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IFC Establishes Private Sector Development Trust Fund with State of Bavaria


Afshin Molavi
Phone:  (202) 458-5674

Fax:  (202) 974-4384

E-mail:  
amolavi@ifc.org


Washington DC, October 26, 2001—The International Finance Corporation, the private sector arm of the World Bank, has signed an agreement with the Government of the Free State of Bavaria to establish a 5 million Deutsche Marks Trust Fund to help finance private sector development in developing countries.
 
The Bavaria-IFC agreement marks the first time IFC has established a trust fund with a state government authority, rather than a national government or agency.  The trust fund will enable Bavarian businesses to work closely with IFC in private sector development in emerging markets and developing countries.


“The Trust Fund marks the beginning of a new and important relationship between Bavaria and IFC,” said IFC Chief Peter Woicke.  “This partnership will give IFC access to Bavarian expertise to address the various constraints it encounters in the course of its work, while providing Bavarian companies with access to IFC’s experience in investing in emerging markets and the developing world,” he added.


Dr. Otto Wiesheu, the Bavarian Minister for Economic Affairs, Transport, and Technology, added: “I certainly hope that cooperation between Bavarian medium-sized companies and international finance institutions will be intensified.  Bavaria has much to offer in products and advisory areas, as well as in the service sector.  This Trust Fund supports IFC’s private sector development work in emerging countries, and helps Bavarian consultants to better cooperate with the World Bank Group.  It is a win-win investment for all of us.”


The fund, which primarily focuses on technical assistance, will finance several key aspects of private sector development, such as: pre-business feasibility studies, the establishment of pilot projects, technology transfer, technical assistance in the rehabilitation of projects experiencing difficulties, and technical advisory services in areas such as privatization and capital markets development.


“The Bavaria-IFC Trust Fund has been established with the mutual understanding that private business is playing – and will continue to play – an increasing and fundamental role in spurring economic growth in developing countries,” Mr. Woicke said.


The Free State of Bavaria is one of the most attractive business regions in the Federal Republic of Germany and in Europe, with an economy larger than each of the economies of nine of the fifteen EU countries, and comparable to the economies of Ohio and Pennsylvania in the United States.  Bavaria’s international competitiveness is demonstrated by its annual exports of more than US$80 billion.


IFC initiated the Technical Assistance Trust Funds Program in 1988 in an effort to identify and support viable business projects in developing countries at an early stage.  Among other forms of technical assistance, the program provides technical assistance to help entrepreneurs prepare projects and design proposals that meet the criteria of prospective investors, including IFC.  Since its inception, the program has supported up to 1000 technical assistance projects in a broad range of sectors.  It also supports some of IFC’s privatization advisory services and capital markets activities aimed at strengthening private sector institutions.


IFC's mission is to promote sustainable private sector investment in developing countries, helping 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 businesses.  Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC's committed portfolio at the end of FY01 was $14.3 billion.