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Telling Our Story: Crisis Response

Telling Our Story: Crisis Response

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Published by IFCpublications
The "Telling Our Story" series puts a human face on IFC's work, featuring short profiles of leading projects and the people whose lives they improve. This issue, "Crisis Response: A Global Partner in Times of Change," highlights IFC initiatives to help private enterprises in emerging markets cope with the global financial and economic crises. The initiatives help companies hold their own in challenging times. (April 2009)
http://www.ifc.org/tellingourstory
The "Telling Our Story" series puts a human face on IFC's work, featuring short profiles of leading projects and the people whose lives they improve. This issue, "Crisis Response: A Global Partner in Times of Change," highlights IFC initiatives to help private enterprises in emerging markets cope with the global financial and economic crises. The initiatives help companies hold their own in challenging times. (April 2009)
http://www.ifc.org/tellingourstory

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Published by: IFCpublications on Apr 01, 2011
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09/13/2011

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Telling Our Story: Crisis Response
A GLOBAL PARTNER
IN TIMES OF CHANGE
 
Throughout all this new activity, we have alsomaintained the emphasis on our core strategic priorities, which remain as relevant as ever:Strengthening our focus on Africa and otherfrontier marketsDeveloping local financial marketsBuilding long-term client relationshipsAddressing climate change and sustainability Focusing on private infrastructure, health,education, and the food supply chainPartnerships are essential to all of these efforts. We partner with clients, with donor governments,development finance institutions, and many otherorganizations to carry out this agenda.Many of the stories in this collection reveal thepower of partnership, mobilizing resources to createopportunity and improve people’s lives. At a time of both great adversity and great opportunity in the global economy, this is our story. We are a globalpartner in times of change.
Lars H. ThunellExecutive Vice President and CEO
1
Lars H. Thunell
Highlights of IFC’s Reach
$94 billion in micro, small, and medium enterprise loans byclient financial institutions$54 billion in local purchases of goods and services byclient companies18.2 million water distribution customers5.5 million health care patientsActivities in more than 130 countries
 
(NOTE: Data for calendar year 2007)
The Power of Partnership and Mobilization
These are extraordinary times.They are also times when IFC can have considerable impact.They are times that are exceptionally difficult for many people in emerging markets, who are feelingthe impact of a global financial crisis that may push more than 50 million of them back into poverty.Never has there been greater need for IFC and its vision:
That people should have the opportunity to escape poverty and improve their lives.
Financing options have dropped precipitously for the private sector, a key engine of recovery, jobcreation, and economic growth throughout these countries. Under these harsh conditions, much of the recent momentum in poverty reduction is unfortunately at risk. Yet as the largest global development institution focused on the private sector, bolstered by a strongfinancial position, sound risk management policies, and a talented and diverse global staff, IFC iscontributing to the international community’s response to the crisis. Guided by our vision, we are working with our partners to mobilize new resources, and supporting our clients and membercountries with investment and advisory services at a time when they need us the most.In doing so, we have had to think creatively, prioritizing our actions in areas where we can make thegreatest difference. As a result, we have joined forces with others on several major new crisis response initiatives, support-ing banks, trade finance, microfinance institutions, and infrastructure projects, as well as refocusingour advisory services around emerging needs. We have also begun developing a Sovereign Fund, joineda new multilateral initiative to finance businesses in Central and Eastern Europe, and begun actively looking for solutions in other key areas such as food supply and distressed asset recovery.
Cover Photo: Youth, Kenya. Amid a global economic slowdown, IFC is stepping up the pace of itsinvestment and advisory support, creating opportunity and improving lives across the developing world.
 
CRISIS RESPONSE:
IFC’s Strateg
Infrastructure
The crisis also threatens many upcoming infrastruc-ture projects that are expected play an importantdevelopment role.IFC’s new
Infrastructure Crisis Facility
 supports viable private sector or public-private partnership projects (PPPs) that facefinancial distress because of the crisis. Debtand equity components will provide short-to medium-term financing and advisoryservices to help governments design orredesign PPPs. Plans include:— Ensuring a minimum level ofcontinued new project activity whererestarting project development planscould otherwise take several years;— Investing up to $300 million or itsequivalent in the facility’s equity fund,with other investors expected toprovide at least $1.2 billion.
Microfinance
Although commercial microfinance as a wholecontinues to perform well, the private capital it hadstarted attracting in recent years is now virtuallyunavailable. To help this critical industry rebuildmarket confidence and maintain its momentum inthe fight against poverty:IFC and German development bank KfW havecreated a
Microfinance EnhancementFacility
with initial funding of $500 million.Three of the industry’s leading private fundmanagers (BlueOrchard Finance, responsAbilitySocial Investments AG, and CyranoManagement) will oversee funds, ensuringrapid deployment and cost efficiency.More than 100 microfinance institutionswill receive needed refinancing.— The initial focus will be on large playerswith extensive reach.The initiative will support 60 millionlow-income borrowers in the world’spoorest countries.
Enhancing Advisory Services
IFC Advisory Services
are being refocused tohelp clients weather the crisis. Priorities include:Scaling up specific existing programs inresponse to growing client needs;Designing new crisis-response programsin risk management and nonperformingloan management;Raising up to $60 million from donors tosupplement IFC resources for advisorywork at the firm and bank level (such asrisk management and corporate gover-nance) as well as in policy reform (inareas such as insolvency frameworks).
Investing in Leading Local Banks
As losses mount among private banks, local financialsectors will need strengthening. But developingcountries lack the resources to take the sameapproach as the U.S. and several European countries.Even in countries receiving IMF support, local banksoften prefer to receive new private capital in order tostay independent.• The
IFC
 
Capitalization Fund
will provideadditional capital for major banks in developingcountries so that they can keep lending andsupporting economic recovery and job creationthrough the crisis.— The fund will make subordinated loansand equity or equity-linked investmentsin major private banks or state-ownedbanks on a clear path to privatization.IFC investment totals $1 billion; weattracted another $2 billion from theJapanese government, and otherinvestors may join as well.
IFC is responding to the global economic downturn with a series of large-scale initiatives, helping developing countries weather the stormwith a broad package of targeted investments and advisory services. The initiatives help companies hold their own in challenging times—keeping people at work, products on the shelves, and money in the banks.
Trade
The global crisis is steering private capital away fromemerging markets and into lower-risk assets. Vitalcommercial trade finance lines are being cut, creatinga need for new funding in previously well-financedsectors. IFC has two complementary programs tosupport trade finance:IFC has expanded its
Global Trade FinanceProgram
from $1 billion to $3 billion, guaran-teeing risks that commercial banks will nottake—especially for smaller companies in thepoorest countries—and allowing support foran additional $18 billion in trade. Now activein 68 countries, the program expects to add25 more in the coming year.A new
Global Trade Liquidity Program
willwork on a larger scale, teaming IFC withStandard Chartered Bank, Standard Bankof South Africa, other major internationalbanks, and development partners to support$50 billion of trade throughout the financialcrisis.
Providing Liquidity SupportRebuilding Financial Infrastructure

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