Fias 2022 ANNUAL REVIEW THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES EXECUTIVE SUMMARY With support from: 2 FIAS 2022 Annual Review — Executive Summary New economic challenges require new approaches, so it is timely that fiscal year 2022 marked the beginning of a new five-year strategy cycle for the Facility for Investment Climate Advisory Services (FIAS) partnership. COVID-19, Russia’s invasion of Ukraine, and the devastating earthquake in Türkiye and Syria have delivered a series of economic aftershocks, including inflation, food shortages, and trade disruptions, falling especially hard on emerging markets and developing economies. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 3 Message from New economic challenges require new approaches, so it is timely that fiscal year 2022 marked the beginning of a new five-year strategy cycle for the Facility for Investment the Director Climate Advisory Services (FIAS) partnership. COVID-19, Russia’s invasion of Ukraine, and the devastating earthquake in Türkiye and Syria have delivered a series of economic aftershocks, including inflation, food shortages, and trade disruptions, falling especially hard on emerging markets and developing economies. This is the arena in which FIAS operates. IFC Advisory and Upstream Services supported by FIAS combine crisis response with strategic vision to help client countries build durable and inclusive private sector growth. The FIAS strategy for F22–26 combines continuity with innovation. FIAS continues to prioritize IDA, Sub- Saharan Africa, and fragile situations while testing and scaling new approaches: helping clients expand promising business sectors, advance opportunities for women, address climate change, and participate in the digital economy. Much of the project activity detailed in the FIAS 2022 Annual Review is new, so the report is inherently forward-looking. Yet the results already achieved in FY22 indicate that the strategy is well-positioned to achieve FIAS results targets. The need for FIAS-supported work has never been greater. The January 2023 edition of the World Bank Group’s Global Economic Prospects (GEP) projects a sharp drop- off in global growth—to 1.7 percent, the third weakest pace in nearly three decades. GEP also tracked investment in 60 emerging markets and developing economies from 1984 to 2020 and found a strong correlation between spurts in investment climate reform and investment growth. This is important confirmation of the value of work supported by FIAS. FIAS is a trust fund and a program, but first and foremost I view it as a partnership, developed with our clients and 12 Development Partner countries (and we expect additions to the roster of FIAS donors soon). Today’s economic turbulence underscores the value of a program that not only delivers much-needed services but enables us to pursue thematic work in gender, climate change, and digitalization, track and measure results, and pilot approaches in job creation, affordable housing, smallholder farming, and other areas that can inform longer-term IFC interventions. This is why we are both optimistic and grateful as we move through the five-year strategy cycle. Anastasia Gekis Director IFC Operations Management Department FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 4 FIAS 2022 Annual Review — Executive Summary Fiscal year 2022 (from July 1, 2021, through their deliverables; 58 percent have climate June 30, 2022) marked a significant transition components; and nearly one-third of the for the FIAS development partnership. As Core projects have both gender and climate the first year of the new five-year FY22–26 components. The makeup of new projects strategy cycle, the FIAS portfolio began coming online in FY23 give reason for a process of innovation and renewal. optimism that FIAS will reach its strategy cycle target of 80 percent of Core projects Roughly half of the IFC Advisory Services (IFC including gender and 70 percent including AS) projects supported by FIAS were new to climate change. the portfolio in FY22. Through a new allocation process, FIAS began to rapidly expand its FIAS is a key part of the IFC 3.0 Creating roster of projects with activities geared toward Markets agenda to mobilize private capital improving economic opportunity for women through what IFC calls a “continuum” of effort and addressing the economic challenges of that includes economy-wide advisory with climate change. The FIAS Program, part of deep analytics and reform work geared IFC’s Operations Management Department toward the most promising business sectors. (OMD), is shifting focus to generating concrete The Upstream approach aims to address the and measurable economic benefits, from shortage of bankable deals in many of the new domestic and foreign investment to world’s emerging markets and developing Introduction increased investment retention and facilitation economies (EMDEs) where IFC works— of financing. Despite the relative newness of particularly in the FIAS priority areas of IDA, much of the FIAS portfolio, strong results are Sub-Saharan Africa, and fragile conflict- coming in. Through the end of FY22, FIAS- affected situations (FCS). FIAS supports this supported projects generated $29.7 million agenda through projects aimed at “creating in investment and $22.3 million in value of markets through sector interventions” that financing facilitated (VFF). facilitate private sector investment in which IFC is a potential financing partner along with The new allocation process developed by private investors. the FIAS team and fielded at the midpoint of FY22 incentivizes IFC AS teams to include The effects of the COVID-19 pandemic gender and climate change elements in their continue to buffet the global economy, with project proposals. In several cases, proposed added pressures from the from the Russian projects that lacked these elements were invasion of Ukraine, inflation, and the threat of amended to include them following dialogue recession. These combined impacts are likely with the FIAS team. The new process is a to pose continuing challenges through much key tool helping FIAS deliver on its strategy of the strategy cycle. As client government cycle goal of doubling the percentage of priorities shift, this may slow progress in projects with gender and climate change implementing reforms. components as compared to IFC corporate- wide targets for Advisory Services. As the FIAS 2022 Annual Review details, IFC AS and FIAS are determined to meet At the end of the first year of the strategy these shifting challenges with agility, thanks cycle there are signs the approach is in no small part to the continuing support working. Nearly two-thirds of FIAS projects of the FIAS Development Partners. For this funded through the Core trust fund support, IFC and the FIAS Program team are include gender components as part of deeply grateful. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 5 Man working at a food cart in Istanbul, Türkiye. Photo: Said/Pexels FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 6 FIAS 2022 Annual Review — Executive Summary $29.7M in investment Main Achievements generated or retained via FIAS-supported projects $22.3M in value of financing facilitated via FIAS-supported projects 63% of FIAS Core and Milestones projects gender flagged 58% climate flagged; nearly a third have climate and gender elements FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 7 Lima Metro Line 2 station under construction. Photo: Yayo López/World Bank FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 8 FIAS 2022 Annual Review — Executive Summary The FIAS Program for FY22–26 supports the IFC 3.0 Creating Markets agenda while helping developing countries recover from pandemic impacts and gird against new challenges ranging from conflict to climate change. IFC Advisory Services supported by FIAS increasingly combine economy-wide reform work with sector-specific and firm-level advisory that can help move client country economies toward new investment and inclusive job creation. The new strategy cycle began on July 1, 2021—the start of FY22—with the FIAS Program team focused on building a new portfolio emphasizing investment generation and finance facilitation. The new projects will have clearer correlations to measurable economic benefits A New Era on the ground, such as new investment benefits in the areas of gender and inclusion and climate change mitigation and adaptation. for FIAS FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 9 FIAS Results at a Glance Many projects in the FIAS portfolio are too new to have begun producing beneficial impacts. Yet the shift in focus of the FIAS Program is still evident in the results generated in FY22 (July 1, 2021, to June 30, 2022). Investment generated and retained for FY22 represents modest progress toward the five-year FIAS target of $1 billion but, in combination with more recent results, gives reason for optimism that FIAS-supported projects are delivering: Emphasis on New Investment, Finance $29.7 $29,733,755 in new Investment New Investment generated investment generated and retained through FIAS-supported projects in Bosnia and Herzegovina and South Africa million $22.3 $22.3 million in value of financing Value of financing facilitated via the Global Housing Advisory Platform project and the Invest West Africa Regional Warehouse Receipts Program million 35 of 73 FIAS projects had ties to IFC or World World Bank, IFC synergies Bank policy and investment operations (28 IFC; 5 World Bank; 2 IFC and World Bank) Regulatory streamlining in Business cost savings Bosnia and Herzegovina generated $296,707 in direct compliance cost savings to private businesses in FY22 Markets and Competition Policy Project in Peru Reforms generated one investment climate reform in FY22, helping enact first economy-wide merger control law FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 10 FIAS 2022 Annual Review — Executive Summary Greater Efforts in Gender and Climate Change FIAS Core 63% of FY22 projects funded from FIAS Gender components Core (15 of 24 projects) include gender FY22 components, solid progress toward the FIAS strategy target of 80 percent 47% of all FIAS projects (34 of Projects All FIAS 73) include gender components, ahead of 40 percent target 58% of FIAS Core projects (14 of 24) Climate change components include climate change components, Core FIAS progressing toward the FIAS target of 70 percent 26% of all FIAS projects (19 of 73) Projects All FIAS include climate components; as older projects close and are replaced by new projects, FIAS anticipates meeting the 35 percent target 29% of FIAS Core projects (7 of 24) have Both gender and climate Core FIAS both gender and climate components; 11% of all portfolio projects (8 of 73) have both Continuity in FIAS Priorities: IDA, Africa, FCS, Streamlined Business Regulations Share of FIAS FY22 client-facing spending in IDA, Sub-Saharan Africa, FCS 58% IDA 44% 33% Sub-Saharan Africa FCS below target below target ahead of target Spending levels will more closely align with targets as the portfolio expands FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 11 FIAS Scorecard FY22–26 FY17–21 FY22–26 STRATEGY STRATEGIC THEME INDICATOR* CUMULATIVE FY22 CUMULATIVE TARGET Focus on Priority Clients % FIAS client-facing project implementation spend in IDA 1.  63% 58% 58% 70% countries % FIAS client-facing project implementation spend in Sub- Saharan Africa 46% 44% 44% 50% % FIAS client-facing project implementation spend in FCS 28% 33% 33% 25% Delivering Significant 2.  Number of Reforms supported by FIAS 204 1 1 200 Business Results % reforms supported by FIAS in IDA countries 58% 0% 0% 70% % reforms supported by FIAS in Sub-Saharan Africa 43% 0% 0% 50% % reforms supported by FIAS in FCS countries 24% 0% 0% 25% Client Satisfaction 3.  Overall client satisfaction: FIAS client survey results 94% 96% 96% 90% and Development Effectiveness Development Effectiveness: % FIAS-supported projects rated satisfactory for DE 72% 100% 100% 80% Measuring Impact 4.  Direct Compliance Cost Savings (USD) $196.2M $296,707 $296,707 $200M Investment Generated/Retained (USD) $999.1M $29,733,755 $29,733,755 $1B Measuring Impact 5.  Value of financing facilitated (USD) $22,300,000 $22,300,000 TBD (New Indicator) Measuring Impact 6.  Number of Jobs Pilot impact assessments TBD TBD 10–15 (Jobs) Leverage (New Indicators 7.  Number of IFC investment operations informed and enabled 106 30 30 for tracking and reporting) by FIAS Number of IBRD Development Policy and Investment operations informed by FIAS 28 7 7 Thematic Impact 8.  % projects gender flagged (FIAS Core) 63% 63% 80% (New indicators) % projects gender flagged (FIAS total program portfolio) 47% 47% 40% % projects with climate related activities (FIAS Core) 58% 58% 70% % projects with climate related activities (FIAS total program portfolio) 26% 26% 35% Blank boxes in FY17–21 indicate the value was not part of Scorecard for that cycle; in Target column, blank boxes indicate targets are not being calculated for IFC, IBRD linkages. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 12 FIAS 2022 Annual Review — Executive Summary In January 2022 FIAS launched a new allocation process designed to incentivize IFC project teams to step up their work in gender and climate change and to gear projects toward producing new private investment in client countries and enabling them to retain more investment. As of June 30, 2022, the end of FY22, about half the FIAS portfolio of 73 projects was less than two years old. The FIAS portfolio contains projects carried over from the FY17–21 cycle and new additions geared to the FY22–26 strategy. The share of the portfolio delivering sector- specific advisory will increase. As shown below, 14 projects deliver sector advisory exclusively (19 percent); 28 projects (38 percent) do so with enabling environment advisory. In all, 42 projects (58 percent) include sector-level work. ECONOMY-WIDE ENABLING SECTOR-LEVEL AND SECTOR-LEVEL Portfolio at a Glance PROJECT TYPE ENVIRONMENT ADVISORY ADVISORY TOTAL Client-facing 27 14 24 65 Projects Share of Client- 42% 22% 37% 100% facing Projects (%) Global Knowledge 4 0 4 8 Projects Share of Global Knowledge Projects 50% 0% 50% 100% (%) Total Projects 31 14 28 73 Share of Total 43% 19% 38% 100% Projects (%) In FY22–26, FIAS is transitioning to sector-oriented work aimed at helping client countries attract and retain investment leading to inclusive job creation. Sectors covered by FIAS-supported advisory include agriculture and agribusiness, tourism, manufacturing, finance, and infrastructure. As agreed under the new FIAS strategy, any IFC unit, working in areas ranging from manufacturing to finance to infrastructure to enabling environment advisory, is eligible to seek FIAS funding for project activity provided it can demonstrate adherence to the strategy. FIAS While FIAS moves in new directions it maintains its well-established priorities. These include support for projects in borrowing countries of the International Development Association (IDA)—countries that struggle with low per capita income levels (the limit was $1,255 in FY23) and require concessional funding. FIAS allocation decisions also prioritize countries in the Sub-Saharan Africa region, and countries in fragile and conflict-affected situations (FCS) facing high levels of institutional and social fragility, and violent conflict. Some FIAS client countries fall into all three of these categories. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 13 The longstanding priorities of the FIAS Program—work in IDA, Sub-Saharan Africa, and FCS, and a client- focused approach supported by deep regional and global analytics—remain intact as detailed below: Client-Facing Engagements Share of FIAS FY22 client-facing projects in IDA, Sub-Saharan Africa, FCS1 48% IDA Sub-Saharan Africa 48% 35% FCS Global Engagements • Of the 73 FIAS FY22 projects, 59 (81 percent) are specific to a country or set of countries; 14 (19 percent) are global projects • Of the 14 global projects, 8 are knowledge development products (KDPs) advancing knowledge and expertise in areas relevant to the FIAS agenda and applicable across the portfolio • 6 of the global projects are considered client-facing because they are developing activities to be rolled out in client countries; all will eventually support projects in Africa, for example: › The Global Food Safety Platform will benefit clients in IDA and Africa › The Sustainable Banking Network Global project will develop clients in IDA, Africa, and FCS › The Global Microfinance Initiative will develop projects in IDA and Africa Development Effectiveness, Client Satisfaction • 45 clients of FIAS-supported projects responded to the client satisfaction survey, 43 positively, or 96 percent (strategy cycle target: 90 percent) • During FY22, 4 of 4 closed projects received positive ratings for Development Effectiveness, or 100 percent (strategy cycle target: 80 percent): › Europe and Central Asia Agri-Finance Project; closed 2022, DE rating: Successful › Vietnam Private Sector Competitiveness; closed 2022, DE rating: Mostly Successful › Doing Business Mozambique; closed 2020, DE rating: Mostly Successful › ECA Green Banking Academy; closed 2021, DE rating: Mostly Successful 1 The three FIAS priority categories—IDA, Sub-Saharan Africa, and FCS—include many of the same countries. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 14 FIAS 2022 Annual Review — Executive Summary 100% 97% 96% 96% FIAS CLIENT SATISFACTION, FY17–22 100 91% 90% Share of positive client responses from FIAS supported projects 90 80 70 60 50 40 30 20 10 0 FY17 FY18 FY19 FY20 FY21 FY22 FIAS FY22 Expenditures • FIAS FY22 project expenditures totaled $11.7 million, with $10.4 million, or 89 percent, client-facing (FY21: 88 percent), $1.1 million, or 9 percent, for non-client facing global projects, and $204,052, or 2 percent, for program management and general and administrative costs • Of $10.4 million in FIAS FY22 client-facing expenditures, 58 percent supported IDA (target 70 percent); 44 percent supported Sub-Saharan Africa (target 50 percent); 33 percent supported FCS (target 25 percent) PERCENT OF FIAS FY22 FIAS EXPENDITURES 100% = $11.7 Million Client-Facing (89%) Non-Client Facing (11%) FIAS EXPENDITURE BY REGION, FY22 100% = $11.7 Million Sub-Saharan Africa (44%) Europe and Central Asia (19%) World (12%) East Asia and Pacific (7%) Middle East and North Africa (7%) Latin America and Caribbean (5%) South Asia (4%) FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 15 FIAS FY22–26 Fundraising (as of November 2022) • Through the first quarter of FY23 FIAS secured contributions of $137 million for FY22–26, 69 percent of the way to the five-year $200 million FIAS fundraising goal • $56.3 million (41 percent) was for FIAS Core, the trust fund account that enables the FIAS Program team to direct funding to priority areas (IDA, Sub-Saharan Africa, FCS, gender, climate change) • $80.9 million (59 percent) was raised for programmatic activity in which a donor or donors set priorities within the framework of the FIAS strategy • The ratio of about $4 out of every $10 going to FIAS Core is in line with the FY17–21 cycle • For FY22, FIAS gross receipts from donor contributions and the World Bank Group totaled $31.4 million, with just under half representing donor support for programmatic programs and 45 percent in combined donor and World Bank Group support for FIAS Core • The $11.7 million in direct project expenditures out of $31.4 million in gross receipts reflects the early stage of many of the projects in the developing FIAS FY22 portfolio FIAS Core Contributions $56,266,507 FIAS Programmatic Contributions $80,879,017 Total Combined Contributions $137,145,524 Funding Gap ($62,854,476) FY22 DONOR CONTRIBUTIONS Fundraising (GROSS RECEIPTS) 100% = $31.4 Million Programmatic (48%) Core (29%) World Bank Group (16%) Project Specific (6%) FIAS FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 16 FIAS 2022 Annual Review — Executive Summary SHARE OF SHARE OF IN US$ TOTAL IN US$ TOTAL CONTRIBUTIONS (SOURCES OF FUNDS) (FY 2017-21) (FY 2017-21) (FY 2022) (FY 2022) WORLD BANK CONTRIBUTIONS 38,661,111 26% 5,000,000 16% Core 35,000,000 24% 5,000,000 16% IFC [1] 28,661,111 19% 5,000,000 16% World Bank 10,000,000 7% - 0% DONOR CONTRIBUTIONS 109,336,867 74% 26,395,751 84% Core 24,640,465 17% 9,181,888 29% Programmatic 54,665,942 37% 15,219,839 48% Project Specific 30,030,459 20% 1,994,024 6% TOTAL CONTRIBUTIONS 147,997,978 100% 31,395,751 100% FY17–21 and FY22 Funding Less Trust Fund Administration Fees 4,853,929 1,220,086 TOTAL NET CONTRIBUTIONS 143,144,049 30,175,664 EXPENDITURES (USES OF FUNDS) [2] Staff Costs 62,728,065 48% 4,831,751 41% Consultants /Temporaries & Contractual services 48,612,622 37% 6,053,773 52% Operational Travel Costs 13,744,863 10% 474,982 4% Other expenses 6,715,699 5% 329,517 3% TOTAL EXPENDITURES 131,801,249 100% 11,690,024 100% 1 IFC’s annual contribution to the FIAS FY22-26 funding cycle is $5.0 million each year. FY2017-21 IFC contributions includes $3.6 Million in project specific contributions. 2 Includes contributions from all sources of funds that support the FIAS FY22-26 strategic agenda. FIAS FY22-26 funding cycle and Expenditure contributions and expenses (previously reported) have been adjusted for comparative purposes. FIAS FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 17 19 Projects in the FIAS FY22 Portfolio Include Climate Change Components, 8 of which also Deliver Change-Related Advisory Gender Advisory FIAS Support for Climate Most of the FIAS Projects Offering Climate-Related Advisory are New as of FY22 Special Topic: FIAS Allocation Process Incentivizes Teams to Include Climate & Gender in Project Design FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 18 FIAS 2022 Annual Review — Executive Summary FIAS Supporting Climate The Egypt Green Building project Most of the Change Projects aims to increase in EDGE-certified green buildings to improve resource utilization and projects in the IFC Advisory Services (IFC AS) help client reduce carbon footprints. Solid progress FIAS FY22 countries manage economic transformation while meeting climate change adaptation was achieved with the first two EDGE (Excellence in Design for Greater Efficiencies) portfolio that and mitigation challenges. IFC aims to include certifications in Egypt. include climate climate-related components in 35 percent change-related of its projects. The FIAS FY22–26 strategy seeks to double this to 70 percent in the The Central Europe Agricultural Finance Digital Platform project intends to de- work are new FIAS Core project portfolio. Launched in risk agri-finance, reduce transaction costs to IFC and FIAS FY22, the FIAS allocation process prioritizes projects with gender- and climate-related in agricultural lending, increase financial institution participation in the sector, and components. When gender and climate are enhance outreach to under-banked agri- not part of an initial project concept, the FIAS MSMEs and farmers. Program team engages with client-facing teams at the pipeline stage to add gender The UPSEZWA Nigeria (Upstream Special or climate elements, or both. Through FY22, Economic Zone West Africa) project 63 percent of FIAS Core projects (15 of 24) aims to eliminate market and government- include gender components; 58 percent regulatory failures in Nigeria through the (14 of 24) have climate components. Nearly implementation of competitive special one-third (7 of 24) contain both gender and economic-social zone (SEZ) legal, regulatory, climate components. and institutional frameworks. Most of the projects in the FIAS FY22 The Circular Economy Knowledge portfolio that include climate change-related Development Product project plans to work are new to IFC and FIAS. This reflects develop an evidence-based approach to the both the intensified prioritization of climate- circular economy that can leverage policy, related work across all IFC AS and the new regulatory, and other Upstream enablers for FIAS FY22–26 strategy for gender and industries and improve the competitiveness climate. Here are some project examples: of circular economy options. The Sustainable Banking and Finance The Scaling Biodiversity Finance project Network engages with banking regulators assesses options and partnerships for IFC and industry associations to increase and/or IFC clients to invest in opportunities use of international environmental, social, that directly contribute to biodiversity and governance (ESG) standards and co-benefits at a landscape level, thereby international best practices across emerging significantly scaling IFC’s potential market financial markets. biodiversity-positive impacts. The ECA Green Banking project is providing The Global Housing Advisory Upstream a one-stop-shop platform with materials, project seeks to increase clients’ business training, and information on integrating and design capacity to develop quality climate into development and growing projects with a view to creating affordable, investment in climate business lines. quality, inclusive, secure, sustainable, and healthy residential communities. FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 19 A project in Luxor, Egypt, creating short-term employment opportunities for unskilled and semi-skilled workers and providing access to basic infrastructure services. Photo: Dominic Chavez/World Bank FIAS FY22 Portfolio: Gender/Climate Summary # GENDER/ % GENDER/ # GENDER % GENDER TARGET # CLIMATE % CLIMATE TARGET CLIMATE CLIMATE Core (24 projects) 15 63% 80% 14 58% 70% 7 29% All (73 projects) 34 47% 40% 19 26% 35% 8 11% FIAS FY22 Climate-Tagged Projects Responsible Financial Inclusion and Innovation * Central-America Sustainable Banking Initiative * Global Housing Advisory Platform Housing for Pakistan Initiative * Implementation (Child) * Global Housing Microfinance Initiative * Sustainable Banking Network Global * Egypt Textile Value Chain Project Scaling Biodiversity Finance * CEU Agriculture Finance Digital Platform Colombia Productivity and Jobs Egypt Green Building SOE and State in the Economy * SL Climate Smart Agri Finance * Gender-Inclusive Infrastructure Circular Economy Knowledge & Natural Resources * Development Product * UPSEZWA Nigeria * Sustainable Infrastructure of the Future Platform * Colombia Productivity Advisory to Axis Bank on Climate and ESG * Projects listed in orange text with * are funded through FIAS Core FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 20 FIAS 2022 Annual Review — Executive Summary As the FIAS partnership enters a new five-year strategy cycle, the focus is on recovering and rebuilding from the economic devastation caused by the COVID-19 pandemic. 73 FIAS FY22 Portfolio Overview of the Portfolio As of June 30, 2022, the end of FY22, the FIAS portfolio consisted of 73 projects, of projects which 65 were client-facing (59 country- and region-specific; 6 global platforms with client-facing components); 8 were global projects spanning knowledge, product, and of which… program development. 65 Among the 59 projects focused on country and regions, 27 benefit IDA countries, 26 prioritize the Sub-Saharan Africa countries, projects while 23 are concentrated in FCS. More than half of the projects in priority areas Operational help single countries; the others work in are client-facing and… regions which include IDA, FCS, and/or Africa countries, such as FIAS-supported work in the 31 Organization for the Harmonization of Business Law in Africa (OHADA) and the Women, Business and the Law — Africa Initiative. projects The table below provides a breakdown of the 73 FIAS-supported projects across the full spectrum of Advisory Services: Enabling environment advisory, sector-level advisory, Highlights benefit IDA and interventions targeting both. ECONOMY- WIDE AND ENABLING SECTOR-LEVEL SECTOR-LEVEL PROJECT TYPE ENVIRONMENT ADVISORY ADVISORY TOTAL Client-facing Projects 27 14 24 65 Share of Client-facing Projects (%) 42% 22% 37% 100% Global Projects 4 0 4 8 Share of Global Projects (%) 50% 0% 50% 100% Total Projects 31 14 28 73 Share of Total Projects (%) 43% 19% 38% 100% FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 21 FIAS Strategy Emphasizing portfolio produced 1 reform. The Markets Investment Generation, Retention and Competition Policy project in Peru helped the government enact the country’s As a key financial source for IFC AS and the first economy-wide merger control law and IFC 3.0 Creating Markets agenda, FIAS is related regulations. emphasizing projects with the potential to help clients attract and retain greater private Several factors contributed to the sector investment. The IFC Monitoring & disappointing reform results in FY22. Evaluation (M&E) team helps evaluate project Significant turnover in the FIAS portfolio proposals seeking FIAS funding support, meant that about half the portfolio is less analyzing their potential to make good on their than two years old; close to half is new as targeted results for investment generation. of FY22; these projects were too new to be M&E also plays a key post-factor role in producing reforms, which generally involve validating the results claimed by project drafting and passage of legislation and teams, applying a rigorous methodology that follow-up evaluation to ensure adequate determines how much new and retained reform implementation. Two years of investment can be reliably attributed to the pandemic-related business closures and FIAS-supported work. As a result of this travel restrictions, as well as changes in conservative approach, FIAS is reporting policy priorities in client governments, significantly less investment generated and brought reform activity in older FIAS projects retained for FY22 than the Program team to a temporary halt. Still other projects in anticipates will eventually be validated. Even the portfolio are closing in on completion so, the results to date are considerable: and have already been credited with the reforms they set out to achieve. In addition • The Subnational Investment Climate project to these factors, two months into FY22 the in Bosnia and Herzegovina generated World Bank Group decided to discontinue $3,587,651 in new investment in FY22. the Doing Business report following the discovery of irregularities in the DB reports • The South Africa Private Sector for 2018 and 2020. This decision, and the Competitiveness project generated uncertainty that had hovered over Doing $26,146,104, bringing the total investment Business for the two years leading up to it, generated in FY22 by FIAS-supported constrained IFC-supported reform work projects to $29,733,755. geared toward the Doing Business indicators in areas such as starting a business, getting • The Global Housing Advisory Platform electricity, and taxation. Implementation project recorded $20,400,000 in value of financing The M&E team continues to work with facilitated (VFF); Invest West Africa client-facing teams on new or revised reform Regional Warehouse Receipts categories to replace the indicator-based recorded $1,900,000 VFF. reforms linked to Doing Business. • FIAS-supported regulatory streamlining Amid New Initiatives, FIAS in Bosnia and Herzegovina and Maintains Focus on IDA, Kosovo generated $296,707 in direct Africa, FCS compliance cost savings to private businesses in FY22. The FIAS FY22–26 strategy combines innovation with continuity. The shift toward more sector-focused advisory, support FIAS Reform Activity for IFC 3.0 Creating Markets Advisory, Lagged in FY22 emphasis on investment generation and retention, and procedures to ensure strategic Over the previous two strategy cycles, FIAS- alignment to the FIAS Scorecard results, supported projects generated an average including gender and climate, are among the of 55 reforms per year; in FY22, the FIAS innovations in the new strategy cycle. FIAS FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES 22 FIAS 2022 Annual Review — Executive Summary continues to maintain its prioritization of IFC owned businesses and provide advice to AS geared toward IDA borrowing countries, women-led businesses. Despite political Sub-Saharan Africa, and FCS. This work instability and project activity delays during proceeds amid highly volatile political and FY22, the project team completed studies security circumstances and in economies examining potential in the textile sector that faced serious obstacles to attracting and the cotton and meat value chains and new investment even before the onset of developed marketing plans relating to these the COVID-19 pandemic. Below are some and other products for use by API Mali, the examples of this highly challenging—and country’s investment promotion agency. potentially rewarding—FIAS-supported work. Africa Leasing Seeks to Build New OHADA Strengthening Credit Leasing Market Infrastructure for MSME The project aims to build the foundation for a Growth Program future viable leasing market by enhancing the This is a five-year advisory services markets legal and regulatory framework in Burkina and enabling regional environment program Faso, Cameroon, Côte d’Ivoire, and Gabon. to promote access to credit for MSMEs and The project will introduce knowledge-based women-owned businesses in four member market tools in collaboration with business states of OHADA: Burkina Faso, Côte associations and leasing stakeholders to train d’Ivoire, the Democratic Republic of the and improve skills and product expertise. Congo, and Gabon. The program focuses At the policy/macro level, the program will on responding to economic pressures support improvements in the national legal created by the COVID-19 pandemic. The and regulatory environment for leasing project is expected to trigger significant in two of the four program countries to market movement by introducing and support future Upstream potential. At the scaling movable asset-based lending and industry level, the program team will engage implementing the provisions of the recently with relevant leasing stakeholders on the adopted OHADA Insolvency Law to help ground (business associations, government counteract COVID-19-induced bankruptcies officials) to educate leasing practitioners and and unemployment. It seeks to enhance the introduce transaction related market tools. A business enabling environment, optimize kick-off mission took place in each country, usage of the digital credit infrastructure and the team delivered country-specific (credit reporting systems, secured national leasing market studies, serving as transaction and collateral registry, and the basis for the national leasing action plan. insolvency regimes), and encourage product innovation. In June 2022, the scope of the Strengthening the Mango Supply project was expanded to include 17 other Chain and Advancing in Senegal’s OHADA member states. Agribusiness Sector Mali IC4 Project Proceeds Amid Mangos are emblematic of Senegal and Political Turmoil contribute to 15 percent of the country’s expanding horticultural exports, employing The Mali Investment Climate Phase 4 20,000 people and generating about $6.6 Economy-Wide project aims to support million (4 billion CFA) annually. During eight government institutions in attracting private weeks of the year, Senegal is the lone investment that will create jobs. Through country producing mangos, and its relative studies, workshops, and advisory services to proximity to Europe makes Senegalese API Mali, the investment promotion agency, mangos an attractive option for European the project is working to build a pipeline of buyers. However, fruit fly infestation 27 new private investment commitments in poses a major challenge, rendering the priority sectors, including agribusiness and mangos inedible and leading European energy. An operational single window for phytosanitary inspectors to reject entire women will help in the creation of women- container loads of the fruit. IFC Advisory FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES FIAS 2022 Annual Review — Executive Summary 23 Services, with FIAS support, has worked objective of the FIAS-supported project is to with counterparts in Senegal to address expand access to finance in the agricultural this persistent problem. To date, the project sector in Zimbabwe by supporting the has recommended seven procedures, development of a regulated warehouse standards, or practices that have helped receipt system (WRS). In FY22, the team 52 agricultural-related businesses and supported the launch of the Zimbabwe organizations make changes which Mercantile Exchange to facilitate the trading improved their competitiveness and of warehouse receipts of agricultural efficiency. Through FY22, the project commodities. However, the COVID-19 reached 6,265 farmers, helped secure and pandemic continued to have negative improve their revenue, and provided 16 impacts on project implementation, namely: investor or private partnership leads to IFC delaying stakeholder awareness creation on Upstream and Investment Services teams. WRS through regional workshops, delaying The Upstream-tagged project is well on capacity building/training of stakeholders, its way to meeting and exceeding its $19 and delaying a benchmarking tour of million investment generated target. An stakeholders to selected countries. investor survey organized by the project team received responses from 17 firms that Women, Business and the Law benefited from IFC technical assistance. Advisory Initiative for Africa Piloting The survey found that total investment Gender Reform Implementation realized by these companies since 2018 was more than $12 million. Access to the EU The Women, Business and the Law (WBL) market was essential to securing additional Advisory Initiative is expanding the support investment commitments in industrial for gender equality throughout Africa by mango plantations. Additionally, a digital increasing the participation of women in the application called Commango, set up in 2018 economy. The project aims to achieve this with IFC support, continues to contribute to goal by co-designing gender-neutral laws the growth in Senegal’s mango sector. with the governments. The FIAS-supported projects for piloting reform implementation Zimbabwe Warehouse Receipt are ongoing in Côte d’Ivoire and Rwanda, System Opening Doors to whereas preparatory client engagement is in progress in Gabon, Mauritania, Senegal, Agricultural Credit Sierra Leone, Somalia, and Togo. The work In Zimbabwe the agricultural sector is through World Bank lending operations the largest economic sector. Thus, the is ongoing in Cameroon, Chad, Senegal, success of the sector is vital. Unfortunately, Sierra Leone, and Uganda. productivity growth is constrained by several financial factors. The overall FIAS—THE FACILITY FOR INVESTMENT CLIMATE ADVISORY SERVICES About the Facility for Investment Climate Advisory Services (FIAS): Through the FIAS program, the World Bank Group and Development Partners facilitate investment climate and sector reforms in emerging markets and development economies (EMDEs) to foster open, productive, and competitive markets and to unlock sustainable private investments in sectors that contribute to growth and poverty reduction. The FIAS Program is managed by the International Finance Corporation (IFC), a member of the World Bank Group, and implemented by IFC Advisory Services teams. For more information, visit https://www.thefias.info.