Washington, D.C., April 12, 2001—The
International Finance Corporation announces a range of new investments—in
Africa, south Asia, eastern Europe, and Latin America—to support sustainable
private sector enterprises in the developing world. These wide-ranging
investments are in microfinance, banking, small and medium enterprises,
the port sector, agro-industry, the preservation of natural habitats, and
training programs. IFC also organized two conferences—on finance,
mining, and sustainability and on small business finance—in Washington,
The mission of IFC, part of the World Bank Group, is to promote sustainable
private sector investment in developing countries as a way to reduce poverty
and improve people’s lives. IFC finances private sector investments
in the developing world, mobilizes capital in the international financial
markets, and provides technical assistance and advice to governments and
BENIN—IFC’S FIRST MICROFINANCE INVESTMENT
IFC will help generate new income and improve living standards in Benin
by investing US$360,000 for a 25 percent stake in a microfinance project,
Finadev. This is IFC’s first microfinance project in Benin and will
help low-income businesses—that lack access to credit—gain the financing
they need for start-up or expansion.
As the first fully commercial microfinance venture in francophone West
Africa, Finadev will focus on three markets—micro entrepreneurs, mostly
women, who need working capital to finance their trading activities; employees
of large Beninese companies who receive loans from Finadev via their workers’
union; and other microfinance institutions that need working capital for
Other shareholders in Finadev include Lafayette Participations (France)
with a 10 percent shareholding; FMO with 25 percent; and Financial Bank
Benin, the project sponsor, with 40 percent.
KENYA—ADDING VALUE TO THE TEA SECTOR
IFC will provide a $700,000 loan to Twin Leaves EPZ Ltd. to construct a
$2.7 million tea packaging plant in Mombasa, Kenya. The company will
export retail packaged tea to the Middle East and strengthen its revenues
through the sale of value-added tea products.
The project represents an important step in the transformation of Kenya's
tea export market from bulk tea to higher value products. Industrial
Development Bank of Kenya will provide a further $800,000 loan.
The Balala family—the project sponsors—have, over the past eight years,
built a strong trading position in the Mombasa tea auction. They
are also successful exporters of bulk tea to countries in Africa and the
IFC will provide a $20 million medium-term credit line to Guaranty Trust
Bank Plc. (GTB), Nigeria to help the bank develop its lending to private
sector companies operating in a variety of sectors, serving export or domestic
GTB is a full-service commercial bank established in 1990 by a group of
Nigerian investors. It is one of the leading commercial banks in
the country, is listed on the Nigerian stock exchange, and has a network
of branches located in the major commercial and industrial centers of Nigeria.
IFC's investment in GTB is in line with its strategy to develop Nigeria’s
financial sector and provide critically lacking long-term resources.
IFC will lend $22.5 million to FSB International Bank (FSB), Nigeria. FSB
will use IFC’s financing to on-lend to private Nigerian enterprises that
will use the funds for restructuring, project finance and trade finance
and as working capital.
Over the past decade, economic and political uncertainties combined with
governance issues have curtailed private sector investment in Nigeria.
The country requires massive investments to restore private sector
operational capacity. The proposed project is part of IFC’s efforts to
address these financing needs by making available foreign exchange resources
through the financial sector.
The project is expected to be an important confidence-building factor during
the period of FSB’s transition to full private ownership.
TANZANIA—MAASAI VILLAGE PARTNERS WITH PRIVATE SECTOR IN ECO-TOURIST LODGE
IFC will provide a $200,000 loan to the Boundary Hill eco-tourist lodge
in northern Tanzania, which will protect an important migratory corridor
for animals and preserve valuable habitat adjacent to the Tarangire National
Park. The project is a strong example of IFC’s efforts toward sustainable
development with the application of progressive environmental and social
policies adding value to private investment.
The 16-bed, upscale lodge is located within a 60,000-acre private wildlife
reserve owned by the Maasai village of Lolkisale. The Lolkisale community
owns 50 percent of the project’s equity and has leased its land to the
project. The technical investor is East African Safari and Touring
Company Ltd, majority owned by Simon King, an established tour operator
with long-standing ties to the community.
IFC’s loan is complemented by a loan from the Global Environment Facility,
whose private sector funds are administered by IFC. IFC also secured
trust funds to cover part of the costs for the project’s environmental
and social assessment.
WEST & CENTRAL AFRICA—TRAINING FOR LOAN OFFICERS IN
IFC has completed a training program in five West and Central African countries
for loan officers working in local banks and financial institutions. The
training is part of IFC’s policy to promote the development of small and
medium enterprises via financial intermediaries and will better equip local
loan officers to identify clients and improve their assessment of credit
risk and portfolio management.
DAI, a U.S. consulting firm, was selected to carry out the training in
Benin, Cameroon, Chad, Cote d’Ivoire, and Senegal. Two five-day
seminars were held in each country with follow-up programs. Over
190 participants from local banks, venture capital funds, and microfinance
institutions took part.
The program was made possible by a technical assistance grant from IFC’s
technical assistance trust funds program with cofinancing from participating
local beneficiary banks and financial institutions.
IFC has invested $7.3 million for a 10 percent stake in the Vysya Bank
Limited, Bangalore, which will improve its efficiency by offering technology-based
products to retail and corporate clients and expand its client base through
the use of Internet banking.
Vysya Bank has a 70-year history, strong local presence, and wide branch
network. The bank is well positioned for expansion after several
years of restructuring its balance sheet and operations.
Vysya Bank is listed on the Bombay Stock Exchange. Other major shareholders
include Bank Brussels Lambert of Belgium and the Vysya Group, a Bangalore-based
INDIA—SUPPORT TO SME EXPORTERS
IFC is investing Indian Rs. 112.5 million (approximately $2.5 million)
in Global Trade Finance Pvt. Limited, to promote market-driven export financing
solutions (such as factoring and forfaiting) for Indian small and medium
enterprises (SMEs) operating in an increasingly competitive world trade
environment. The new company is expected to create “a one-stop shop”
for SME export activities.
Global Trade Finance Pvt. Limited will provide Indian SMEs with credit
assessment and protection, financing, and bill collection, as well as small
item forfaiting—which offers long-term financing to importers of capital
goods from India. As the demand for open account trading expands
worldwide, Indian exporters need to offer similar terms to importers to
be competitive—the new company will help fill that need.
The sponsors are Westdeutsche Landesbank Girozentrale (WestLB) and the
Export-Import Bank of India (Exim Bank). IFC’s financing consists
of an equity investment of up to $2.5 million and a loan of up to $10 million.
The company’s initial capitalization will be Indian Rs. 450 million
(approximately $10 million), of which 40 percent will be held by WestLB,
35 percent by Exim Bank, and 25 percent by IFC.
IFC will help develop the local banking sector in Romania by providing
a loan of $6 million to Banca Romaneasca, a privately owned commercial
bank that lends to SMEs. Banca Romaneasca will use the loan to consolidate
its position in the Romanian banking sector and expand its lending operations.
The project is expected to encourage further investment in the country's
emerging financial sector. It signals IFC’s commitment to support
the Romanian private sector by providing long-term financing that is not
easily available in the region. The investment is also expected to
positively affect overall economic development, particularly employment
creation and competitiveness.
Substantial long-term technical assistance to further modernize Banca Romaneasca
in the field of SME financing was supported by trust funds from the Dutch
IFC will invest $9.5 million in Tecon Salvador S.A., a Brazilian container
port company based in Salvador port, Bahia state, in northeast Brazil.
The $17.3 million project—which supports the government’s continuing
efforts to improve the efficiency of port operations—will operate under
a 25-year lease which was awarded following a public offering in 1999.
IFC’s financing package includes an equity investment of up to $1 million
and loans of up to $3.5 million for IFC’s account and $5 million for the
account of the participant, Transamerica Leasing Inc. The project
sponsor is Wilson, Sons de Administração e Comércio Ltda., Brazil’s largest
port operator and ship towing company. Wilson has operated in Brazil since
1837 and is wholly-owned by the Bermuda-based Ocean Wilson Holding Limited.
IFC’s financing will help Tecon Salvador S.A. to upgrade and operate the
container and general cargo terminal. It will also assist with equipment
purchase, paving of the container storage area, and construction of a warehouse
and administration building. The project is expected to be complete
in 2003 at which time the terminal’s annual capacity is anticipated to
double from 55,000 to 110,000 container moves.
CONFERENCE ON FINANCE, MINING, AND SUSTAINABILITY
A high-level IFC/World Bank conference was held on April 8-9 in Washington,
D.C. on Finance, Mining, and Sustainability—the first time the World Bank
Group has brought together those who finance and insure private sector
ventures with those who operate them—to discuss whether the operations
they finance have a socially and environmentally sustainable impact. The
conference was organized in the context of the mining industry which is
at the forefront of both public criticism and awareness about socially
and environmentally sustainable impact and of industry action on these
issues. The United Nations' Environmental Programme (UNEP) and the
mining industry's Mining Minerals and Sustainable Development Project (MMSD)
co-sponsored the event. The conference attracted 120 participants
from 18 countries around the world.
Participants—who included representatives of governments and civil society
besides the financial community and mining industry—discussed whether
and to what degree those who finance, insure, and trade in bonds in relation
to mining operations are interested in the social and environmental impact
of those operations. The conference was an occasion to take stock
and test the relevance of “the business case for sustainability”, which
has evolved dramatically over the past three years.
The discussions identified a clear link between investment risk and profitability
on the one hand and environmental and social performance of operations
on the other. While this link might exist mainly because sustainability
can be treated as a proxy for good management, participants pointed to
an increasing interest in the markets in pricing capital and investment
risks taking into account a company’s sustainability performance.It was
felt that much work still needs to be done in the area of standards, metrics,
and reporting, before price differentiation takes hold. Both UNEP
and the MMSD project will pursue these topics as areas of research and
further discussion. For more information see: www.worldbank.org/mining
CONFERENCE ON SMALL BUSINESS FINANCE
The World Bank and IFC hosted the International Conference on Small Business
Finance in Washington D.C. on April 2-3. The key focus was on credit
information and credit scoring—a financial technology that rationalizes
credit decisions and credit management—to make small business lending
profitable in emerging markets and transition countries. More than
250 participants attended from 55 countries, representing about 60 banks,
30 leading microfinance institutions, more than 10 credit bureaus, several
regulators, and 20 leading technology providers.
Decreasing margins in large and mid-cap lending have heightened the interest
of financial institutions to tap the unmet demand for financial services
for micro and small businesses. Lenders applying traditional corporate
banking approaches remain constrained by the high transaction costs and
credit risks associated with small loans. Although a large number
of participating banks confirmed that credit scoring technologies held
great potential, what was required was a culture change within financial
institutions to overcome obstacles. One of the key challenges will
be to work jointly with banks and other lenders to improve the existing
credit information infrastructure.
The conference was co-sponsored by Coface, one of the largest international
credit risk insurers; CRIF, a leading credit bureau and credit scoring
developer; DBS/Temenos, a major technology provider to the banking and
microfinance industry; Trans Union Advantage, an alliance of two leading
international credit bureaus; and Visa International, the world’s largest
payment network. The conference was also supported by funds from
the Swedish government. For more information please refer to the
conference web-site where proceedings will be posted by July 2001: http://www.worldbank.org/wbi/banking/creditscoring.