60328 Cr eat in g O pp Ort unit Y H i g H ligHts from IFC Annu Al RepoRt 2 0 0 7 Financial year 2007 was a remarkable one for IFC. We delivered strong, measurable development impact and continued to show how the private sector creates oppor- ifC's Board of Directors reaffirmed tunities in emerging markets--especially for the poor people who most need help. We also achieved the strongest financial position in our history. our five strategic pillars this year: IFC's market is evolving. Today, nearly two-thirds of our client firms are based in kk Assisting frontier markets, including IDA countries emerging markets, and there is wide acknowledgment that the private sector plays kk Building long-term relationships with local companies a critical role in addressing the needs of people in these countries. Many firms we kk Ensuring environmental and social sustainability invest in are expanding into other emerging markets: we finance more than 20 such kk Helping the private sector strengthen infrastructure, from ports and roads "South-South" transactions each year. to schools and hospitals kk Developing local financial markets We are also transforming IFC's operations. Today just over half our workforce is based in field offices, close to local clients. Beyond financing, we continue to We also stepped up our support of agribusiness, an industry that touches increase our advisory services, more and more of which lead to IFC investments or most of the world's poor people. are delivered alongside financing. This work allows us to provide comprehensive solutions to our clients' business needs. Our priority markets are what IFC calls the "frontier": countries eligible for The challenges in emerging markets drive IFC's strategy. Millions of people in interest-free, public sector loans from the World Bank's International Development smaller, less developed markets and conflict-affected countries have not yet shared Association as well as countries that have high risk ratings for private sector invest- in the benefits of growth. Poor infrastructure impairs such basic services as water, ment. The frontier also includes low-income or high-risk regions in middle-income electricity, and health care. Smaller businesses, often the major source of employ- countries, such as northeast Brazil and western China. ment, struggle to obtain financing and face burdensome regulations. Throughout the developing world, the environment, corporate governance, and social issues Measuring results is critical to understanding how well our strategy is work- pose challenges to a private sector seeking to become competitive and meet inter- ing. Our new tracking system gives insights into the number of people we are national standards. reaching. In 2006, for example, 4 million people received hospital treatment, 9.5 million customers received electricity, 5 million loans helped smaller businesses, and 40,000 entrepreneurs received training and advice through engagements In FY07, IFC invested over $8 billion for its own account supported by IFC. We are committed to achieving broader development impact as and mobilized nearly $4 billion more. In Sub-Saharan Africa we implement our strategy. our investments reached $1.4 billion, double the previous IFC can leverage the expertise of the larger World Bank Group to ensure that year's commitments. Investments also topped $1 billion for the foundations for private sector development are in place, with World Bank as- the first time in the Middle East and North Africa. About a sistance to governments on policy frameworks preceding advice and investments from IFC. The joint Doing Business report, for example, helps streamline business third of our investments and over half of advisory services regulations worldwide. spending went to frontier and IDA countries. IFC has made progress, and opportunities to do more are tremendous. We have the strategy, mandate, and resources to deliver greater impact. We also IFC is able to play a bigger role because we have made a strategic decision bring a commitment to measuring results. With ongoing support and cooperation to take a larger number of well-managed risks. We are increasing our equity and from stakeholders, partners, and Bank Group colleagues, IFC will continue to create quasi-equity investments, especially in markets where others are unable or reluctant opportunities for millions of people to escape poverty and improve their lives. to bear the risk. We are using innovative products, such as local currency financing that lets companies concentrate on building a business rather than worrying about exchange rate volatility. Lars H. Thunell, Executive Vice President and CEO Adapted from the IFC Annual Report, which includes the full text of this message and a letter from World Bank Group President Robert B. Zoellick. ifC At A glANCE Our MEMBEr COuNTrIES Our DEVELOPMENT IMPACT STRONG SHAREHOLDER SUPPORT sTrOnG sharehOLDer suppOrT DeveLOpMenT resuLTs By reGIOn 63% IFC United States 24% 54% East Asia and the Pacific 39% INVESTMENTS BY REGION Regional Department Industry Department 56% 48% Global <1% Middle East and North Africa Middle East and Sub-Saharan Africa 17% 50% 170 other North Africa 15% 57% Sub-Saharan Africa countries 43% 5 60% Latin America and the Caribbean Japan 6% 73% South Asia East Asia and Germany 5% the Pacific 11% 76% Europe and Central Asia Latin America and United Kingdom 5% the Caribbean 22% 78% World (multiregion) France 5% Russia 3% Italy 3% South Asia 13% India 3% Canada 3% 10 20 30 40 50 60 70 80 100 10 20 30 40 5 Percent Success Rate Percent Succe Europe and Central Asia 22% LarGesT COunTry expOsures (June 30, 2007) DOTS data as of June 30, 2007, for projects approved in calendar 1998-2003 FY07 EXPENDITURES BY BUSINESS LINESportfolio Global rank Country name percent ($ millions) INVESTMENTS BY INDUSTRY 1 russian Federation 2,238 9% Subnational Finance 1% Access to Finance 21% Agribusiness 7.6% Private Equity and Investment Funds 3% 2 India 2,117 8% IFC fosters sustainable private sector Value Addition Oil, Gas, Mining, to Firms 29% 3 China 1,680 7% and Chemicals 12% 4 Brazil 1,618 6% 5 Turkey 1,342 5% growth in developing countries. Global Financial 6 Mexico 1,228 5% Infrastructure 11.4% Markets 41% 7 Argentina 768 3% 8 Colombia 756 3% Health and Education 2.4% Business Enabling 9 Indonesia 743 3% Environment 21% Infrastructure 16% 10 Nigeria 684 3% Global Manufacturing 70 Environment and Social and Services 16.7% IFC Frontier Countries Sustainability 13% 60 Global Information and Other Active Client Countries Communication Technologies 4.9% Project Count 50 40 COMMITTED PORTFOLIO BY INDUSTRY Subnational Finance 1% Agribusiness 7% INVESTMENTS BY PRODUCT Private Equity and Investment Funds 4% 30 Oil, Gas, Mining, and Chemicals 11% Global Financial Markets 37% Risk Management 20 Loans* 68.7% Products <1% 10 Infrastructure 15% Guarantees 11.9% 0.26 to 3 10.1 to 20 50.1 to 80 Health and Education 2% Equity** 19.3% IFC Commitment Amount ($million Global Manufacturing and Services 21% Global Information and Communication Technologies 4% This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and anyother information shownon this map do not imply, on the part of The World Bank Group, any judgment on the legalstatus of any territory,or any endorsement or acceptance of such boundaries. STRONG CORRELATION: DeveLOpMenT resuLTs By InDusTry FINANCIAL PERFORMANCE FInanCIaL perFOrManCe anD AND DEVELOPMENT OUTCOME ST DeveLOpMenT OuTCOMe 63% IFC Pacific 39% Health and Education 99 Measuring additionality Performance Rating Excellent Industry Department Full standardization of indicators 48% Agribusiness DOTS Financial orth Africa Comparing vs. expectations 97 Satisfactory 50% Global Manufacturing and Services Reporting of aggregate results DOTS Partly Results inform strategy 57% STRONG CORRELATION: Private Equity and Investment Funds Launch 42 the Caribbean Unsatisfactory DOTS full portfolio coverage FINANCIAL PERFORMANCE STRONG CORRELATION: Global Information and Communication Technologies 63% cou AND DEVELOPMENT OUTCOME STRONG SHAREHOLDER SUPPORT 5 Evaluation of representative sample Unsatisfactory FINANCIAL PERFORMANCE 75% AND DEVELOPMENT OUTCOMEMining, and Chemicals Oil, Gas, STRONG SHAREHOLDER SUPPORT Evaluation framework Asia 10 20 30 40 50 60 70 80 90 100 Independent evaluation 78% Global Financial Markets 99 2003 2004 2006 United Going 2007 States 2005Development Outcome 24% Performance Rating ) 78% 99 Excellent Infrastructure % Rated High ForwardStates 24% United INVESTMENTS DOTS Financial Performance Rating Excellent 10 20 30 40 50 60 70 80 97 100 Satisfactory INVESTM DOTS Financial 97 DOTS data as of June 30, 2007, for projects approved Percent Success Rate Satisfactory 42 Partly in calendar 1998-2003 Middle East and Unsatisfactory Partly 170 other North Africa 15% 42 DOTS data as of June 30, 2007, for projects approved countries 43% Middle in calendar 1998-2003 5 Unsatisfactory 170 other North A Unsatisfactory countries 43% Japan 6% 5 Unsatisfactory 10 20 30 40 50 60 70 80 90 100 FY07 EXPENDITURES BY REGION6% Japan FY07 EXPE Germany 5% Development Outcome 70 80 90 100 10 20 30 40 50 60 SuSTAINABILITY 3000 16 % Rated High Germany 5% Latin America and Development Outcome World 14% United Kingdom 5% Europe and the Caribbean 22% % Rated High Central Asia 20% Latin America and V United Kingdom 5% Fy07 COMMITMenTs By 3% Russia Italy 3% France 5% 14 the Caribbean 22% CuMuLaTIve COMMITMenTs By 2500 CaTeGOry envIrOnMenTaL anD sOCIaL3% 3% Canada 3% IndiaRussia France 5% Italy 3% envIrOnMenTaL anD sOCIaL CaTeGOry Commitments number of Category* Commitments ($ millions) FY07 Investments in 12 number of India 3% investments Canada 3% Category* 2000 ($ billions) investments FY07 EXPENDITURES 4.7 REGION 132 a BY a 593.2 8 FY07 EXPENDITURES BY BUSINESS LINES renewable 10Energy Sub-Saharan Africa 23% FY07 EXPENDITURES BY REGION BY BUSINESS LINES FY07 EXPENDITURES($ billions) INVESTMENTS East Asia and B World 14% 27.9 Europe and 1,677 B1500 Net Worth 3,522.6 112 and Energy 8Efficiency: INVEST Access to Finance 21% the Pacific 19% Private Equity a C World 14%8.1 792 $450 million Central Asia 20% Europe and C 1,462.9 Value Addition 94 6 South Asia 6% Access to Finance 21% Oil, Ga P to Firms 29% Latin America and FI 14.1 Central Asia 20% 796 1000 Value Addition and Chem Middle East and the Caribbean 8% to Firms 29% FI Net Income ($ 2,640.9 millions) 85 North Africa 10% 4 n** 7.5 1,196 u** 2.0 299 500 Sub-Saharan 2 Infrastructure 11.4% Africa 23% *See category descriptions on p. 20. Visit IFC's Annual report on the Web--www.ifc.org/annualreport--for more Infras Sub-Saharan **N and u refer to projects committed before IFC began implementing Africa 23% COMMITTE Health and Education 2.4 East Asia and COMMITTED PORTFOLIO BY REGION information on sustainability, including 03Global 05 06 07 Initiative index. environmental policies and guidelines in 1993. the Pacific 19% East Asia and FY 98 99 00 01 02 a Business Enabling reporting 04 Health and Private E the Pacific 19% Environment 21% Infrastructure 16% Global 1% Business Enabling Global Manuf Middle East and Environment 21% Sub-Saharan Africa 11% and Service an South Asia 6% Infrastructure 16% North Africa 10% Latin America and Environment and Social Middle 6% South Asia East and the Caribbean 8% Sustainability 13% Latin America and Environment and Social North Africa 10% Middle East and the Caribbean 8% Sustainability 13% East Asia and North Africa 10% INVESTMENT POrTFOLIO the Pacific 14% Infrastruct 3 10.1 to 20 50.1 to 80 120 or For IFC's own account as of June 30, 2007: $25.4 billion greater COMMITTED PORTFOLIO BY INDUSTRY Latin America and COMMITTeD pOrTFOLIO By reGIOn COMMITTED PORTFOLIO BY REGION IFC Commitment Amount ($millions) COMMITTeD pOrTFOLIO By InDusTry the Caribbean 27% INVESTMENTS Health and Ed COMMITTED PORTFOLIO BY INDUSTRY Subnational Finance 1% Agribusiness 7% South Asia 10% COMMITTED PORTFOLIO BY REGION Private Equity and Investment Funds 4% Subnational Finance 1% INVEST Global 1% Agribusiness 7% Middle East and Oil, Gas, Mining, and Investment Funds 4% Private Equity North Africa 10% Sub-Saharan Africa 11% Global 1% and Chemicals 11% Global Financial Middle East and Oil, Gas, Mining, Risk Mana Markets 37% Europe and Central Asia 28% North Africa 10% Sub-Saharan Africa 11% and Chemicals 11% Global Financial Produ Markets 37% East Asia and the Pacific 14% East Asia and Infrastructure 15% the Pacific 14% Guarantees 11.9% Infrastructure 15% Latin America and Gua the Caribbean 27% Health and Education 2% Latin America and South Asia 10% the Caribbean 27% Health and Education 2% South Asia 10% Equity** Global Manufacturing and Services 21% Global Information and Europe and Central Asia 28% Global Manufacturing Communication Technologies 4% and Services 21% Global Information and Europe and Central Asia 28% Communication Technologies 4% Excellent Performance Ratin IN DOTS Financial 97 Satisfactory 42 Partly Unsatisfactory 170 other countries 43% 5 Unsatisfactory Japan 6% ifC At A glANCE 10 20 30 40 50 60 70 80 90 100 Development Outcome Germany 5% % Rated High Latin Am United Kingdom 5% the Cari STRONG CORRELATION: Italy 3% Russia 3% France 5% FINANCIAL PERFORMANCE Canada 3% India 3% STR FY07 INVESTMENTS FY07 ADVISOrY SErVICES AND DEVELOPMENT OUTCOME For IFC's own account as of June 30, 2007: $8.2 billion FY07 EXPENDITURES BY REGION FY07 EXPENDITURES BY BUSINESS LINES 99 expenDITures By BusIness LIne Performance Rating Excellent IN DOTS Financial By reGIOn World 14% 97 Satisfactory INVESTMENTS BY INVESTMENTS BY REGION REGION Europe and Central Asia 20% Access to Finance 21% Value Addition 42 Partly to Firms 29% Global <1% Global <1% Unsatisfactory 17 INVESTMENTS BY REGION Middle East and Middle East and Sub-Saharan Africa 17% Sub-Saharan Africa 17% countri North Africa 15% North Africa 15% 5 Unsatisfactory Global <1% Middle East and Sub-Saharan Africa 17% 10 20 30 40 50 60 70 80 90 100 North Africa 15% Sub-Saharan Africa 23% East Asia and Development Outcome East Asia and the Pacific 11% the Pacific 11% Asia and East % Rated High the Pacific 19% Business Enabling Latin America andLatin America and East Asia and Environment 21% the the Caribbean 22% Caribbean 22% Infrastructure 16% the Pacific 11% South Asia 6% Latin America and South Asia 13% South Asia 13% and Latin America Environment and Social the Caribbean 22% Middle East and the Caribbean 8% Sustainability 13% North Africa 10% South Asia 13% Europe and Europe and Central Asia 22% Central Asia 22% expenDITures By reGIOn BY REGION FY07 EXPENDITURES FY07 EXPEN Europe and Central Asia 22% By InDusTry COMMITTED PORTFOLIO BY INDUSTRY World 14% INVESTMENTS BY PORTFOLIO BY REGION INVESTMENTS COMMITTEDINDUSTRY BY INDUSTRY Subnational Finance 1% Europe and IN Agribusiness 7% Asia 20% Central Subnational Finance 1% Subnational Finance 1% Private Equity and Investment Funds 4% Valu Agribusiness 7.6%Agribusiness 7.6% Private Equity andPrivate Equity and Investment Funds 3%Global 1% Investment Funds 3% to Oil, Gas, Mining, INVESTMENTS BY INDUSTRY Middle East and Gas, Africa 10% Oil, Gas, Mining, Oil,North Mining, Sub-Saharan Africa 11% and Chemicals 11% Global Financial and and Chemicals 12% Chemicals 12% 1% Agribusiness 7.6% Subnational Finance Markets 37% Private Equity and Investment Funds 3% Oil, Gas, Mining, East Asia and and Chemicals 12% the Pacific 14% Sub-Saharan Global Financial Global Financial Infrastructure 15% Africa 23% Infrastructure 11.4% Infrastructure 11.4% Markets 41% Markets 41% East Asia and Latin America and the Pacific 19% Health and Education 2.4% Global Financial Health and Education 2.4% Caribbean 27% the Infrastructure 11.4% Markets 41% Health and Education 2% South Asia 10% South Asia 6% Health and Education 2.4% Global Manufacturing Global Manufacturing Latin America and and Services 16.7% Services 16.7% and Global Manufacturing Middle East and the Caribbean 8% and Services 21% North Africa 10% Global Information and Europe and Central Asia 28% Communication Technologies 4% Global Manufacturing Global Global Information and Information and Communication Technologies 4.9% Communication Technologies 4.9% and Services 16.7% IFC'S rEACH BY REGION Global Information and *Some amounts include regional shares of investments Communication Technologies 4.9% that are officially COMMITTED classified as global projects. See regional sections for details. COMMITTED PORTFOLIO reach indicators give an indication of the people touched by IFC's activities. Private Equ INVESTMENTS BY PRODUCT INVESTMENTS BY PRODUCT Global 1% Middle East and Oi InvesTMenTs, 2006 North Africa 10% Sub-Saharan Africa 11% and C PRODUCT INVESTMENTS BY Risk Management By prODuCT Hospital patients treated: 4 million Risk Management Products <1% Loans* 68.7% Loans* 68.7% Students educated: 350,000 Products <1% East Asia and Electricity customers served: 9.5 million the Pacific 14% Infrastructure Risk Management Products <1% Loans* 68.7% Water customers served: 15.3 million MSME loans: 5 million Guarantees 11.9%Guarantees 11.9% Latin America and New the Caribbean 27% phone connections: 53 million Health and Educa South Asia 10% Local purchases by IFC clients: $31 billion Guarantees 11.9% Community development spending by clients: $250 million Gl Equity** 19.3% Equity** 19.3% Europe and Central Asia 28% aDvIsOry servICes, 2002-2006 Equity** 19.3% Assisted 1,768 banks Assisted 40,000 entrepreneurs * Includes loan-type, quasi-equity products. ** Includes equity-type, quasi-equity products. IFC also mobilized $3.9 billion in FY07 2121 Pennsylvania Avenue, NW through structured finance, loan participations, Washington, DC 20433 uSA and parallel loans. Telephone 202-473-3800 www.ifc.org