IFC Development Goals (IDGs) Overview IDG3: FINANCIAL SERVICES The IFC Development Goals (IDGs) 83847 The IFC Development Goals (IDGs) are corporate-level development goals which IFC began testing in 2011. They were inspired by the Millennium Development Goals as a way to better integrate IFC’s results measurement with strategy. The IDGs are high-level targets for the incremental reach IFC aims to achieve through its investments and advisory services. IFC aims to use them to drive implementation of strategy and influence operational decision making, alongside volume targets. IFC’s contributions are counted as expected results at the time projects are committed or signed. In addition, IFC’s regular monitoring and evaluation system tracks the results materializing during project implementation. . IDG 3: Financial Services This IDG measures the expected increase in access to financial services for individuals and microenterprises (IDG 3a); and Small Medium Enterprises (SME) clients (IDG 3b) contributed by IFC’s Financial Markets (FM) & Access to Finance (A2F) projects. It also attempts to measure the increase in access to financial services for women owned-businesses or women. After two years of testing, IFC is moving this IDG out of test phase and into implementation starting July 1st, 2012. Incremental Reach and IFC’s contribution The increase is measured by number of outstanding loans, deposit accounts, insurance policies/clients insured, electronic payments and transactional accounts. The incremental reach of IFC clients is the additional reach expected in the 5 years post commitment to achieve a total reach (target) from the current reach (baseline). For greenfield projects, the timeline is 7 years post commitment. Target Target Increment Baseline To claim credit commensurate with the magnitude of IFC’s involvement with a client, IFC applies a contribution factor to the incremental reach. The contribution is a function of the type of intervention and IFC’s stake in the project and it is based on the latest financial statement available prior to commitment and other project data. Contribution Rules for Investments • IDG’s contribution is counted at the time of a project’s first commitment and tracked in IFC’s Development Outcome Tracking System (DOTS). • Aligned to the final use of IFC funding: • IFC’s Equity measured against total equity, IFC’s Corporate loans against total long-term debt. • If IFC’s funding is used for a specific purpose (i.e. expanding SME lending) contribution factor is prorated by relevant portfolio. • For direct transactions where funding is directly channeled to beneficiaries through investees (e.g. risk sharing facilities) the entire reach can be counted. The contribution factor reflects IFC’s total involvement with the client at the time of commitment (including outstanding amounts of prior investments). Equity ≥ 10%; 100% of incremental reach Loan/GT ≥ 20%; 100% of incremental reach Equity < 10%; prorate incremental reach Loan/GT < 20%; prorate incremental reach If project has Equity & Debt components → attributions are added up (100% limit) Contribution Rules for Advisory Services • Counted when the legal agreement is signed with the client • Must have clear demonstration of: • IFC’s link to the intervention • Client contribution to project, consistent with IFC’s pricing policy • Client services agreement in place (+ MOUs) Individual Firms (Stand alone AS to Financial Institutions) Total project cost defined to include in-kind, parallel, IFC, client and other contributions: • AS project cost ≥ $500,000; 50% of incremental reach • $100,000 ≤ AS project cost < $500,000; prorate incremental reach • AS project cost < $100,000; no attribution Financial Infrastructure (Credit Reporting and Collateral Registry) Set targets from the time of legal agreement signing up to 5-7 years after AS start • Credit Bureaus: 20% of number of inquiries in last year of reporting contribute towards new micro loans • Collateral Registries: 45% of number of registries contribute towards new SME loans provided through secured transactions IDG Basic Formula   -­‐ =   x   =   Project   Project   Project   Project   Project   Expected   Expected   Contribution   IDG   Baseline  FY12   Target  in  FY17   Increment   Factor   Contribution   -­‐   Indicators for Investment Services Indicators IDG 3a Micro/ IDG 3b SME Individuals Access to Finance: Outstanding Portfolio in # – SME X – Micro X – Leasing X – Housing Finance X – Agribusiness X X – EE/RE/Sustainability X X – Consumer Finance X – Student Loans X Access to Finance for Women: Outstanding Portfolio in # – Microfinance X – SME X Access to Financial Services: Deposits # X Access to Insurance and Pensions: Clients Reached – Individual X – Enterprise X Indicators for Advisory Services Products Indicators IDG 3a Micro/ IDG 3b SME Individuals Retail/Commercial – Microfinance – Number of micro loans outstanding (non-cumulating) X – Number of deposit accounts opened – Housing Finance – Number of outstanding loans X – Retail Payment – Number of non-cash retail transactions X Institutions – Value of non-cash retail payments (US$) – Insurance – Value of insurance contracts issued (US$) – Individual X – Enterprise X – SME Banking – Number of SME loans outstanding (non-cumulating) X – Agribusiness – Number of unique farmers reached (directly) X finance – Number of unique farmers reached by IFC’s partners/clients – Risk management – N/A X – GEM Access to – Number of outstanding loans X X Finance Financial Infrastructure – Credit Bureaus – Number of inquires received X – Collateral – Number of SMEs registered X Registries/Secured Transactions Definitions “Micro/Individual clients”: For IS/AS projects through financial institutions, micro/individual clients are defined as individual clients benefitting from financial products such as deposits, micro loans, insurance, payments, as well as Micro enterprises which are defined as businesses benefiting from commercial loan with amount at origination up to US$10,000 (which is a proxy for the World Bank firm size definition). For AS through financial infrastructure (credit bureaus), micro clients are defined further as working age individuals (15-64 years) that are able to establish a credit history within the relevant credit bureau/registry database. Micro loans provided through a positive inquiry with a credit bureau further assumes that 20% of total inquiries in the last year that the bureau is monitored, less any baseline inquiries, generate new micro loans 1. “Small and medium-size enterprises” (SMEs): For IS/AS projects through financial institutions, SMEs are defined as enterprises benefitting from financial products such as loans, insurance and payments. For loans, SMEs are considered small if their average loans at origination were between $10,000 and $100,000; and medium-size if between $100,000 and $1 million ($2 million in advanced countries)2. (This is a proxy for the World Bank firm size definition). For Advisory Services, through financial infrastructure such as secured transactions or collateral registries, SMEs are defined based on their definition in every country where IFC reports impacts. New loans secured by movable property granted to such firms assume a loan to a single enterprise. The number of these firms reached through collateral registries further assumes that 45 percent of registered firms are small or medium-size. (The percentage is much higher in low-income countries.) “Women Borrowers” is defined as companies that are: (a) ≥ 51% owned by woman/women; or (b)≥ 20% owned by woman/women; and have ≥ 1 woman as CEO or COO or President or Vice-President; and have ≥ 30% of the board of directors comprised of women (where a board exists). A fifth owned by a woman or women and have one woman as CEO or COO (president or vice president or where at least 30 percent of the board of directors is comprised of women (where boards exist). Data Sources For IS/AS through financial institutions: The project team, through the due diligence process and financial forecasts, estimates the expected micro and SME finance reach within 5 years from commitment with existing institutions (and within 7 years for Greenfield institutions). Data on beneficiaries reached by the project is tracked as part of IFC’s regular monitoring and evaluation activities. IFC also collects data annually from credit bureaus and collateral registries that IFC helped establish or improve. 1. The 20% assumption is based on data collected from the bureaus that have been established with IFC AS support, and report to IFC annually. “New micro loans” are calculated based on the total number of inquiries reported in the “last year” (within 7 years) from the start of credit bureau operations less any baseline number of inquiries, in the case of existing bureaus. The “start” of credit bureau operations is defined at the time the credit bureau has been established and the first inquiry received. 2. Advanced countries: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Estonia, Hungary, India, Korea, Republic of Latvia, Lithuania, Mexico, Morocco, Peru, Poland, Russian Federation, Slovak Republic, Slovakia, Slovenia, South Africa, Thailand, Tunisia, Turkey).