at the highest level, as determined annually by independent U.S. compensation market surveys, and the salary of the World Bank Group President. The compensation of our executive leadership is transparent. IFCs Executive Vice President and CEO, Jin-Yong Cai, received a salary of $350,000, net of taxes. There are no executive incentive compensation packages.
OUR MEMBER COUNTRIESSTRONG SHAREHOLDER SUPPORT
Capital Stock by Country Grand Total United States Japan Germany France United Kingdom Canada India Italy Russian Federation Netherlands 174 Other Countries 100.00% 23.69% 5.87% 5.36% 5.04% 5.04% 3.38% 3.38% 3.38% 3.38% 2.34% 39.14%
Each of our member countries appoints one governor and one alternate. Corporate powers are vested in the Board of Governors, which delegates most powers to a board of 25 directors. Voting power on issues brought before them is weighted according to the share capital each director represents. The directors meet regularly at World Bank Group headquarters in Washington, D.C., where they review and decide on investments and provide overall strategic guidance to IFC management. The President of the World Bank Group is also President of IFC.
_ 91
FAR LEFT ROW: No. 5 - John Whitehead, New Zealand; No. 4 - Roberto B. Tan, Philippines; No. 3 - Satu Santala, Finland
5 4 3 2 1 6 7 9 8 10 11 12 13 14 15 16 17 18 19 20 21 25 22 23 24
SECOND ROW LEFT: No. 7 - Shaolin Yang, China; No. 6 - Marie-Lucie Morin, Canada; No. 2 - Agapito Mendes Dias, Sao Tome and Principe; No. 1 - Merza Hasan, Kuwait THIRD ROW LEFT: No. 9 - Vadim Grishin, Russian Federation; No. 8 - Gwen Hines, United Kingdom; No. 10 - Mukesh N. Prasad, India MIDDLE ROW: No. 12 - Piero Cipollone, Italy; No. 14 - Ibrahim M. Alturki (alt.), Saudi Arabia; No. 13 - Omar Bougara, Algeria; No. 11 - Mansur Muhtar, Nigeria FIRST RIGHT ROW: No. 18 - Denny H. Kalyalya, Zambia; No. 19 - Csar Guido Forcieri, Argentina; No. 15 - Gino Alzetta, Belgium; No. 16 - Hideaki Suzuki, Japan; No. 17 - Ingrid-Gabriela Hoven, Germany SECOND RIGHT ROW: No. 20 - Juan Jos Bravo, Mexico; No. 21 - Sara Aviel (alt.), United States FAR RIGHT ROW: No. 22 - Herv de Villeroch, France; No. 23 - Frank Heemskerk, Netherlands; No. 24 - Jrg Frieden, Switzerland; No. 25 - Sundaran Annamalai, Malaysia
92 _
ACCOUNTABILITY
INDEPENDENT EVALUATION GROUP
The Independent Evaluation Group generates lessons from evaluations to contribute to IFCs learning agenda. IEG is independent of IFC management and reports directly to IFCs Board of Directors. It aims to strengthen IFCs performance and inform its strategies and future directions. IEGs Biennial Report on Operations Evaluation, which focused on assessing, monitoring, and evaluation in IFC and MIGA, reported that IFC has an advanced results management system to gather, analyze, and apply investment and advisory project information. IEG found that IFC has made strides in developing, aggregating, disclosing, and strategically using its development indicators. The data from the Development Outcome Tracking System are used in corporate and departmental scorecards and corporation-wide development goals. IEGs evaluation provided important input to rene and strengthen IFCs results management system. IEG validates 45percent of eligible IFC investment projects
and 51percent of eligible advisory projects. IEG communicates these ratings to IFC and aggregates them in its annual evaluation of World Bank Groups results and performance. That most recent IEG report found that IFCs overall development results have been relatively stable on a three-year rolling average. Another IEG evaluation this year covered the Global Trade Finance Program. IEG reported that the program signicantly improved IFCs engagement in trade nance and has been effective in helping expand the supply of trade nance by mitigating risks that would otherwise inhibit the activity of commercial banks. This year IEG relaunched E-LRN, a database of lessons from IFC investment projects since 1996. E-LRN gives access to more than 3,000 lessons from 15 years of evaluations. The lessons are searchable and easily accessible to staff, helping improve IFCs development effectiveness. IEGs reports are disclosed on its website: http://ieg.worldbank group.org.
IEG validates
OFFICE OF THE COMPLIANCE ADVISOR OMBUDSMAN
45%
of eligible IFC investment projects and 51 percent of eligible advisory projects.
The Office of the Compliance Advisor Ombudsman is the independent recourse mechanism for IFC and the Multilateral Investment Guarantee Agency. CAO helps address complaints from people affected by IFC and MIGA projects, and reports directly to the World Bank Group President. CAOs goal is to enhance the environmental and social performance of projects and to foster greater public accountability of IFC and MIGA. Through its three roles, CAO helps resolve disputes between local communities and IFC clients; provides independent oversight of IFCs environmental and social compliance; and provides independent advice to the President and IFC management. During the year, CAO addressed 42 cases in 19 countries. These cases related to IFC investments in extractive industries, infrastructure, agribusiness, manufacturing, advisory services, and nancial intermediaries. In its compliance role, CAO handled 12 audits of IFCs performance. CAO determined it had sufficient
_ 93
basis to close two regarding IFCs investments in palm oil in Indonesia and agribusiness in Peru. Seven audits are in process, while CAO is monitoring IFCs response to three audits related to metals manufacturing in Mozambique, the power sector in Kosovo, and global nancial intermediaries. The nancial intermediaries audit analyzed 188 IFC investments and raised concerns about IFCs approach to supporting appropriate environmental and social management capacities in its nancial intermediary clients, and identied challenges in the way IFC monitors the environmental and social impact of such investments. IFC is working on an action plan to address CAOs audit ndings. CAOs dispute-resolution team is working in Albania, Cambodia, Cameroon, Chad, Colombia, Indonesia, India, Mexico, Mongolia, Nicaragua, Papua New Guinea, Peru, South Africa, and Uganda helping communities and IFC clients address issues of concern. CAO closed a labor complaint related to a nancial intermediary client in Africa, and is monitoring settlements for two cases in the palm oil
CAO addressed
42
cases in 19countries.
sector in Indonesia and sugar industry in Nicaragua, respectively. CAO this year revised its Operational Guidelines in consultation with civil society, IFC/MIGA, and other stakeholders. The revised guidelines were implemented in March and aim to improve CAOs effectiveness. More information about CAO is available at www.cao-ombudsman.org
94 _
PARTNERSHIPS
FORMING PRODUCTIVE PARTNERSHIPS
IFC works with governments, corporations, foundations, and other multilateral organizations and development institutions to foster innovative partnerships that create prosperity and eradicate poverty. As the largest global development institution focused on the private sector in developing countries, IFC, together with our partners, strives to address urgent development challenges. Our collaborative approach emphasizes the power of long-term partnerships, maintains a focus on results measurement and efficiency, and leverages the contributions of our partners.
WORKING WITH DONOR PARTNERS
IFC maintains long-term relationships with its donor partners, with whom we work to promote private sector development across the globe. Our donor partners strongly support the work of IFC Advisory Services, to which they committed more than $254million in FY13. In addition, a number of these partners have deepened their collaboration with IFC by investing alongside us on various investment initiatives. In cooperation with the global donor community, IFC launched several strategic partnerships in FY13, which blended exible nancing, thought leadership, and knowledge sharing to maximize our development impact. We created the Canada-IFC Partnership Fund to address pressing development issues in the extractive and nancial sectors and to promote gender equality worldwide. We strengthened the Luxembourg-IFC and Ireland-IFC Partnerships to jointly promote
sustainable business, corporate governance, and a more robust investment climate globally, as well as support conict-affected states in Africa. We also extended the Netherlands-IFC Partnership to work together on sustainable business, investment climate, access to nance, public-private partnerships, and conict situations. In Asia, we established the Pacic Partnership with Australia and New Zealand to help drive regional private sector development. We also deepened our partnership with Japan to further our activities in Asia and sub-Saharan Africa. Here are a few additional highlights of our work with partners in FY13: Austrias Federal Ministry of Finance renewed its commitment to enhance collaboration in Eastern Europe and Central Asia, with a focus on public-private partnerships, agribusiness, and sustainable energy. Likewise, the Development Bank of Austria supported increased investments in renewable energy and energy efficiency in East Africa. The Bill & Melinda Gates Foundation and IFC continued cooperation in the water and sanitation sector, and in access to nance, launching a market development project for household sanitation in Kenya and a mobile nancial services project in Tanzania. The Government of Canada contributed to strengthening the investment climate in Sub-Saharan Africa and Latin America and the Caribbean as well as enhancing food security in East Asia and the Pacic. Canada also supported our climate-change activities as an investor in the IFC Catalyst Fund.
In FY13, more than
$254
million was committed by donor partners to support IFCs advisory work.
$44
billion was provided by international nancial institutions for private sector development in 2011.
The Government of Denmark supported our resource efficiency and clean energy programs in Egypt and Tunisia. The Government of the French Republic continued its cooperation with IFC on the Business Law Reform Program in SubSaharan Africa. Germanys Gesellschaft fr Internationale Zusammenarbeit contributed to IFCs work with nancial institutions to improve their social and environmental risk-management activities, while the Federal Ministry for Economic Cooperation and Development helped IFC explore opportunities for green-growth investments. The Netherlands Ministry of Foreign Affairs supported job creation in the Middle East and North Africa, water-related activities in South Asia, investment-climate reforms in Sub-Saharan Africa, and the Global SME Finance Innovation program. In addition, the Netherlands provided muchneeded trade nancing through a contribution to our Global Trade Liquidity Program. Norways Ministry of Foreign Affairs provided additional funding to IFCs Conict-Affected States in Africa Initiative. The Republic of South Africa, through the Department of Trade and Industry, renewed its commitment to IFCs private sector development activities in Africa. The Swedish International Development Cooperation Agency became a partner in our private sector development work in Ethiopia. Switzerlands State Secretariat for Economic Affairs supported IFCs work in investment climate, access to nance, infrastructure, and environmental and social risk
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management globally. SECO also provided substantial support to IFCs sustainable business advisory activities, with a particular emphasis on activities that strengthen gender equality. The United Kingdoms Department for International Development contributed to our work on investment climate in Central Asia and Sub-Saharan Africa, regional trade and SME development in South Asia, private-public partnerships in Central and South Asia, and job creation in the Middle East and North Africa. DFID also committed to the private sector window of the Global Agriculture and Food Security Program. In addition, DFID and the U.K. Department for Energy & Climate Change made a signicant commitment to the IFC Catalyst Fund. The United States Agency for International Development supported IFCs business reform activities in Eastern Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa.
FINANCIAL COMMITMENTS TO IFC ADVISORY SERVICES
(US$ Million Equivalent)*
Governments
New Zealand Norway South Africa Sweden Switzerland United Kingdom United States Total
FY12
0.00 4.85 0.00 12.38 57.15 69.94 14.14 247.28
FY13
4.00 2.01 0.67 5.32 63.51 34.79 5.78 239.61
Institutional & Private Partners

Blue Moon Fund Inc. BNDESPAR The Coca-Cola Company* CTF Disney Worldwide Services, Inc. European Commission Bill & Melinda Gates Foundation Inter-American Development Bank Kauffman Foundation Marie Stopes International The MasterCard Foundation Nestl SA* Omidyar Network Fund, Inc. PepsiCo Foundation* SABMiller PLC* UN Agencies/Entities Total
*Contributor to the 2030 Water Resource Group
FY12
0.00 3.00 0.00 0.80 0.05 8.90 2.57 1.00 0.05 0.00 37.45 0.00 0.00 0.00 0.00 0.25 54.08
FY13
0.25 0.00 2.00 0.50 0.00 0.00 2.87 0.00 0.00 3.87 0.03 1.00 0.07 2.00 0.25 1.16 14.01
Summary
Governments Institutional/Multilateral Partners Corporations, Foundations, and NGOs Total
*Unaudited gures
FY12
247.28 10.95 43.13 301.36
FY13
239.61 1.66 12.35 253.62
WORKING WITH OTHER DEVELOPMENT INSTITUTIONS
Governments
Australia Austria Canada Denmark Finland France Germany Ireland Japan Korea Luxembourg The Netherlands
FY12
1.57 25.55 5.63 0.96 0.13 0.03 0.60 1.51 9.48 1.00 0.00 42.37
FY13
21.87 12.70 47.83 3.61 0.00 2.65 1.15 1.12 7.22 0.00 6.79 18.59
International nance institutions including multilateral and bilateral development nance institutions play a critical role in spurring the private sector to help improve lives and reduce poverty. They have a track record of success in difficult environments. They provide capital when private markets become risk-averse. They provide advice that strengthens markets and makes private sector development inclusive and sustainable. Over the past decade, the private sector nancing activities of international nance institutions in developing countries quadrupled to more than $44billion in 2011.
Every dollar invested by these institutions unlocks $2 to $3 of investment from others. IFC has teamed up with an array of IFIs, pooling resources to share knowledge, expand reach, and maximize impact. Following the pattern of previous years, the private sector operations of IFIs continue their strong focus on the nancial sector and infrastructure, and additional areas of emphasis remain the Middle East, renewable energy, and food security. Collaboration among these institutions also continues to expand. Ongoing areas of cooperation include the Master Cooperation Agreement with 17 development nance institutions. The agreement details how such institutions work together through loan syndications to co-nance projects led by IFC. We also collaborate on the Busan Initiative follow-up, corporate governance, gender, and climate change. Joint efforts on concessional nance, local-currency nance, integrity issues, and harmonizing development indicators continue to be led by IFC. Since January 2012, IFC has been leading an outreach campaign in Europe to promote the themes of the report International Finance Institutions and Development Through the Private Sector. Atthe conference to launch IFC Jobs Study in January 2013, 28 institutions issued a joint communiqu pledging to collaborate to create more and better jobs (see page43). IFC also continues to build leadership in corporate governance, for example through the IFI Corporate Governance Development Framework, which is based on IFCs methodology, in collaboration with almost 30nancial institutions. The following development nance institutions have invested in funds managed by IFC Asset Management Company: Japan Bank for International Cooperation Abu Dhabi Fund for Development African Development Bank CDC Group European Investment Bank The OPEC Fund for International Development
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MANAGING RISKS
PORTFOLIO MANAGEMENT
Portfolio management is an intrinsic part of managing IFCs business to ensure strong nancial and development results of our projects. IFCs management reviews our entire portfolio globally ona quarterly basis and reports on the portfolio performance to the Board annually. Our portfolio teams, largely based in eld offices, complement global reviews with asset-by-asset quarterly reviews. On the corporate level, IFC combines the analysis of our $50billion portfolio performance with projections of global macroeconomic and market trends to inform decisions about our future investments. IFC also regularly tests the performance of the portfolio against possible macroeconomic developments in emerging markets to identify and proactively address risks. Stress tests serve as a basis to determine the potential impact of macroeconomic events on the IFC portfolio. On the project level, IFC actively monitors compliance with investment agreements, visits sites to evaluate project status, and helps identify solutions to address potential problems. We systematically
track environmental and social performance, and measures nancial and development results. For projects in nancial distress, our Special Operations Department determines the appropriate remedial actions. It seeks to negotiate agreements with creditors and shareholders to share the burden of restructuring so problems can be worked out while the project continues to operate. Investors and other partners participating in IFCs operations are kept regularly informed on project developments. IFC consults or seeks their input as appropriate.
TREASURY SERVICES
New borrowings in the international markets totaled the equivalent of about
LIQUIDITY MANAGEMENT
$12
billion in FY13.
Liquid assets on IFCs balance sheet totaled $30.3billion as of June 30, 2013, compared with $29.7billion a year earlier. Most liquid assets are held in U.S. dollars. The exposure arising from assets denominated in currencies other than U.S. dollars is hedged into U.S. dollars to manage currency risk. The level of these assets is determined with a view to ensure sufficient resources to meet commitments even during times of market stress.
FY13 BORROWING IN INTERNATIONAL MARKETS
Amount (USD equivalent) Percent
6,597,029,098 1,377,411,350 891,776,917 792,480,000 605,262,000 488,293,678 368,637,282 55.80% 11.60% 7.50% 6.70% 5.10% 4.10% 3.10%
IFC funds lending by issuing bonds in international capital markets. We are often the rst multilateral institution to issue bonds in the local currencies of emerging markets. Most of IFCs lending is denominated in U.S. dollars, but we borrow in a variety of currencies to diversify access to funding, reduce borrowing costs, and help develop local capital markets. IFCs borrowings have continued to keep pace with our lending. New borrowings in the international markets totaled the equivalent of about $12billion in FY13.
Currency
U.S. dollar Australian dollar Brazilian real New Zealand dollar Japanese yen Russian ruble Turkish lira
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CAPITAL ADEQUACY AND FINANCIAL CAPACITY
Sound risk management plays a crucial role in ensuring IFCs ability to fulll our development mandate. The very nature of IFCs business, as a long-term investor in dynamic yet volatile emerging markets, exposes us to nancial and operational risks. Prudent risk management and a sound capital position enable us to preserve our nancial strength and play a countercyclical role during times of economic and nancial turmoil. In addition, IFCs nancial strength results in low borrowing costs, allowing us to provide affordable nancing to our clients. The soundness and quality of IFCs risk management and nancial position can be seen in our triple-A credit rating, which has been maintained since coverage began in 1989. We assess IFCs minimum capital requirement in accordance with our economic capital framework, which is aligned with the Basel framework and leading industry practice. Economic capital acts as a common currency of risk, allowing us to model and aggregate the risk of losses from a range of different investment products as well as other
In FY13, IFCs debt-to-equity ratio was
2.6:1
well within the 4:1 limit prescribed by our nancial policies.
risks. Aggregating these risks determines our estimate of the minimum amount of capital that we must hold to retain IFCs triple-A rating. IFCs total resources available consist of paid-in capital, retained earnings net of designations and certain unrealized gains, and total loan-loss reserves. The excess available capital, beyond what is required to support existing business, allows for future growth of our portfolio while also providing a buffer against unexpected external shocks. As of June 2013, total resources available reached $20.5 billion, while the minimum capital requirement totaled $16.8 billion. As of June 2013, IFCs debt-to-equity ratio was 2.6:1, well within the limit of 4:1 prescribed by our nancial policies.
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WORKING RESPONSIBLY
IFCS APPROACH TO SUSTAINABILITY
Businesses operate in a dynamic landscape. In a time of climate change, resource scarcities, and rising social pressures, environmental, social, and governance issues are increasingly important for businesses and for our clients. IFC believes that doing business sustainably drives positive development outcomes. Our Sustainability Framework and advice to clients help them nd opportunities for growth and innovation. It also promotes sound environmental and social practices, broadens our development impact, and encourages transparency and accountability. This framework articulates IFCs strategic commitment to sustainable development and is an integral part of our approach to risk management. It enables us to manage a diverse client base that includes both advisory and investment clients many of which are nancial intermediaries.
THE IFC PERFORMANCE STANDARDS
At the core of the framework are eight IFC Performance Standards that address a range of environmental and social issues facing the private sector. These standards are designed to help clients avoid, mitigate, and manage risk as a way of doing business sustainably. They help them devise solutions that are good for business, good for investors, and good for the environment and communities. This can include reducing costs through improved energy efficiency, increasing revenue and market share through environmentally and socially sound products and services, or forging better stakeholder relations through robust engagement. In situations where the Performance Standards cannot be applied appropriately (for example, short-term and trade nance), IFC has developed risk-screening tools to achieve the objectives of the Sustainability Framework.
The IFC Performance Standards have become globally recognized as a leading benchmark for environmental and social risk management in the private sector. They are reected in the Equator Principles, now used by 76 nancial institutions around the world. In addition, other nancial institutions also reference IFCs Performance Standards in their policies including 15 European Development Finance Institutions and 32 Export Credit Agencies from countries belonging to the Organization for Economic Co-operation and Development. IFC clients continue to indicate that our environmental and social expertise is an important factor in their decision to work with us. Our annual client survey shows that more than 90percent of the clients that received support from us on environmental and social matters found our assistance to be helpful. They said it helped them improve relationships with stakeholders, strengthen brand value and recognition, and establish sound riskmanagement practices. When a project is proposed for nancing, IFC conducts a social and environmental review as part of our overall due diligence. This review takes into account the clients assessment of the projects impact and the clients commitment and capacity to manage it. It also assesses whether the project adhered to the IFC Performance Standards. Where there are gaps, we and the client agree on an Environmental and Social Action Plan to ensure that the standards are met over time. We supervise our projects throughout the life of our investment, monitoring client commitments to environmental and social performance.
SUSTAINABILITY IN PRACTICE
IFC believes that sound economic growth, driven by private sector development, is crucial to poverty reduction. In our investment and advisory activities across the globe, we consider four dimensions of sustainability nancial, economic, environmental, and social. Being nancially sustainable enables IFC and our clients to work together to make a longterm contribution to development. Making our projects economically sustainable ensures that they can contribute meaningfully to the host economies. Ensuring environmental sustainability in our clients operations and supply chains helps protect and conserve natural resources, mitigate environmental degradation, and address the global challenge of climate change. IFC is the rst international nance institution to comprehensively incorporate the concept of ecosystem services in our environmental and social policies. These are naturally occurring services that benet people and businesses providing, among other things, food, fresh water, and medicinal plants. They underscore the economic and societal benets of maintaining a healthy environment. With climate risk included in the Sustainability Framework, IFC has scaled up the development of climate tools and programs of climate risk assessment andadaptation for clients. We support social sustainability by working to improve living and working standards, strengthen communities, consult with indigenous peoples, and promote respect for key issues relevant tobusiness and human rights. IFCs approach to gender is integrated and mainstreamed throughout the Performance Standards, reecting the expectation that these issues will be general requirements protecting all workers, and reducing risks and impacts to all communities. These
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standards recognize the importance of both addressing differentiated impacts and ensuring gender-responsive consultation processes. IFC is committed to ensuring that the benets of economic development are shared with those who are poor or vulnerable, and that development takes place in a sustainable manner. We also see sustainability as an opportunity to transform markets, drive innovation, and add value to our clients by helping them improve their business performance.
CORPORATE GOVERNANCE
IFC also helps strengthen corporate governance by developing training materials and institution-building tools and products. This includes tools that can help companies in the areas of corporate governance associations, codes and scorecards, board leadership training, dispute resolution, and the training of business reporters. Strong corporate governance depends on diversity in board leadership. We strive to increase the number of women who serve as nominee directors on the boards of our clients. Nearly 20percent of IFC nominee directors are women. We are committed to increasing that share to 30percent by 2015.
OUR FOOTPRINT COMMITMENT
Improving corporate governance among our clients and across the private sector in developing countries is a priority for IFC. We provide advice on good practices for improving board effectiveness, strengthening shareholder rights, and enhancing the governance of risk management, internal controls and corporate disclosure. We also advise regulators, stock markets, and others with an interest in improving corporate governance. We are ramping up our corporate governance programs in underserved areas of the world especially in Africa, Latin America, and South Asia. Our experience allows IFC to apply global principles to the realities of the private sector in developing countries. As a result, development banks and other investors working in emerging markets now look to IFC for leadership on corporate governance. We do this in a variety of ways including establishing the IFC Corporate Governance Methodology, a system for evaluating corporate governance risks and opportunities that is recognized as the most advanced of its kind among development nance institutions. This methodology is the basis for a common approach to corporate governance now implemented by more than 30 development nance institutions working in some of the most challenging markets.
At IFC, we aim to make sustainability an integral part of our culture and way of doing business. By continually improving our environmental and social performance, we commit to the same standards as we ask of our clients. IFC took a more global approach to our Footprint Commitment in FY13. For example, electricity use constitutes nearly 30percent of our global carbon footprint. We invested in a power management system for all networked IFC computers, laptops, and monitors. IFCs rst global electricity reduction initiative is estimated to reduce computer-associated electricity use by a third, with a payback period of just one year. We also took a global approach to reducing our solid waste footprint. We announced our rst global target to reduce paper consumption by 15percent by FY15.
Our IFC Waste Challenge campaign encouraged over a dozen country offices to implement new waste programs, and more than 830 staff from over 65 countries to make personal commitments to reduce waste via an online map, entitled IFC Pledge. IFC headquarters set the rst waste target: to reduce overall waste tonnage by 10percent and to improve its combined recycling/composting rate from 35percent to 85percent by FY15. A new waste system was implemented, and an interim audit showed we are on track to meet or exceed our FY15 target. In addition, 58,876pounds of office supplies and furniture at headquarters were donated to charitable organizations. In FY12, carbon emissions from IFCsglobal internal business operations totaled about 47,800metric tons of carbon dioxide equivalent. IFC has collected and reported data on our global carbon footprint since FY07. IFC continues to be carbon-neutral for our global corporate operations. To offset our carbon footprint, we purchased carbon credits from LifeStraw Carbon for Water a unique program that distributes water lters to low-income communities so they avoid boiling water using wood, which generates greenhouse gases. This project is reaching over 800,000 families, providing 4.5million people with safe drinking water in rural Kenya while reducing carbon emissions.
FY12 CARBON EMISSIONS INVENTORY FOR IFCS GLOBAL BUSINESS OPERATIONS

Metric Tons of Carbon Dioxide Equivalent
Business Travel HQ Ofce Electricity Country- Ofce Electricity Other TOTAL EMISSIONS
33,195.94 7,512.34 4,703.90 2,404.83 47,817.02
tCO2e tCO2e tCO2e tCO2e tCO2e
69% 16% 10% 5%
IFCs FY12 carbon emissions totaled approximately 47,800 metric tons of carbon dioxide equivalent.(tCO2e), which includes emissions from carbon dioxide, methane, and nitrous oxide.
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OUR ACCESS TO INFORMATION POLICY
As a global institution with operations in many regions and sectors, IFC affects a diverse range of stakeholders. Transparency and accountability are fundamental to fullling our development mandate. IFCs Access to Information Policy, which came into effect in 2012, improves our ability to communicate our development impact and how we manage environmental and social risk. This increased transparency about our projects and investments allows for more informed dialogue and feedback. IFC now discloses information on the environmental, social, and development impact of our projects during all stages of the investment cycle. These requirements, which place a greater emphasis on results reporting, also apply to investments made through nancial intermediaries an important and growing area of IFCs portfolio. The disclosure of development results for IFCs investment projects is being phased in by region, with our Latin America and the Caribbean, East Asia and the Pacic, and Europe and Central Asia regions beginning disclosure in FY13. All other regions will begin disclosure of development results in 2014. IFCs advisory services projects, which began disclosing
development impact indicators when the AIP came into effect in 2012, will begin displaying calendar-year results following the publication of the Annual Report. Increased transparency regarding investments through nancial intermediaries includes the periodic disclosure of the list of names, locations, and sectors of high-risk sub-projects supported by IFCs investments in Private Equity Funds. IFCs project-level and Annual Report data sets are now also available on the World Bank Groups Open Finances platform. This initiative increases the accessibility of IFCs project and nancial information, and enables users to slice and visualize the data as they choose. While IFC maintains provisions to protect commercially sensitive, deliberative, and condential information, stakeholders may now pursue an independent two-stage appeals mechanism to challenge decisions not to disclose particular information. IFC believes that greater transparency can improve business performance and promote good governance. We believe that over time the changes will result in better project outcomes, increased awareness on the part of affected communities, and stronger relationships with stakeholders. For more information, visit www.ifc.org /disclosure.
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INDEPENDENT ASSURANCE REPORT ON A SELECTION OF SUSTAINABLE DEVELOPMENT INFORMATION
In response to a request made by IFC, we performed a review on a selection of sustainable development information in the Annual Report for the nancial year ending June 30, 2013, including quantitative indicators (the Indicators) and qualitative statements (theStatements). We selected statements that were deemed to be of particular stakeholder interest, and involved a potential reputation risk for IFC, together with statements on corporate responsibility management and performance. The Indicators and the Statements arerelated to the following material areas:
MATERIAL AREAS
IFC Policy
STATEMENTS
The IFC Development Goals (p. 80) IFCs approach to sustainability (p. 98) How We Measure Development Results (pp. 8087) Investment Results (pp. 8287) Advisory Results (pp. 8487)
INDICATORS
Development effectiveness of investments and advisory services
Investment projects Rated High: 66% (p. 86); and detailed values by industry (p. 87), by region (p. 87), and by performance area (p. 87); and weighted and unweighted scores (p. 87) Advisory Projects Rated High: 76% (p. 86); and detailed values by business line (p. 87) and by region (p. 87) Jobs supported (millions) 2.7 Patients reached (millions) 17.2 Students reached (millions) 1.0 Gas distribution (millions of persons reached) 33.8 Power distribution (millions of persons reached) 45.7 Water distribution (millions of persons reached) 42.1 Number and amounts of micro nance loans and SME loans for CY12 (p. 86) Number of loans (millions) 22.9 5.8 Amount ($ billions) 25.13 241.3
Reach
Local capital markets, an effective way to spur growth (p. 54) Creating Opportunity Where Its Needed Most (pp. 6869)
Type of loans Microloans Small and medium loans
Environmental and social ratings
IFC Performance Standards (p. 98) Sustainability in Practice (pp. 9899)
IFC commitments by Environmental and social category (p. 28) Commitments ($ millions) 884 5,490 6,764 1,751 450 2,203 807 18,349 Number of projects 17 167 269 48 14 59 38 612
Category A B C FI FI-1 FI-2 FI-3 Total Sustainable business Climate Change, addressing global warming (pp. 3637) Gender boosting development through equality (p. 60) IFC Advisory Services (p. 74) Our Footprint Commitment (p. 99) Food Security, expanding opportunity for small farmers (p. 47) Job creation, the surest pathway out of poverty (p. 43) Small and medium enterprises, Helping Businesses Thrive (p. 45) Middle income countries, promoting Prosperity for all (p. 61) Infrastructure Promoting Prosperity in Africa (p 51) South-South investments, a vital force for development (p. 53) Generating Conditions for Sustainable Growth (pp. 5859) IDA countries, creating opportunities for the poorest (p. 63) Mobilization, opening new markets for Private investment (p. 52) Working with Donor Partners (pp. 9495) Working with Other Development Institutions (p. 95) IFC Asset Management Company (p. 75) Independent Evaluation Group (p. 92) Ofce of the Compliance Advisor Ombudsman (pp. 9293)
Commitments in Climate-related investments for FY13 (p. 36): $2.5 billion Carbon Emissions (p. 99): 47.8 tCO2 equivalent in nancial year 2012
In uence on Private Sector Development
Engagement in the poorest and fragile countries
Working with others
Asset management Evaluation of IFCs activity
102 _
Our review aimed to provide limited assurance1 that: 1. the Indicators were prepared in accordance with the reporting criteria applicable during scal year 2013 (the Reporting Criteria), consisting in IFC instructions, procedures and guidelines specic for to each indicator, a summary of which is provided in the Annual Report, for the indicators related to Commitments by Environmental and Social Category (p. 28) and Development effectiveness of investments and advisory services (Monitoring and tracking results, p. 81) and on IFCs website for the others. 2. the Statements have been presented in accordance with IFCs Access to Information Policy, which is available on IFCs website2 and the principles of relevance, completeness, neutrality, clarity and reliability as dened by international standards.3 It is the responsibility of IFC to prepare the Indicators and Statements, to provide information on the Reporting Criteria and to compile the Annual Report. It is our responsibility to express a conclusion on the Indicators and the Statements based on our review. Our review was conducted in accordance with the ISAE 3000, International Standard on Assurance Engagements from IFAC.4 Our independence is dened by IFAC professional code of ethics.
NATURE AND SCOPE OF OUR REVIEW
We reviewed the content of the Annual Report to identify key statements regarding the sustainability and development areas listed above. At the corporate level, we conducted interviews with more than 25 persons responsible for reporting to assess the application of the Reporting Criteria or to substantiate the Statements. At the corporate level, we implemented analytical procedures and veried, on a test basis, the calculations and the consolidation of the Indicators. We collected supporting documents for the Indicators or Statements, such as reports to the board of directors or other meetings, loan agreements, internal and external presentations and reports, or survey results. We went to the Hong Kong office in order to meet with result measurement specialists, investment officers, portfolio managers and others in charge of gathering data from clients, consolidating it and reviewing it locally. We reviewed the presentation of the Statements and the Indicators in the Annual Report and the associated notes on methodology.
LIMITATIONS OF OUR REVIEW
INFORMATION ABOUT THE REPORTING CRITERIA AND THE STATEMENT PREPARATION PROCESS
With regards to the Reporting Criteria and the Statement preparation policies and principles, we wish to make the following comments: Relevance IFC presents sustainability information on its own impact and on environmental and social risks, impacts and outcomes of projects it nanced directly or through nancial intermediaries. This level of disclosure is in line with that of other multilateral development banks. A specic effort is made by IFC to assess the development results of its Investment and Advisory Services, notably through its Development Outcome Tracking System (DOTS), the implementation of its evaluation strategy and the testing of IFC Development Goals. However, we note that IFC would benet from further improving the relevance and number of indicators (beyond the Environmental and Social (E&S) management system) in the E&S DOTS performance area, in order to better measure how clients are improving their own E&S performance. This is of particular importance with nancial institutions where E&S impacts are indirect. Completeness The Indicators reporting perimeter covers the most relevant IFC activities. The scope covered by each indicator has been indicated in the comments next to the data in the Annual Report. With the growing importance of Trade Finance activities in IFCs portfolio, in 2012, IFC launched a pilot DOTS client data collection survey for its Global Trade Finance Program which provided a report
We performed the following review to be able to express a conclusion: We assessed the Reporting Criteria, policies and principles, with respect to their relevance, their completeness, their neutrality and their reliability.
Our review was limited to the Statements and Indicators identied in the table aboveand did not cover other disclosures in the Annual Report. Our tests were limited to document reviews and interviews at IFCs headquarters in Washington, DC and Hong Kong. Within the scope of work covered by this statement, we did not participate in any activities with external stakeholders or clients, nor did we conduct testing or interviews aimed at verifying the validity of information related to individual projects.
1. A higher level of assurance would have required more extensive work. 2. http://www.ifc.org/ifcext/disclosure.nsf/content/disclosure_policy 3. ISAE 3000 from IFAC, Global Reporting Initiative (GRI), or AA1000 Accountability Standard. 4. ISAE 3000: Assurance Engagement other than reviews of historical data, International Federation of Accountants, International Audit and Assurance Board, December 2003.
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of baseline data ndings and which should enable IFC to start reporting ratings soon. Neutrality and clarity IFC provides information on the methodologies used to establish the Indicators in the comments next to the published data or in the related sections. Further information is available on the IFC website. We have noted the efforts made, together with the other principal International Finance Institutions, to harmonize the denitions of the Reach indicators, which should signicantly enhance the consistency of IFIs communication on the reach of their activities. Reliability IFC has made progress in strengthening internal controls on Climate related investments, micro loans and small & medium loans (MSME reach indicators). In addition to the numerous controls performed at the corporate and project level, IFC should implement further checks at the source information used to track Reach indicators. As these data often come directly from external sources, and can sometimes be based on estimates rather than clients audited nancial statements, it is essential to ensure that data reported are
consistent with IFCs own denitions and calculation methodologies.

CONCLUSION
LETTER TO THE BOARD OF GOVERNORS
Based on our review, nothing has come to our attention that causes us to believe that: the Indicators were not established, in all material aspects, in accordance with the Reporting Criteria; the Statements were not presented, in all material aspects, in accordance with IFCs Policy on Disclosure of Information and the principles of relevance, completeness, neutrality, clarity and reliability as dened by international standards. Paris-La Dfense, France, August 5, 2013 The Independent Auditors ERNST & YOUNG et Associs
The Board of Directors of IFC has had this annual report prepared in accordance with the Corporations by-laws. Jim Yong Kim, President of IFC and Chairman of the Board of Directors, has submitted this report with the audited nancial statements to the Board of Governors. The Directors are pleased to report that, for the scal year ended June 30, 2013, IFC expanded its sustainable development impact through private sector investments, Advisory Services, and fund management.
Eric Duvaud Partner, Cleantech and Sustainability
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FINANCIAL SUMMARY
FINANCIAL PERFORMANCE SUMMARY
The overall market environment has a signicant inuence on IFCs nancial performance. The main elements of IFCs net income and comprehensive income and inuences on the level and variability of net income and comprehensive income from year to year are:
Elements 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. Realized and unrealized gains and losses on the liquid asset portfolios, which are driven by external factors such as: the interest rate environment; and liquidity of certain asset classes within the liquid asset portfolio. Global climate for emerging markets equities, uctuations in currency and commodity markets and company-specic performance for equity investments. Performance of the equity portfolio (principally realized capital gains, dividends, equity impairments, gains on non-monetary exchanges and unrealized gains and losses on equity investments). Risk assessment of borrowers and probability of default and loss given default. Signicant Inuences
Liquid asset income
Income from the equity investment portfolio
Provisions for losses on loans and guarantees Other income and expenses
Level of advisory services provided by IFC to its clients, the level of expense from the staff retirement and other benets plans, and the approved administrative and other budgets. Principally, differences between changes in fair values of borrowings, including IFCs credit spread, and associated derivative instruments and unrealized gains 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 are valued using internally developed models or methodologies utilizing inputs that may be observable or non-observable. Level of the Board of Governorsapproved grants to IDA.
Gains and losses on other nontrading nancial instruments accounted for at fair value
Grants to IDA
Other comprehensive income: Unrealized gains and losses on listed equity investments and debt securities accounted for as available-for-sale Unrecognized net actuarial gains and losses and unrecognized prior service costs on benet plans Global climate for emerging markets equities, uctuations in currency and commodity markets and company-specic performance. Such equity investments are valued using unadjusted quoted market prices and debt securities are valued using internally developed models or methodologies utilizing inputs that may be observable or non-observable. Returns on pension plan assets and the key assumptions that underlay projected benet obligations, including nancial market interest rates, staff expenses, past experience, and managements best estimate of future benet cost changes and economic conditions.
_ 105
NET INCOME
IFC reported income before net gains and losses on other non-trading nancial instruments accounted for at fair value and grants to IDA of $928million in FY13, as compared to $1,877million in FY12. The decrease in income before net gains and losses on other non-trading nancial instruments accounted for at fair value and grants to IDA in FY13 when compared to FY12 was principally as a result of the following (US$ millions):
Increase (decrease) FY13 vs FY12
Realized capital gains on equity investments Provisions for losses on loans, guarantees and other receivables Foreign currency transaction gains and losses on non-trading activities Advisory services expenses, net Expenses from pension and other postretirement benet plans Unrealized gains on equity investments Income from liquid asset trading activities Other-than-temporary impairments on equity investments Other, net Overall change $(1,079) (126) (110) (91) (77) 154 187 251 (58) $(949)
Net gains on other non-trading nancial instruments accounted for at fair value totaled $422million in FY13, $641million higher than net losses of $219million in FY12. Accordingly, IFC has reported income before grants to IDA of $1,350million, $308million lower than income before grants to IDA of $1,658million in FY12. Grants to IDA totaled $340million in FY13, as compared to $330million in FY12. Net loss attributable to noncontrolling interest totaled $8million in FY13 as compared to $0 in FY12. Accordingly, net income attributable to IFC totaled $1,018million in FY13, as compared with a net income of $1,328million in FY12. IFCs net income (loss) for each of the past ve scal years ended June 30, 2013 is presented below (US$ millions):
NET INCOME (LOSS)
For fiscal years ended June 30 (US$ millions) 2013 2012 2011 2010 2009
$1,018 $1,328 $1,579 $1,746 $(151)
106 _
The table below presents selected nancial data for the last ve scal years (in millions of US dollars, except where otherwise stated):
Selected Financial Data
as of and for the years ended June 30
2013
2012
2011
2010
2009
NET INCOME HIGHLIGHTS: Income from loans and guarantees (Provision) release of provision for losses on loans & guarantees Income (loss) from equity investments Of which: Realized gains on equity investments Gains on non-monetary exchanges Unrealized gains (losses) on equity investments Dividends and prot participations Other-than-temporary impairments Fees and other Income from debt securities Income from liquid asset trading activities Charges on borrowings Other income Service fees Advisory services income Other Other expenses Administrative expenses Advisory services expenses Expense from pension and other postretirement benet plans Other Foreign currency transaction gains (losses) on non-trading activities Income (loss) before net gains and losses on other non-trading nancial instruments accounted for at fair value and grants to IDA Net gains (losses) on other non-trading nancial instruments Of which: Realized gains Gains on non-monetary exchanges Unrealized gains (losses) Income before grants to IDA Grants to IDA Net income (loss) Less: Net loss attributable to noncontrolling interests Net income (loss) attributable to IFC 35 2 385 1,350 (340) 1,010 8 $ 1,018 11 10 (240) 1,658 (330) 1,328 $ 1,328 63 22 70 2,179 (600) 1,579 $ 1,579 5 6 (350) 1,946 (200) 1,746 $ 1,746 $ 45 407 299 (450) (151) (151) (845) (351) (173) (32) 35 928 422 (798) (290) (96) (23) 145 1,877 (219) (700) (153) (109) (19) (33) 2,024 155 (664) (108) (69) (12) (82) 2,285 (339) (582) (134) (34) (14) 10 (153) 452 101 239 101 60 269 119 88 134 70 106 39 114 921 6 26 248 (441) (8) 5 500 (220) 2,000 3 (128) 274 (692) 81 313 (181) 737 217 454 280 (218) (6) 46 529 (140) 1,290 28 240 285 (203) (2) 108 815 (163) 990 14 (299) 311 (1,058) 71 474 (488) $ 1,059 (243) 752 $ 938 (117) 1,457 $ 877 40 1,464 $ 801 (155) 1,638 $ 871 (438) (42)
_ 107
2013
as of and for the years ended June 30
2012
2011
2010
2009
CONSOLIDATED BALANCE SHEET HIGHLIGHTS: Total assets Liquid assets, net of associated derivatives Investments Borrowings outstanding, including fair value adjustments Total capital Of which: Undesignated retained earnings Designated retained earnings Capital stock Accumulated other comprehensive income (AOCI) Noncontrolling interests $ 18,435 278 2,403 1,121 38 $ 17,373 322 2,372 513 $ 16,032 335 2,369 1,543 $ 14,307 481 2,369 1,202 $ 12,251 791 2,369 711 $ 77,525 31,237 34,677 44,869 $ 22,275 $ 75,761 29,721 31,438 44,665 $ 20,580 $ 68,490 24,517 29,934 38,211 $ 20,279 $ 61,075 21,001 25,944 31,106 $ 18,359 $ 51,483 17,864 22,214 25,711 $ 16,122
FINANCIAL RATIOS:1 Return on average assets (GAAP basis)2 Return on average assets (non-GAAP basis)3 Return on average capital (GAAP basis) 4 Return on average capital (non-GAAP basis)5 Cash and liquid investments as a percentage of next three years estimated net cash requirements External funding liquidity level 6 Debt to equity ratio7 Total reserves against losses on loans to total disbursed portfolio 8 Capital measures: Capital to risk-weighted assets ratio9 Total Resources Required ($ billions)10 Total Resources Available ($ billions)11 Strategic Capital12 Deployable Strategic Capital13 Deployable Strategic Capital as a percentage of Total Resources Available n/a 16.8 20.5 3.8 1.7 8% n/a 15.5 19.2 3.7 1.8 9% n/a 14.4 17.9 3.6 1.8 10% n/a 12.8 16.8 4.0 2.3 14% 44% 10.9 14.8 3.9 2.3 16% 1.3% 0.9% 4.8% 3.1% 77% 309% 2.6:1 7.2% 1.8% 2.8% 6.5% 9.9% 77% 327% 2.7:1 6.6% 2.4% 1.8% 8.2% 6.0% 83% 266% 2.6:1 6.6% 3.1% 3.8% 10.1% 11.8% 71% 190% 2.2:1 7.4% (0.3%) (1.1%) (0.9%) (3.0%) 75% 163% 2.1:1 7.4%
1. Certain nancial ratios, as described below, are calculated excluding the effects of unrealized gains and losses on investments, other non-trading nancial instruments, AOCI, and impacts from consolidated Variable Interest Entities (VIEs). 2. Net income for the scal year as a percentage of the average of total assets at the end of such scal year and the previous scal year. 3. Net income excluding unrealized gains and losses on certain investments accounted for at fair value, income from consolidated VIEs, and net gains and losses on non-trading nancial instruments accounted for at fair value, as a percentage of total disbursed loan and equity investments (net of reserves) at cost, liquid assets net of repos, and other assets averaged for the current period and previous scal year. 4. Net income for the scal year as a percentage of the average of total capital (excluding payments on account of pending subscriptions) at the end of such scal year and the previous scal year. 5. Net income excluding unrealized gains and losses on certain investments accounted for at fair value, income from consolidated VIEs, and net gains and losses on non-trading nancial instruments accounted for at fair value, as a percentage of paid-in share capital and retained earnings (before certain unrealized gains and losses and excluding cumulative designations not yet expensed) averaged for the current period and previous scal year. 6. IFCs objective is to maintain a minimum level of liquidity, consisting of proceeds from external funding to cover at least 65% of the sum of (i) 100% of committed but undisbursed straight senior loans; (ii) 30% of committed guarantees; and (iii) 30% of committed client risk management products. As of FY13 Q3, IFCs management decided to modify the External Funding Policy by eliminating the cap on the operational range of 65% to 85%. 7. Leverage (Debt/equity) ratio is de ned as the number of times outstanding borrowings plus outstanding guarantees cover paid-in capital and accumulated earnings (net of retained earnings designations and certain unrealized gains/losses). 8. Total reserves against losses on loans to total disbursed loan portfolio is de ned as reserve against losses on loans as a percentage of the total disbursed loan portfolio at the end of the scal year. 9. The ratio of capital (including paid-in capital, retained earnings, and portfolio (general) loan loss reserves) to risk-weighted assets, both on- and off-balance sheet. The ratio does not include designated retained earnings reported in total capital on IFCs consolidated balance sheet. IFCs Board of Directors has approved the use of a risk-based economic capital framework beginning in the year ended June 30, 2008 (FY08). Parallel use of the capital to risk-weighted assets ratio has now been discontinued. 10. The minimum capital required consistent with the maintenance of IFCs AAA rating. It is computed as the aggregation of risk-based economic capital requirements for each asset class across the Corporation. 11. Paid-in capital plus retained earnings net of designated retained earnings plus general and specic reserves against losses on loans. This is the level of available resources under IFCs risk-based economic capital adequacy framework. 12. Total resources available less total resources required. 13. 90% of total resources available less total resources required.
108 _
COMMITMENTS In FY13, total commitments were $24,853million, compared with $20,358million in FY12, an increase of 22%, of which IFC commitments totaled $18,349million ($15,462million FY12) and Core Mobilization totaled $6,504million ($4,896million FY12). FY13 and FY12 commitments and Core Mobilization comprised the following (US$ millions):
FY13 FY12
Total commitments1
$24,853
$ 20,358
IFC commitments Loans Equity investments Guarantees: Global Trade Finance Program Other Client risk management Total IFC commitments 6,477 482 138 $ 18,349 6,004 398 110 $ 15,462 $ 8,520 2,732 $ 6,668 2,282
Core Mobilization Loan participations, parallel loans, and other mobilization Loan participations Parallel loans Other mobilization Total loan participations, parallel loans and other mobilization AMC Equity Capitalization Fund Sub-debt Capitalization Fund ALAC Fund Africa Capitalization Fund Russian Bank Cap Fund Total AMC Other initiatives Global Trade Liquidity Program and Critical Commodities Finance Program Public Private Partnership (PPP) Infrastructure Crisis Facility Debt & Asset Recovery Program Total other initiatives Total Core Mobilization Core Mobilization Ratio
1. Debt security commitments are included in loans and equity investments based on their predominant characteristics.
$ 1,829 1,269 480
1,764 927 814
$ 3,578
$ 3,505
214 209
24 215
210
92 43 $ 768 $
190
8 437
$ 1,096 942 110
850 41 63
10
$ 2,158 $
954
$ 6,504 0.35
$ 4,896 0.32
CORE MOBILIZATION RATIO The Core Mobilization ratio is dened as:

Loan participations + parallel loans + sales of loans and other mobilization + non-IFC investment part of structured nance which meets core mobilization criteria + non-IFC commitments in Initiatives + non-IFC investments committed in funds managed by AMC + PPP Mobilization Commitments (IFC investments + IFC portion of structured nance + IFC commitments in new Initiatives + IFC investments committed in funds managed by AMC)
For each dollar that IFC committed, IFC mobilized (in the form of loan participations, parallel loans, other mobilization, the non-IFC portion of structured nance and the non-IFC commitments in Initiatives, and the non-IFC investments committed in funds managed by AMC) $0.35 in FY13 ($0.32 in FY12).
_ 109
AMC The activities of the funds managed by AMC at June 30, 2013 and June 30, 2012 can be summarized as follows (US$ millions unless otherwise indicated):
Equity Capitalization Fund Assets under management as of June 30, 2013 From IFC From other investors For the year ended June 30, 2013 Fund Commitments to Investees: From IFC From other investors Disbursements from investors to Fund: From IFC From other investors Disbursements made by Fund Disbursements made by Fund (number) 336 217 546 7 332 214 $ 1,275 775 500
Sub-Debt Capitalization Fund $ 1,725 225 1,500
ALAC Fund $ 1,000 200 800
Africa Capitalization Fund $ 182 182
Russian Bank Cap Fund Catalyst Funds $ 550 250 300 $ 282 75 207
Global Infrastructure Fund $ 500 100 400
Total $ 5,514 1,625 3,889
31 209
52 210
92
35 43
450 768
33 223 249 5
63 252 297 12
94 91 4
38 46 78 2
1 2
1 3
472 837 1,261 30
Equity Capitalization Fund Assets under management as of June 30, 2012 From IFC From other investors For the year ended June 30, 2013 Fund Commitments to Investees: From IFC From other investors Disbursements from investors to Fund: From IFC From other investors Disbursements made by Fund Disbursements made by Fund (number) 62 40 97 6 36 24 $ 1,275 775 500
Sub-Debt Capitalization Fund $ 1,725 225 1,500
ALAC Fund $ 1,000 200 800
Africa Capitalization Fund $ 182 182
Russian Bank Cap Fund Catalyst Funds $ 275 125 150 $
Global Infrastructure Fund $
Total $ 4,457 1,325 3,132
32 215
48 190
116 437
28 186 208 2
52 208 174 8
14 11 3
142 448 490 19
110 _
_ 111
STAY CONNECTED WEB AND SOCIAL MEDIA RESOURCES
IFCs 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 affecting IFC and our client companies. The online version of IFCs Annual Report 2013 provides downloadable PDFs of all materials in this volume and translations as they become available. It is available at www.ifc .org/annualreport. The website also provides more information on sustainability, including a Global Reporting Initiative index.
IFC ONLINE IFC website ifc.org Annual Report ifc.org/AnnualReport Social Media Index ifc.org/SocialMediaIndex Facebook facebook.com/IFCwbg Twitter twitter.com/IFC_org LinkedIn on.ifc.org/ifcLinkedIn Google+ gplus.to/IFCwbg Scribd scribd.com/IFCpublications YouTube youtube.com/IFCvideocasts CREDITS IFC Annual Report Team Bruce Moats Director, External and Corporate Relations, World Bank Group Lisa Kopp Chief of Brand Marketing and Production Joseph Rebello Chief Editor Aaron Rosenberg Chief of Public Affairs Inae Riveras Editorial Consultant Katherine Klaben Consultant Design Addison www.addison.com Illustration Page 1213: Thomas Porostocky Page 1415: James Taylor Page 1617: James Taylor Printing UNIMAC unimacgraphics.com
Photography Page 4: Ray Rayburn/WB Photolab Page 6: Iwan Bagus Page 89: Iwan Bagus Page 1819: Margie Politzer/Getty Page 2021: Eightsh/Getty Page 2223: Commerce and Culture Agency/Getty Page 2425: Dan Josephson/Getty Page 34: Vaner Cassaes Page 35: Sonata Dkhar Page 36: Abengoa Page 37: Gerardo Salazar (top); Abengoa (bottom) Page 38: Tom Cockrem/Getty Page 39: Johannes Wiebus-OHeron Page 42: Manas Ranjan Ojha Page 43: Etileno XXI Page 44: Jamie MarshallTribaleye Images/Getty Page 45: Mohamed Essa (left); Kushang Singh (right) Page 46: Tran Thiet Dung Page 47: Mackenzie Keller Page 50: Rebecca Post Page 51: Azito Energie (left); Abhay (right) Page 52: Lisa Dadlani Page 53: Apollo Tyres Page 54: loveguli/Getty Page 58: Andrew Testa/Panos Page 59: Roshan (top); Eric Duos (bottom) Page 60: Joseph Montezinos Page 61: Sirli Benarolya Page 62: Ric Francis Page 63: Evgeniya Shatunova (top); Ric Francis (bottom) Page 65: Eudes Santana Page 70: Anam Abbas Page 78: Pallon Daruwala
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Annual Report 2013

IFC Year in Review

IFC Financial Highlights

Net income (loss) attributable to IFC Grants to IDA

1,579 600 2,179

1,746 200 1,946

(151) 450 299

Income before grants to IDA Total assets

$ 1,350 $ 77,525 $34,677 $ 13,309

$ 1,658 $ 75,761 $31,438 $ 11,977

$68,490 $ 29,934 $ 13,126

$ 61,075 $25,944 $ 10,146

$51,483 $ 22,214 $ 7,932

1.3% 4.8% 77% 2.6:1 $ $ 16.8 20.5 7.20% $ $

1.8% 6.5% 77% 2.7:1 15.5 19.2 6.60% $ $

2.4% 8.2% 83% 2.6:1 14.4 17.9 6.6% $ $

3.1% 10.1% 71% 2.2:1 12.8 16.8 7.4% $ $

-0.3% -0.9% 75% 2.1:1 10.9 14.8 7.4%

Net Income (Loss) Attributable to IFC

Total reserve against losses on loans to total disbursed loan portfolio

IFC Operational Highlights

Dollars in millions, for the year ended June 30

Number of countries For IFCs own account

$ 3,098 $ 1,696 $ $ 768 942

$ 4,680 $ 1,340 $ 454 $ 6,474

1,858 169 1,927 8

$ 2,358 $ 236 $ 5,377

THE POWER OF PARTNERSHIPS

IFC Annual Report 2013

THE POWER OF PARTNERSHIPS

The Power of Partnerships

IFCs Global Results

How IFC Creates Opportunity

Our Business and Expertise

Our People and Practices

IFC ANNUAL REPORT 2013

A Letter from WORLD BANK GROUP PRESIDENT JIM YONG KIM

THE POWER OF PARTNERSHIPS

JIM YONG KIM World Bank Group President

IFC ANNUAL REPORT 2013

THE POWER OF PARTNERSHIPS

We believe strongly in the power of partnerships to make a transformational difference.

IFC ANNUAL REPORT 2013

Jean Philippe Prosper

Vice President, Treasury and Syndications

Vice President, Financial and Private Sector Development

Vice President, SubSaharan Africa, Latin America and the Caribbean

Vice President, Risk Management and Portfolio

Vice President, Asia-Pacic

Vice President, Human Resources, Communications, and Administration

THE POWER OF PARTNERSHIPS

Vice President, General Counsel

IFC Executive Vice President and CEO

Vice President, Business Advisory Services

CEO, IFC Asset Management Company

Vice President and Chief Operating Officer

Jorge Familiar Calderon

Vice President and Corporate Secretary (not pictured)