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World Bank
1.1 INTRODUCTION
The World Bank is a vital source of financial and technical assistance to developing countries around the world. Our mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors. We are not a bank in the common sense; we are made up of two unique development institutions owned by 187 member countries: The International Bank for Reconstruction and Development (IBRD) The International Development Association (IDA). Together, we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management. The World Bank, established in 1944, is headquartered in Washington, D.C. We have more than 10,000 employees in more than 100 offices worldwide. Innovating from Within To ensure countries continue to have access to the best global expertise and cuttingedge knowledge, the World Bank Group is revising its programs to assist the poor, as well as its range of financing options, to meet pressing development priorities. Pillars of these efforts include: Results: Together, we are continuing to sharpen our focus on helping developing countries deliver measurable results.
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Reform: New reforms at the World Bank Group are aimed at improving every aspect of our work: the way projects are designed (investment lending), how information is made available (access to information), and how our staff are deployed to best assist governments and communities (decentralization). Open Development: The World Bank is leading the effort toward openness and transparency in development by offering a wealth of tools and knowledge to provide people with the resources they need to help solve the world's development challenges. In 2010, the Bank launched a new Open Data website, providing free access to a comprehensive set of data about development in countries around the globe.
IBRD:
The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its 187 member countries. IBRD raises most of its funds on the world's financial markets and has become one of the most established borrowers since issuing its first bond in 1947. The income that IBRD has generated over the years has allowed it to fund development activities and to ensure its financial strength, which enables it to borrow at low cost and offer clients good borrowing terms. At its Annual Meeting in September 2006, the World Bank with the encouragement of its shareholder governments committed to make further improvements to the services it provides its members. To meet the increasingly sophisticated demands of middle-income countries, IBRD is overhauling financial and risk management products, broadening the provision of free-standing knowledge services and making it easier for clients to deal with the Bank.
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IDA BORROWERS:
Eligibility for IDA support depends first and foremost on a countrys relative poverty, defined as GNI per capita below an established threshold and updated annually (in fiscal year 2011: US$1,165). IDA also supports some countries, including several small island economies, which are above the operational cut-off but lack the creditworthiness needed to borrow from IBRD.
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Some countries, such as India and Pakistan, are IDA-eligible based on per capita income levels, but are also creditworthy for some IBRD borrowing. They are referred to as blend countries. Seventy-nine countries are currently eligible to receive IDA resources. Together, these countries are home to 2.5 billion people, half of the total population of the developing world. An estimated 1.5 billion people there survive on incomes of US$2 or less a day.
TOP TEN IDA BORROWERS ($million, includes regional projects) India Vietnam Tanzania Ethiopia Nigeria Bangladesh Kenya Uganda 2,578 1,429 943 890 890 828 614 480
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New IDA Lending by Region: Sub-Saharan Africa...........49% South Asia...........................32% East Asia/Pacific..................11% Europe/Central Asia...............4% Latin America/Caribbean........2% Middle East/North Africa.........1%
Infrastructure ......................37% Public Admin and Law..........18% Social sector.......................29% Agriculture ............................8% Industry ................................2% Finance...................................5%
IDA LENDING:
IDA funds are allocated to the recipient countries in relation to their income levels and record of success in managing their economies and their ongoing IDA projects. IDA's lending terms are highly concessional, meaning that IDA credits carry no or low interest charges. The lending terms are determined with reference to recipient countries' risk of debt distress, the level of GNI per capita, and creditworthiness for IBRD borrowing. Recipients with a high risk of debt distress receive 100 percent of their financial assistance in the form of grants and those with a medium risk of debt distress receive 50 percent in the form of grants. Other recipients receive IDA credits on regular or blend and hard-terms with 40 year and 25 year maturities respectively.
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IDA REPLENISHMENTS:
Donors get together every three years to replenish IDA funds. 51 countries contributed to the 16th replenishment of IDA, which totalled US$ 49.3 billion.
The IDA16 replenishment raised funds for poor countries for the three-year period between July 2011 and June 2014. These are critical years for countries trying to achieve the UN Millennium Development Goals since it takes time for projects to be completed and yield measurable results.
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Reconstruction remains an important part of our work. However, the global challenges in the world compel us to focus on: poverty reduction and the sustainable growth i the poorest countries, especially in Africa; solutions to the special challenges of post-conflict countries and fragile states; development solutions with customized services as well as financing for middle-income countries; regional and global issues that cross national borders--climate change, infectious diseases, and trade; greater development and opportunity in the Arab world; Pulling together the best global knowledge to support development.
At today's World Bank, poverty reduction through an inclusive and sustainable globalization remains the overarching goal of our work.
Lending:
The World Bank was established at Bretton Woods because the end of World War II was in sight and the summit attendees worried about the devastation of Europe. The Bank was created to help with reviving Europe's economy and repairing the damage of the war. It did this by giving loans -- its first loan, in 1947, gave $250 million to
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France to rebuild. As of 2010, the bank loaned about $13 billion each year to developing countries in the form of interest-free credits.
Development Strategy:
Loans from the World Bank have strings attached: the Bank monitors how each country spends the funds that it receives. The framework of the World Bank provides support for countries to which it lends to ensure that World Bank funds are not spent inefficiently or lost to corruption. The Bank studies the economy and political atmosphere of each country to which it intends to lend funds. The loan comes with a development strategy that the various institutions that comprise the World Bank will help the country follow.
Financial Services:
The World Bank also helps developing countries to manage their money effectively. As part of its development strategies, the World Bank counsels the borrowing countries on developing their financial strategies. It helps them to develop their investment portfolios and teaches them about financial practices like risk management through hedging and derivatives trading. It gives continuing financial advice to its borrowing countries, advising them on managing investments and risk in addition to protecting against disasters with catastrophe bonds.
Data Collection:
The World Bank draws on the experiences of countries that it has supplied funds to in the past to decide how a new borrower may best use its loan. It documents its experiences in data banks. The World Bank collects information about each borrowing country and how it uses World Bank funds. While the Bank collects this information primarily for its own use, it also shares its knowledge. The World Bank makes much of its data available to the public in online databases, and it also publishes its analysts' reports on emerging global trends.
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The United Nations Monetary and Financial Conference, commonly known as the Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, to regulate the international monetary and financial order after the conclusion of World War II. The conference was held from 1-22 July 1944, when the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF). As a result of the conference, the Bretton Woods system of exchange rate management was set up, which remained in place until the early 1970s.
1946- World Bank Opens The World Bank begins operations with 32 shareholding countries, $7.7 billion in capital, and headquarters in Washington, D.C. IFC has not yet been created.
1947 - Garner Arrives The driving force behind the future IFC, New York financier Robert L. Garner, joins the World Bank as one of its first senior executives. He brings a keen sense of the role private business can play in international development, a topic few others considered at the time.
2. 1950s Creation.
1950 - The Idea of IFC Garner and colleagues suggest creating a new institution to stimulate private investment in the Bank's borrowing countries. "It was my firm conviction that
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the most promising future for the less developed countries was the establishing of good private industry," Garner said.
1951- Growing Support The U.S. government calls for "an International Finance Corporation" tied to the World Bank. It would finance private enterprises in developing countries but: Take no government guarantees Always work alongside other private investors Never manage its investees
1956- IFC Created IFC opens under Garner's leadership with 12 full-time staff but just $100 million in authorized capital, a low amount that prevents it from making major investments. Shareholders only allow it to make loans, not the equity investments that Garner desired, and that in time would become the key to its profitability. 1957- First Investment IFC's first investment: A $2 million loan to help the Siemens affiliate in Brazil manufacture electrical equipment. Following the mandate, the project is a private sector solution to a development challenge - at the time, Brazil's per capita power consumption is just half of neighbouring Argentina's.
1958- First Mission to India Garner leads IFC's first mission to India, becoming an early champion of its nascent private sector that will later transform the country in the 1990s and 2000s
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1961- New Powers Upon retirement, Robert L. Garner sees a key part of his historic vision become reality: IFC is authorized to make equity investments. The first one follows the next year (a stake in Spanish auto parts manufacturer FEMSA). 1965- First Syndication IFC mobilizes $600,000 from Deutsche Bank and others for Brazilian pulp and paper company Champion Cellulose. The transaction provides early support for Champion, a rising player that in 2001 is sold for $9.1 billion to the world's largest paper company, International Paper of the U.S. The project also launches IFC's syndications program. 1969- A Call for Growth Accepting an independent commission's report, World Bank President Robert S. McNamara agrees that a larger, more development-oriented IFC could play a powerful role. To guide the thinking behind IFC's growth, he recruits IMF official Moeen Qureshi, a future prime minister of Pakistan.
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1971- Financial Markets At a time when few development thinkers are focused on the role of financial institutions, IFC breaks the mold, creating a Capital Markets Department to strengthen local banks, stock markets, and other intermediaries. In time this function will become IFC's largest area of emphasis.
1972- First Advisory Services With donor support from the U.S. and U.K., IFC sends two staff and 12 Canadian banking consultants to Jakarta for four years to build Indonesia's securities markets. Little noticed at the time, it is the start of a core business function: provision of business and financial expertise through advisory services 1972 1977- First Field Offices Decentralization begins with small one-man offices in Jakarta and Nairobi, followed by establishment of the first regional mission for East Asia, based in Manila. By 2008, more than 50 percent of IFC staff will be based outside of Washington, DC.
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1982- First Advisory Facility IFC creates its first multi donor advisory services initiative, the Caribbean Project Development Facility. The first of many such initiatives within IFC, the initiative was credited with creating 17,500 jobs before closing in the 1990s.
1984- Financial Autonomy Long reliant on World Bank support, IFC becomes financially independent, gaining approval to issue its own bonds in international capital markets.
1989- AAA Credit Rating IFC receives the highest possible endorsement of financial health from private rating agencies. It becomes the key to a large-scale, multicurrency borrowing program that by 2009 will exceed $9 billion a year.
1991- Capital Increase Shareholders give IFC a record $1.2 billion capital increase, leading to increased work in privatization, infrastructure finance, capital market development, support of small and medium enterprises, and renewed collaboration with the World Bank. 1992- Global Industry Departments Sensing that global knowledge is one of its most important assets, IFC creates new global industry departments in Infrastructure, Agribusiness, Oil/Gas/Mining, and Chemicals/Petrochemicals/Fertilizers to complement the existing one for Capital Markets.
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1994- Information Disclosure IFC enacts its first policy on public disclosure of information, greatly increasing its openness and transparency by increasing the amount of project information it releases on projects before board approval. As part of the policy, IFC "recognizes and endorses the fundamental importance of accountability and transparency in the development process."
1998- Environmental and Social Standards IFC's launches new environmental and social review procedures and safeguard policies. They will become a fundamental part of IFC's work, mainstreaming high standards of sustainability in all investment transactions. 1999- Increased Accountability As part of an increasing commitment to openness and accountability, Meg Taylor is appointed Compliance Advisor/Ombudsman for IFC and MIGA. The post is the first of its kind in a multilateral development institution.
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Meeting at IFC,10 top international banks adopt the Equator Principles,
applying new environmental and social development standards to their project finance lending based on IFC's own standards. By 2009, 68 participating banks had adopted the Equator Principles, representing 90 percent of all global project financing.
2007- IDA Focus IFC's investment in IDA countries grows by 75 percent in one year, part of a new focus on the world's poorest countries and other frontier regions left out of the emerging market investment boom. Soon, more than half of IFC investment projects will be in IDA countries.
Decentralization: With most clients now coming from emerging markets, IFC plans moves to increase client service and responsiveness by streamlining business procedures and decentralizing staff and decision making. By 2009, IFC will be present in more than 80 countries and have more than half of its staff in the field-a dramatic turnaround from previous years.
2008- Climate Change IFC adds climate change to its main areas of business focus, leading to a vast increase in investment and advisory services in renewable energy, energy efficiency, cleaner production, and other earth-friendly business opportunities.
Expanded Reach: For the year, IFC clients provide 2.1 million jobs, serve 5.5 million patients, and help educate 1.2 million students. This comes as IFC's new financing
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reaches $16.2 billion, a 34 percent increase over the previous year. This includes $11.4 billion for IFC's own account and $4.8 billion mobilized for clients.
2009- Crisis Response Amid a severe global economic downturn, IFC and its many partners launch crisis response initiatives in trade finance, microfinance, infrastructure, advisory services, and distressed assets. The moves show IFC's growing leadership, helping clients weather the storm and preserve jobs during the crisis. IFC Asset Management Company: IFC Asset Management Company is launched, adding a third business line to complement IFC's existing investment and advisory services work. IFC Asset Management Company invests third-party capital in a private equity fund format. It offers outside investors the opportunity to benefit from IFC's expertise in emerging markets and track record of achieving strong equity returns as well as distinct development impact.
2010- Emphasis on Jobs IFC investment clients provide 2.2 million jobs. More than 711,000 come from businesses supported indirectly though IFC--backed investment funds. Commitments reached $18 billion--$12.7 billion for IFC's own account and $5.3 billion in mobilizations. Annual spending on advisory services hits $268 million.
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Inclusive Business:
IFC makes a new commitment to reaching the many millions of people at the base of the pyramid, launching a new initiative to create jobs, raise incomes, and bring more low-income producers' goods and services to global markets.
G-20 Recognition: Recognizing IFC's leadership in the field, the G-20 makes us its global partner in SME development. At its Seoul summit, the G-20 receives our knowledgesharing report on access to finance, and ask IFC to lead implementation of the SME Finance Challenge, a new campaign to scale up successful models of support to SMEs, a key driver of job creation and growth.
Source: www.worldbank.org
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2.1 ROLE
What We Do
IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. IFC helps companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. The goal is to improve lives, especially for the people who most need the benefits of growth. Where IFCS Work: IFC invests in enterprises majority-owned by the private sector throughout most developing countries in the world. Developing regions include:
y y y y y y
Sub-Saharan Africa East Asia & the Pacific South Asia Europe & Central Asia Latin America & the Caribbean Middle East & North Africa
Strengthening its focus on frontier markets, particularly the SME sector; Building long-term partnerships with emerging global players in developing countries;
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y
Addressing constraints to private sector investment in infrastructure, health, and education; and
Developing domestic financial markets through institution building and the use of innovative financial products.
For all new investments, IFC articulates the expected impact on sustainable development, and, as the projects mature, IFC assesses the quality of the development benefits realized.
2.2 SERVICES
Investments & Advisory Services:
IFC offers an array of financial products and services to its clients and continues to develop new financial tools that enable companies to manage risk and broaden their access to foreign and domestic capital markets. IFC offers a range of advisory services in support of private sector development in developing countries.
Investment Services:
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IFC operates on a commercial basis. It invests exclusively in for-profit projects and charges market rates for its products and services. Loans from IFC finance both Greenfield companies and expansion projects in developing countries. The Corporation also make loans to intermediary banks, leasing companies, and other financial institutions through credit-lines for further on-lending. The credit lines are often targeted at small and medium enterprises or at specific sectors.
To ensure the participation of other private investors, A-loans are usually limited to 25% of the total estimated project costs for Greenfield projects, or, on an exceptional basis, 35% in small projects. For expansion projects IFC may provide up to 50% of the project cost, provided its investments do not exceed 25% of the total capitalization of the project company. Generally, A-loans range from $1 million to $100 million.
The Corporation is willing to extend loans that are repaid only from the cash flow of the project, without recourse or with only limited recourse to the sponsors.
2. Syndicated Loans:
Through its syndicated loan (or B-loan) program, IFC offers commercial banks and other financial institutions the chance to lend to IFC-financed projects that they might not otherwise consider. These loans are a key part of IFC's efforts to mobilize additional private sector financing in developing countries, thereby broadening the Corporation's development impact. Through this mechanism, financial institutions share fully in the commercial credit risk of projects, while IFC remains the lender of record. Participants in IFC's B-loans share the advantages that IFC derives as a multilateral development institution, including preferred creditor access to foreign exchange in the event of a foreign currency crisis in a particular country. Where applicable, these
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participant banks are also exempted from the mandatory country-risk provisioning requirements that regulatory authorities may impose if these banks lend directly to projects in developing countries.
3. Equity Financing:
IFC takes equity stakes in private sector companies and another entity such as financial institutions, and portfolio and investment funds in developing countries. IFC is a long-term investor and usually maintains equity investments for a period of 8 to 15 years. When the time comes to sell, IFC prefers to exit by selling its shares through the domestic stock market in a way that will benefit the enterprise, often in a public offering. IFC operates on a commercial basis. It invests exclusively in for-profit projects and charges market rates for its products and services. To ensure the participation of other private investors, the Corporation generally subscribes to between 5 percent and 15 percent of a project's equity. IFC is never the largest shareholder in a project and will normally not hold more than a 35 percent stake.
IFC's equity investments are based on project needs and anticipated returns. The Corporation does not take an active role in company management. IFC risks its own capital and does not accept government guarantees. However, to meet national ownership requirements, IFC shareholdings can be treated as domestic capital or local shares.
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6. Structured Finance:
IFC has developed products that provide clients with forms of cost-effective financing not otherwise available to them. Products include credit enhancement structures for bonds and loans through partial credit guarantees, risk-sharing facilities, and participations in securitization. Partial credit guarantees allow IFC to use its international triple-A credit rating to help clients diversify their funding sources, extend maturities, and obtain financing in their currency of choice, including local currency. In securitization transactions, IFC participates as a structuring investor or guarantor. Partial loan and bond guarantees also help broaden clients' access to international and local capital markets. Credit enhancement structures help clients attract new sources of financing in their currency of choice, reduce borrowing costs, and extend maturities beyond what private investors would otherwise provide.
7. Securitizations :
It helps IFC's clients obtain financing that would otherwise be unavailable or unsuitable to them because of perceived credit risk. This form of financing involves the pooling and actual sale of financial assets and issuance of securities that are repaid from the cash flows generated by such assets. The risk associated with this form of financing comes from the asset pool rather than from the institution that originated those assets. Securitizations are commonly done for mortgages, credit cards, auto and consumer loans, corporate debt, and other assets with relatively predictable cash flows.
8. Financial Intermediaries:
A large chunk of IFC financing is channelled to private sector projects in developing countries through intermediaries. IFC uses its full range of financial products to
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provide finance to a wide variety of financial intermediaries. Working through intermediaries allows IFC to extend its long-term finance to more companies, in particular to small and medium enterprises (SMEs) and microfinance entrepreneurs.
In many regions of the world, small private companies are the principal engines of economic growth and employment creation. But micro, small and medium-size investments carry high transaction costs, limiting smaller companies' access to longterm finance. By working with local or specialized financial institutions, IFC finance can reach these businesses. IFC operates on a commercial basis. It invests exclusively in for-profit projects and charges market rates for its products and services. Examples of investments in financial intermediaries include:
y
Credit and equity lines to banks for on-lending to local companies. These investments help the banks to provide working capital and investment financing for their corporate customers. Private equity and investment funds, such as index funds and country funds. IFC also invests in venture capital funds which help channel flows to companies that generally are unlisted and do not receive the notice of large investors.
Leasing companies, which are essential to the development of SMEs as smaller companies typically, lease costly capital equipment. Leasing plays a critical role in financial sector development in countries with small economies or low per capita incomes. IFC has actively helped establish leasing industries in countries all over the world.
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IFC offers access to finance advisory services for the following areas: Agribusiness Finance Collateral Registries/Secured Lending Credit Bureaus Gender Access to Finance Housing Finance Insurance Leasing Microfinance Payment Systems & Remittances (Retail Payments, Mobile Banking Risk Management Loan Portfolio Monitoring & Workout Securities Markets SME Banking Sustainable Energy Finance Trade Finance
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3. Business Taxation
Investors identify the tax system as one of the most important parameters in making an investment decision. Cumbersome tax structures are a drain on investor time and resources and act as a disincentive to participation in the formal economy. A badly designed and/or executed tax system negatively impacts investment economic growth suffers. Traditional technical assistance has focused on the implementation of revenue-generating mechanisms, while largely neglecting the impact of the tax system on investment and economic growth. FIAS helps to improve the business-enabling environment by reducing the time and financial cost that firms incur in complying with tax rules. FIAS' Business Taxation team provides specialized advice aimed at promoting effective, fair and inclusive tax systems that foster investment, economic growth and political stability in developing countries. Benefits to streamlining tax systems are considerable, including:
y y y y
increasing the number of firms into the formal economy; encouraging local and foreign direct investment (FDI); widening the tax base; Lowering the per-business costs of tax compliance.
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Doing Business Reform Advisory channels significant resources into helping countries with the lowest Doing Business rankings. Among countries requesting assistance, 61 percent rank in the bottom half of the Doing Business classification. Half of the 25 lowest-ranking countries in Doing Business 2008 have become Doing Business Reform Advisory clients.
5. Industry Competitiveness
Many important investment climate issues such as product standard specifications, import policy distortions, environmental regulation, social standards, and constraints to competition are industry-specific in nature and traditionally have been overlooked in the investment climate reform agenda. The Industry Competitiveness Advisory team brings together FIAS expertise to address this gap in the investment policy
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planning process by identifying and prioritizing the main policy, regulatory, and legal issues through an industry-specific lens. This industry approach is a combination of industry knowledge, strong economic policy expertise, and tools to address problems of access to industrial property which the private sector frequently encounters in developing countries. This focused approach helps to identify and prioritize investment climate issues and succeeds by
y y y y
building private sector capacity identifying and supporting anchor investments ensuring access to finance along the value chain promoting supplier and community linkages.
Specifically, FIAS assists countries in designing special economic zone (SEZ) programs and in developing their agribusiness and tourism sectors. The Industry Competitiveness team focuses on introducing new programs in least-developed economies, particularly in conflict-affected countries.
Establishing or strengthening the insolvency practitioner frameworks that are key to the proper functioning of a countrys insolvency system;
Designing or revising rules to facilitate informal workouts (out-of-court insolvency procedures), in order to ease the burden on formal court systems. Increasing the capacity of institutions that implement the insolvency framework.
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8. Secured Lending
Effective secured lending laws are a crucial component of a healthy business climate. In their absence, entrepreneurs are unable to leverage current or movable assets into capital for investment. FIAS' Secured Lending team works to foster the use of movable assets such as livestock, receivables, and equipment as collateral in exchange for loans. FIAS, jointly with IFC's Access to Finance business line, supports the development of a wellfunctioning secured lending framework through a delivery model that focuses on harmonizing laws, building electronic registries, streamlining registration processes, and eliminating unnecessary paperwork. The Secured Lending team focuses on three main areas: Legal Reform Collateral Registry Development Capacity Building
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9. Sub-national Doing Business Sub-national Doing Business projects apply the Doing Business methodology at the local level, assessing whether local government regulations and practices enhance or impede the investment climate in regions and cities. City- and regional-level rankings are increasingly important in a globalized world, where localities rather than countries, compete for investor attention. Sub national rankings are also excellent tools for creating genuine reform momentum. Such transparency generates competition among cities to improve their business environments, particularly in aspects important to mobile investors. FIAS' Sub national Doing Business team assists client countries in addressing weaknesses as measured by the Doing Business indicators in three stages: by assessing regulatory regimes; by identifying the bottlenecks firms face in setting up and operating; and finally, by providing specific recommendations for reform. The Sub national Doing Business team generally works in y
Countries where local regulations or local implementation of national regulations have an impact on the business environment
y y y
Small countries in a region with similar regulatory frameworks IDA countries or frontier regions in non-IDA countries Countries with strong commitment from local and national governments
10.Trade Logistics
Faster, leaner and more responsive supply chains are essential for businesses to survive in a competitive and globalized world. Firms increasingly use global sourcing strategies that require flexible, speedy, and cost-effective solutions. This demand has energized governments to make world markets more accessible by improving their trade logistics services and providing efficient, easy, and accountable import and export procedures.
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Though the populations of developed nations have the highest consumption rates, supply chains that support this consumption are spread far and wide across the globe. Unsustainable practices along the supply chain, from production to final markets, drive the degradation and disappearance of biodiversity and ecosystem services, which in turn accelerate climate change and threaten long-term business and market viability in developing countries. A critical barrier to achieving sustainability in supply chains is the lack of agreedupon metrics by which to benchmark supply chain activity and practices at all levels and make reasonable claims of sustainability. IFC supports the development and adoption of industry-led voluntary standards, developed through commodity roundtables and related better management practices, as the most efficient method to correct this market failure. IFC's Eco-Standards and Sustainable Supply Chains product includes knowledge management and advisory services at global, national, and client levels to influence and improve supply chains' sustainability. Interventions are designed to change the behaviour of market players in a variety of sectors, but especially in agribusiness.
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3.1 INTRODUCTION
The Multilateral Investment Guarantee Agency (MIGA) is a member organization of the World Bank Group that offers political risk insurance. It was established to promote foreign direct investment into developing countries. MIGA was founded in 1988 with a capital base of $1 billion and is headquartered in Washington, DC. 175 member countries comprise MIGA's shareholders. MIGA promotes foreign direct investment into developing countries by insuring investors against political risk, advising governments on attracting investment, sharing information through on-line investment information services, and mediating disputes between investors and governments. MIGA's membership in the World Bank Group enables the organization to intervene with host governments to resolve claims before they are filed.
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to help practitioners update their knowledge and skills. MIGA has launched three regional versions of the FDI Promotion Center in Arabic, Russian and Serbian.
Technical Assistance:
MIGA provides technical assistance to help governments and other intermediaries involved in promoting investment improve their ability to respond effectively to investor needs. Investment promotion intermediaries promote FDI into their countries through a combination of activities, with the goal of generating economic growth and creating jobs. MIGAs technical assistance helps investment promotion intermediaries develop their capacity to provide investors with information and advice, with the goal of reducing the transaction costs associated with site selection, as well as helping businesses get started. MIGA is one of the few organizations with the global experience to provide the broad-based package of assistance needed to build the institutional capacity of these agencies, in areas such as strategic planning, marketing, and sector targeting, and improving responsiveness to investor needs through information services. For an overview of the agencys TA results, see past MIGA Annual Reports.
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more attractive; and investment generation, including investment policy and promotion, and industry-specific approaches to investment. FIAS aims to develop new products and strategies to promote private investment in frontier countries and fragile states in particularareas where MIGA has extensive experience. Day-to-day operations of the integrated facility are run by FIAS, with financial contributions from IFC, MIGA, and the World Bank, as well as donors. Senior management from these three World Bank Group institutions comprise a supervisory committee to oversee the activities of FIAS.
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4.1 INTRODUCTION
The World Bank is one of the worlds largest sources of funding and knowledge for developing countries. India is one of our oldest members, having joined the institution at its inception in 1944. In India, the World Bank works in close partnership with the Central and State Governments. It also works with other development partners: bilateral and multilateral donor organizations, nongovernmental organizations (NGOs), the private sector, and the general publicincluding academics, scientists, economists, journalists, teachers, and local people involved in development projects.
The Country Strategy for India for 2009-2012 is aligned with the government's Eleventh Five Year Plan. It focuses on helping the country to fast-track the development of much-needed infrastructure, support the seven poorest states, and respond to the financial crisis. See Video
The strategy was arrived at after a series of consultations with a broad range of stakeholders, including members of the government and civil society.
The strategy envisages total proposed lending of US$14 billion for 2009 2012. As private financing dries up in the wake of the global financial crisis, the Bank has agreed to provide an additional US$ 3 billion as part of the total financing envelope of US$ 14 billion.
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The strategy is implemented through lending, dialogue, analytical work, engagement with the private sector, and capacity building exercises. The Banks previous four-year Country Strategy for 2005-2008 focused on lending for infrastructure, human development, and improving rural livelihoods. (Read Country Strategy Progress Report.)
4.3 PROJECTS
The Banks method of operation is not to implement World Bank projects, but to provide financing and advice for projects which are owned and supported by the Indian government and the people and form part of their overall development agenda. Various financing options are available based upon the type of assistance needed. It is important to note that the implementation of projects is managed by the government itself. The government designates an office, referred to as the Project Implementing Agency (PIU), which is responsible for aspects such as procurement and selection of consultants and day-to-day work, monitoring, and evaluation. The Banks operational policies set guidelines to ensure that projects meet its own criteria such as social and environmental standards. Projects are evaluated to capture and share lessons for similar projects in future.
4.4 LENDING
At the end of June 30, 2010, the World Bank group had 75 active projects in the country. The net commitment for these projects was about $21.4 billion. New lending in FY10 (1 July 2009- 30 June 2010) amounted to $9.3 billion. Total IBRD/IDA Commitments as on June 30, 2010 (FY10): $21.4 billion (by fiscal year, in nearest $ billions)
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Commitments New Lending Total Commitments (Active Projects) Total No. of Active Projects FY05 FY06 FY07 FY08 FY09 FY10 2.9 12.8 64 1.4 11.3 56 3.7 14.3 67 2.7 13.8 60 2.3 14.9 61 9.3 21.4 75
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Rachid Benmessaoud, Acting Country Director for India, talks about the Importance of infrastructure for India's growth.
Skills:
The shortage of skills is preventing large segments of the population from being part of India's growth story. Nearly 44% of Indias labour force is illiterate, only 17% of it has secondary schooling, and enrolment in higher education is just 11%. This compares unfavourably with, for example, China, where access to secondary education is almost universal and enrolment in higher education exceeds 20%. Moreover, the quality of most Indian graduates is poor and employers offer very little skills upgrading (16% of Indian manufacturers offer in-service training to their employees, compared to over 90% of Chinese firms). The informal sector employs over 90% of the workforce, but there is very little investment or opportunity for formal `skilling for enterprises.
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Low-income states:
The new strategy devotes more resources to engaging with Indias seven lowincome states - Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh - which are home to more than half of Indias population. Here, the Bank will focus on poverty reduction and on achieving the
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Millennium Development Goals (MDGs). Intensive technical assistance will be provided to help these states develop their administrative capacity. Bank lending to these states will primarily be in the form of low-interest IDA credits as well as technical and advisory services.
Middle-income states:
India's richest states already have incomes comparable to lower middle income countries, with incomes being some five times higher than those in the poorest states. This gap is higher than most other democratic societies. In these states, the Bank will provide support on two fronts: fighting poverty in their lagging regions, and addressing the complex challenges emerging from rapid growth. States such as Andhra Pradesh, Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat, and Maharashtra will be helped to forge the institutions needed in a middle income economy. Cutting-edge analytical work and the best international expertise will be brought to bear upon complex problems where there are yet no clear solutions. Lending to these states will be in the form of competitively priced IBRD loans, with the International Finance Corporation (IFC) the Banks private sector arm providing support for private sector clients.
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development - it will now be extended to agribusiness, health and education, and renewable energy. The Bank and IFC are also working together on longterm finance: through the proposed India Infrastructure Finance Co. Ltd. Project (IIFCL).
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Fertility rate: 2.5 births per woman Life expectancy at birth: 64 years Infant mortality (per 1000 live births): 57 Maternal Mortality (per 100,000 live births):450 Children Underweight (below 5 years): 46% Primary school enrollment, net: 90% Male Adult literacy (age 15 and older): 73% Female Adult literacy (age 15 and older): 48% Access to improved water source (% of pop): 89% Access to improved sanitation:33% Source: World Development Indicators 2008, NFHS 3 2005-06, and World Bank's 'India at a Glance'
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2. Building Strong Partnerships with Low-Income States While Indias higher-income states have successfully reduced poverty to levels comparable with the richer Latin American countries, its seven poorest states - Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh -lag behind their more prosperous counterparts and are home to more than half of Indias poor. The World Bank is increasing support to kick-start development in these lowincome states by helping them to develop into attractive investment destinations, and raise the standards of living of their people by improving the delivery of public services. In Bihar, the World Bank is supporting critical structural reforms (recently closed Bihar Development Policy Loan I), infrastructure development, and the building of rural livelihoods (Bihar Rural Livelihoods Project). It is helping the state recover from the devastating 2008 Kosi river floods (Bihar Kosi Flood Recovery Project, $220 million), and supporting the development of a comprehensive disaster management program. A grant for Flood Management Information System is helping to reduce the states vulnerability to floods. Several Bank-supported national programs such as the Sarva Shiksha Abhiyan and the National Highways program also assist Bihar. Orissa, until the turn of the millennium, was among the poorest and the most highly indebted states in the country. Today, it is recognized as a state in transition. The World Bank has supported the state for over a decade. Two World Bank Development Policy Loans/credits have supported the states own efforts at structural reform in public financial management, investment climate, governance and accountability. A third Development Policy Loan will focus on inclusion and service delivery, where critical challenges remain. The Bank is also supporting investments in the state in core areas of infrastructure development (Orissa State Roads Project) and poverty reduction (Orissa Rural Livelihoods Project; Community Tanks Management Project).
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Improving Infrastructure:
The Government is encouraging private participation in the expansion of critical infrastructure. To support this, the World Bank, in September 2009, agreed to extend$1.195 billion to the India Infrastructure Finance Company Limited (IIFCL) to help finance public-private partnerships in infrastructure, especially in the roads, power and ports sectors.
Transport:
The World Bank has supported the states of Gujarat and Andhra Pradesh to upgrade their state highways. It is now helping to upgrade rail and road connectivity in Mumbai; improve state highways in Andhra Pradesh, Himachal
Pradesh, Kerala, Mizoram, Orissa, Punjab, Tamil Nadu and Uttar Pradesh; construct a section of the Golden Quadrilateral in Uttar Pradesh and Bihar; and upgrade rural roads in select districts of Himachal Pradesh, Rajasthan,Jharkhand and Uttar Pradesh. The Bank is also supporting the improvement of urban transport in the cities of Pune and Pimpri-Chinchwad in Maharastra, Indore in Madhya Pradesh,
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Mysore in Karnataka and Naya Raipur in Chattisgarh. Finally, the Bank is planning to support the improvement of narrow national highways through the National Highway Interconnectivity Improvement Program. It also proposes to support the Eastern Dedicated Railway Freight Corridor which aims to increase the railways share of the freight market, thus reducing transport costs, as well as fuel consumption which could directly contribute to a reduction in carbon emissions.
Energy:
The Government of India is increasingly tapping its vast hydropower resources. It has set the target for an optimum power mix at 40% from hydropower and 60% from other sources. In the past, the World Bank has supported India in building its largest hydropower plant at Nathpa Jhakri in Himachal Pradesh and is now helping the country augment the supply of hydropower. Support for the 412 MW run-of-theriver Rampur Hydropower plant on the Satluj river in Himachal Pradesh is ongoing. Two other hydropower projects are in the pipeline; a 444 MW project on theAlakananda river in Chamoli district in Uttarakhand, and the other at Luhri, further downstream from Rampur in Himachal Pradesh. The Bank is also supporting the efficient transmission and distribution of power to consumers. It has helped Powergrid, the national power transmission agency, to emerge as a world class agency. In September 2009, the World Bank extended a loan of $1 billion to Powergrid to strengthen and expand five transmission systems in the northern, western and southern regions of the country. At the state level, improvements in transmission and distribution are being supported in Haryana and Maharashtra.
Urban Development:
In the next 20-25 years, Indias urbanization level is expected to rise from the present 30% to 40- 50%, with over 60 cities of 1 million plus population contributing about 70% of Indias GDP. Yet, Indias growing cities and towns face major challenges in creating adequate infrastructure including in the transportation, water, solid waste, and power sectors. The World Bank is helping streamline urban transport in Mumbai and
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improve the delivery of urban civic services in Andhra Pradesh, Tamil Nadu, and Karnataka. The Bank has also sought to bring in global best practices in the urban water sector. A successful pilot has helped to provide continuous, reliable water supply in three urban areas in Karnataka. Going forward, it will be essential for India to introduce policy and institutional reforms in land use planning, municipal finance, institutional models, and invest in infrastructure and service delivery to manage its cities efficiently. While state governments have the more critical role in transforming Indias cities, the Government of Indias support through national programs is significant. World Bank support for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is under preparation. Financial Sector Development and Support to Small and Medium
Enterprises: Longer-term local currency financing, which could fund large scale infrastructure projects, is in short supply in India. Moreover, poorer households and small and medium enterprises (SMEs) have limited access to banking services, while insurance and equity market penetration in rural areas remains very low. In September 2009, the World Bank agreed to extend budgetary support of $2 billion to the Government of India in support of its economic stimulus measures to counter the effects of the global financial crisis. This included the injection of capital into some public sector banks to help ensure the expansion of good credit to the SME sector, as well as for the development of infrastructure and the rural economy. The Bank also continues to fund the implementation of the Government of Indias financial sector reform program, support rural credit cooperatives - which are crucial for channeling agricultural credit to farmers, and provide technical assistance for improving the Government's agricultural insurance program, including weatherindexed insurance for farmers. It is also supporting SIDBI in scaling up sustainable and responsible microfinance to the under-served areas of the country.
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Protecting Indias fragile environment - air, water, forests and bio-diversity - in the face of the rising pressures created by economic success
y y
Adapting to climate change and the growing scarcity of water Coping with accelerating urbanization through strengthened urban governance and environmental management Improving energy efficiency and ensuring adequate energy supplies
The World Bank is in the process of articulating a vision for an environmentally sustainable future for India (India 2030), and has projects in the pipeline to support the National Ganga River Basin Authority and industrial pollution management. Support to the sector includes:
Water:
Climate change could impact India more than most other countries, and its impact will most likely be felt first and foremost in the water sector. The World Bank has therefore piloted a new Drought Adaptation Initiative in Andhra Pradesh that will help farmers adapt to warmer and more drought-like conditions. An Integrated Coastal Zone Management Project that seeks to protect India's coastal areas while also ensuring the livelihoods of the people living along the coastline is in the pipeline. The Bank has also completed studies on groundwater resources and low carbon growth.
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Elementary Education:
Since 2001, India has brought some 20 million children into school under the worlds largest elementary education program the Sarva Shiksha Abhiyan (SSA). Many of Indias states are now approaching universal primary enrollment or have already achieved it. Since 2003, World Bank support has helped scale up the program, improve the quality of learning, and assess learning outcomes. World Bank evaluations and research have provided recommendations for improvements. The program is now focused on bringing the hardest-to-reach children into primary school, raising access to upper primary education, and improving retention.
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Skills:
Equally important is the building of skills among Indias rapidly rising work force, whose ranks are joined by some 8-9 million new entrants each year. Presently, nearly 44 % of Indias labor force is illiterate and only 17 % has secondary schooling. Moreover, the quality of most graduates is poor and employers offer very little upgrading of skills; only 16% of Indian manufacturers offer in-service training compared to over 90% in China. To help produce engineers of international standards, the World Bank has supported improvements in the quality of education in engineering institutes in 13 states. It is also supporting 400 Industrial Training Institutes (ITIs) to become centers of excellence in technical skills that are in demand. Much of this support is based on research conducted by the World Bank on improving the vocational education and training system for skill development in India.
Health:
The health sector in India presents a mixed picture. Despite continuous improvements in health indicators, progress is slow and has not matched the impressive gains in economic growth during the past decade. Inadequate access to effective and good quality health services for a large proportion of the population largely accounts for the slow improvement in health outcomes. To help India achieve the MDGs for health, the World Bank increasingly focuses on improving governance and accountability in
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the delivery of health services. Ongoing World Bank projects support national programs for disease control - such as kala azar, polio and malaria, HIV/AIDS, and TB. They also support child nutrition and reproductive and child health programs. Other projects are working to strengthen state-level systems for rural healthcare (Rajasthan, Tamil Nadu, Karnataka), as well as national programs for food and drug regulation, and disease surveillance. The Bank has previously successfully supported India in eliminating leprosy as a national health problem, and in bringing the WHOrecommended DOTS TB treatment to all districts in the country.
Safety Nets:
The global economic crisis has lent new urgency to strengthening safety nets for the poor and vulnerable. The World Bank is in the process of extending support to the Government of India for the Rastriya Swasthya Bima Yojana - or National Health Insurance Scheme - to expand and improve the effectiveness of health insurance for households below the poverty line. Once the project is completed, it is expected that the number of beneficiaries receiving treatment under the program would reach around half a million per annum.
Source: www.worldbank.org
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ANNEXURE
1. Are there objective ways of measuring political commitment? - Political action. - Social action
2. Looking forward to the next 10 years, what are your organisationss highest Priorities for accelerating progress towards sustainable development? - Effectively mainstreaming actions - Supporting green growth - Support for poverty reduction - Economic development.
3. What factors explain progress in implementation? Please rank in order of importance. - Use of integrated strategies - Generalized economic growth and prosperity - Investment in technical and institutional capacity - Financial support from international sources - Other; please specify:
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4. Has your organisation promoted integrated planning and decision making for Sustainable development? If so, under what title- NSDS - PRSP - Five Year Plan, - NCS or NEAP - Other
5. What are the main difficulties experienced in promoting integrated planning and decision-making? - Involving specific line ministries - Getting their buy-in to an integrated approach.
6. What five new and emerging challenges are likely to affect most significantly regional and/or international prospects for sustainable development in the coming decade? Please rank in order of importance. - Povertyconflict - food security - climate change - lack of awareness and - political commitment.
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DATA ANALYSE
Difficult of doing business in India in rank.
Poverty reduction in Pakistan, Bangladesh, India, Vietnam, and China related to growth.
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Development of country on education basis.
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CONCLUSION
The future of both Bretton Woods institutions remains uncertain. Both the IMF and World Bank escaped the efforts of the Republican U.S. Congress in the mid-1990s to sharply curtail and even eliminate both organizations. These agencies have been less successful in answering the charges from the left, as the IMF retains its demand for "structural adjustments" and the World Bank still favours funding for large, projectdriven funding. While both the IMF and the World Bank have instituted some reforms, they have been unable to appease the concerns of outraged environmentalists, labor unionists, and nationalists and advocates of indigenous peoples in the developing world. Still, as this essay has suggested, these two organizations are really the misguided target for the legitimate concerns people of all ideological stripes have had about the rapid pace of globalization in the past half century. It is likely this globalization would have occurred whether or not there had been a Bretton Woods conference, and it is all but certain it will continue in the future regardless of the policies pursued by the IMF and World Bank. While it is true that they have often been too driven by U.S. foreign policy concerns, in the end the influence of both institutions has been widely overstated. And despite their mistakes during the past half century, they have rarely been given credit for many of the little things they do well. For example, both institutions perform economic surveillance over most of the world's economy, a valuable task that no other international or private organization could perform with such skill. Both agencies also serve as a store of expert knowledge and wisdom for countries throughout the world that lack trained specialists. While neither the IMF nor the World Bank has met the lofty goals of their founders or wielded the nefarious influence charged by their critics, they have and should continue to play a small but important role in promoting prosperity and economic stability worldwide.
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REFERENCE
WEBSITES:
BOOKS:
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