IFC Advisory Services in the Pacific: Experience and Outcomes 1990-2010 In Partnership With: Table of Contents Executive Summary......................................................................................................................................................................2 Investment Climate - Creating Regulatory Conditions for Private Sector Growth........................................................6 Creating a Foundation for Reform .................................................................................................................. 6 Facilitating Doing Business for Small and Medium-sized Enterprises............................... 7 Tourism and Fisheries - Supporting Business in Key Sectors.................................................. 13 Tourism: A Vital Sector in the Pacific Islands Region .................................................................... 15 Adding Value to the Fisheries Sector .......................................................................................................... 17 Access to Finance – Addressing the Finance Gap in the Pacific Region .................... 19 Expanding Micro and Small to Mediums-sized Enterprise’s Access to Finance ....20 Strengthening Financial Service Providers and Reforming Financial Markets Infrastructure..................................................................................................................................................................... 21 IFC Investments Increase Access to Finance............................................................................................23 Infrastructure – Connecting People to Markets. .................................................................................... 24 IFC Supports Transport in PNG and Fiji....................................................................................................... 24 Catalytic Impacts. ........................................................................................................................................................... 25 Looking Forward.......................................................................................................................................................................... 27 List of Tables and Graphs Table 1. Key Indicators and Results 2006–2010 Table 2. Impact of the World Hotel Link System in Samoa, Fiji, Vanuatu, TimoLeste, and the Solomon Islands Graph 1. Percentage of Population with Access to Financial Services in Some Pacific Countries and Other Low Income Countries Note 1. All currency is expressed in USD, unless stated otherwise. 2. No figures have been adjusted for present values. 3. All macro-economic data have been sourced from an amalgam of Asian Development Outlook (various publications since 1996); CIA World Fact Book (various publications since 1990); World Development Indicators September 2009; Ministry of Foreign Affairs and Trade, New Zealand October 2009 (and earlier years); Department of Foreign Affairs and Trade, Australia June 2010 (and earlier years); and United Nations Economic and Social Statistics 2000–2010. 3 IFC Advisory Services In The pacific Executive Summary Introductioni with the 52 percent increase in the population growth rate from 5.6 million in 1990 to 8.5 million in 2010, the creation of sustainable employment opportunities for young people Since 1980, IFC has been instrumental in fostering sustainable is crucial. The fastest growth in 2010 is in the Solomon economic growth by financing private sector investment, Islands and Papua New Guinea, at 82 percent and 59 percent advising businesses and governments, mobilizing capital, and respectively, where urbanization is also most pronounced, managing assets in the Pacific region. IFC’s Pacific member thereby creating additional issues related to law and order and countries recognize the valuable role that the private sector poverty levels for both countries. plays in creating job opportunities, generating tax revenues, and expanding services. They are committed to working with Governments’ efforts to address these challenges have been IFC to improve lives, especially for the people who most need generally mixed, mainly due to periods of political instability the benefits of such growth. that have manifested into periods of lawlessness. Inadequate Although the region presents numerous challenges for private policy formulation processes, corruption, and poor service sector development, the Pacific islands have experienced delivery are also evident. Furthermore, many countries have steady economic growth over the last twenty years. The overly complex and antiquated legislative frameworks with pace of growth was slower through the first decade, showing regulatory laws dating back to the colonial era in the 1960s marked improvement from 2000 to 2010. Taken as a whole, or 1970s. In recent times, serious and often violent outbreaks the Gross Domestic Product (by dollar value) grew 2.86 of conflict have occurred in several Pacific states including times on average across the region, with smaller countries, Timor-Leste, the Solomon Islands, Tonga, and Papua New excluding Papua New Guinea and Fiji, growing faster, at 3.57 Guinea. Ethnic conflict and dissatisfaction with the slow pace times on average. of political and economic reform are among the underlying causes of tension. In all countries except Papua New Guinea, the Gross Domestic Product per capita improved decade after decade; however, large discrepancies remain today. In 2010, Papua New Guinea, together with Kiribati and the Solomon Islands, IFC’s Response has the lowest Gross Domestic Product levels per capita (averaging $1,366) while Palau has the highest ($8,911). 1990-2005. Since 1990, Advisory Services has been the Meanwhile, economic growth has been strong in recent years cornerstone of IFC’s engagement in the Pacific. Donor funds in Timor-Leste, allowing the government to direct funds from the governments of Japan, Australia, and New Zealand to address critical infrastructure and social needs; however, have supported IFC Advisory Services operations. private sector investment levels remain poor, and the country remains one of the most vulnerable of the Pacific nations. During this period, IFC primarily helped businesses in the region obtain funds from commercial banks to start or expand their operations. These projects are known as funded projects. In these instances, IFC helped clients determine the The Challenge cost of the project, often working with them to design their business plan and funding proposal as well as assess which In the Pacific, private sector growth is constrained by small, bank could provide the best deal. IFC would then work with narrowly based economies, a lack of infrastructure linking the client and the commercial bank to structure the project isolated communities to market hubs, and a high degree of in order to help generate the necessary finances, which were informality. Economies are dominated by the agricultural, largely debt finances. tourism, and extractive industries sectors, and the islands’ small size, remoteness, and low population density— Several projects that requested IFC’s help in sourcing funds approximately 10 million people spread across an area twice were classified as first requiring IFC’s technical assistance to the size of continental Europe—present serious investment strengthen and streamline their operations before seeking challenges and high transaction costs. In the Melanesian additional funds. IFC’s assistance improved operations, re- countries in particular, many businesses operate unregistered focused goals to achieve more productive activity, and—in and transactions are often based on trust and relationships some cases—provided necessary information for the business rather than formal legal arrangements. to move into exporting. Often this work saved jobs by preventing companies from closing down and prepared them Given the relatively small private sectors in all of the countries, for subsequent growth or improved processes. employment opportunities are limited, particularly for youth. In 2010, the average age for a Pacific Islander is 23.5 years; During this period, IFC also expanded its regional presence 4 IFC Advisory Services In The pacific by opening offices in Papua New Guinea and Timor-Leste. Results Summary: Four Key Areas Job creation and the amount of funding raised were the central modes of measuring project performance. Overall progress. During the last 20 years, IFC’s successes have paralleled the steady economic growth experienced by From 1995 onwards, the Investment Climate Advisory the region. IFC’s performance in the region from 1990 to Services branch of IFC initiated work with governments 2010 is summarized in two distinct phases, 1990-2005 and throughout the Pacific to improve investment policy and 2006-2010. support agencies tasked with attracting foreign investment. Investment Climate Advisory Services is a joint initiative 1990-2005. During this period, IFC’s assistance helped of IFC, the World Bank, and the Multilateral Investment create and save 10,246 jobs in 449 businesses spread across Guarantee Agency that assists governments of developing Fiji, Papua New Guinea, the Solomon Islands, Tonga, countries and transition economies in reforming their Vanuatu, Samoa, Kiribati, Timor-Leste, the Marshall Islands, business environments, with an emphasis on regulatory and the Federated States of Micronesia. This result exceeded simplification and investment generation. In the Pacific the documented target of 4,580 by 124 percent. region, the Investment Climate department was under IFC’s umbrella, with the governments of Australia and New From 1990 to 2005, IFC completed 195 projects costing Zealand providing the core donor funding. a total of $129.5 million, raising $95.17 million in funds from local financial institutions. Removing the distortion 2006-2010. In seeking to enhance its development impact of one very large project in Fiji, the average project cost was and extend its reach, IFC revised its strategic approach $544,000 while the average amount of funds raised from and program structure in 2006. From direct firm-level commercial banks was $393,000. No fund-raising projects interventions, IFC shifted to a multi-country and multi- were completed in Palau or Timor-Leste, whereas two were product approach focused on core program areas. Leveraging completed in Niue and the Cook Islands at the request of a the work the Investment Climate team has been doing, IFC donor (New Zealand). broadened its mandate to work with government partners to promote private sector reform, particularly to improve IFC also provided advisory services to 369 projects covering the region’s investment climate, access to finance, and Fiji, Papua New Guinea, the Solomon Islands, Tonga, infrastructure service delivery. Vanuatu, Samoa, Kiribati, Timor-Leste, the Marshall Islands, Palau, and the Federated States of Micronesia, including 15 IFC is currently working on fewer—but bigger—projects regional projects. in comparison to the past. All of the various arms of IFC’s operations have been seamlessly integrated into a single In summary, for a donor investment of $1.5 million each year team, including IFC Advisory Services in Public Private for 15 years, IFC obtained funds from commercial banks for Partnerships, which focuses on the infrastructure sector. 13 projects and provided assistance to 24 advisory projects, Monitoring and evaluation of project operations and creating or saving an estimated 683 jobs each year. Each job outcomes have been enhanced, and the development impacts cost approximately $2,500. IFC employed, on average, fewer of all IFC projects are more effectively measured. In addition, than 10 staff members to achieve these results, with fewer IFC Investment Services has significantly scaled up efforts; in than five staff members working in the field. doing so, the team has sought to leverage the networks and achievements of IFC Advisory Services while increasingly bringing Investment Services to bear to help catalyze a private sector response. Where possible, IFC Advisory Services maintains the capacity to deliver firm-level assistance where investment linkages exist. For these reasons, the following report also captures the transformational impact IFC’s investments have had to date. IFC Advisory Services In The pacific 5 2006-2010. The table below shows the key indicators and corresponding results for the period of 2006-2010. Table 1. Key Indicators and Results 2006–2010 Results Results Results for Cumulative Overall Project Indicators Calendar Year Calendar Year 2010 Results Target 2006 to 2008 2009 (Jan - June) Number of participants in workshops, training events, 561 2,159 1618 4,338 2911 seminars, conferences, etc. Percentage of women participants in workshops, 35% 44% 27% 37% 43% training events, seminars, conferences, etc. Number of entities implementing recommended 58 42 13 113 113 changes Number of recommended laws / regulations / 2 6 1 9 51 amendments / codes enacted Number of recommended procedures / policies / practices / standards that were 8 48 14 70 111 improved / eliminated Value of aggregate private sector savings from 0 430,600 25,883 456,483 7,564,000 recommended changes (US$) Value of funds released 229,505 89,000 414,146 732,651 1,250,000 through ADR (US$) Value of all loans disbursed 4,049,330 3,623,289 2,347,003 10,019,622 16,983,799 Value of IFC financing facilitated by advisory 0 0 2,950,000 2,950,000 15,000,000 services (US$) Four Key Areas. To further showcase IFC’s work, the •• Nine new laws/regulations/amendments/codes were following sections illustrate IFC’s results according to IFC’s enacted in Papua New Guinea, the Solomon Islands, four focus areas; the investment climate, tourism and fisheries, Timor-Leste, Tonga, and Vanuatu as a result of IFC’s access to finance, and infrastructure service delivery: intervention over the last five years. •• The creation of a public private dialogue group in Timor- 1. Investment Climate—Creating the Regulatory Leste resulted in the establishment of a Chamber of Conditions for Private Sector Growth Commerce and subsequent improvement of the dialogue between the private sector and the government. 34 significant reforms have been achieved relating to •• •• 71 cases were successfully settled through alternative dis- business entry, business operations, investment policy pute resolution and 19 mediators have been trained in and promotion, alternative dispute resolution, and pub- Tonga and Vanuatu since the beginning of 2009, with lic private dialogue mechanisms since counting began in a significant number of cases expected to be settled in January 2009. The Pacific team has generated the most Papua New Guinea by calendar year end. The alterna- significant reforms across IFC in the East Asia Pacific tive dispute resolution process reduces the time to settle region to date. disputes, releasing an estimated $700,000 in Tonga. 6 IFC Advisory Services In The pacific 2. Tourism and Fisheries—Supporting Businesses in 4.Infrastructure—Connecting People to Markets Key Sectors •• Between 1990 and 2005, IFC helped obtain funds from •• Between 1990 and 2005, IFC helped to obtain funds commercial banks for four infrastructure projects. from commercial banks for 41 tourism projects and pro- •• In total, IFC assisted in sourcing $3.61 million in funds vided advisory assistance to 72 tourism projects. from commercial banks for infrastructure projects be- •• In total, IFC obtain $46.29 million in funds from com- tween 1990 and 2005. mercial banks for tourism projects between 1990 and •• IFC served as the lead advisor on the successful public- 2005. private partnership between the government of Samoa •• Between 1990 and 2005, IFC helped source funds from and Virgin Airlines, which established a new national commercial banks for 78 fisheries projects and provided airline, Polynesian Blue, and restructured the existing advisory assistance to 42 projects. flagship carrier. Figures suggest that more than 2,000 new jobs have been created as a result—a significant fig- •• In total, IFC assisted in obtaining $8.46 million in ure in a country with a population of 180,000. funds from commercial banks for fisheries projects be- tween 1990 and 2005. •• IFC’s $100 million in financing to Digicel Lim- ited in Papua New Guinea has helped to increase •• In 2010, IFC assisted three larger hotels in Samoa to mobile phone penetration rates to 18 percent in fi- access financing from banks for the rebuilding of their nancial year 2009 from 3 percent before Digicel en- hotels following the September tsunami. tered the market in 2006. In Papua New Guinea, •• Today, more than 400 businesses are registered on the more than 3.5 million people now have access to World Hotel Link portal for Fiji, Samoa, Vanuatu, mobile phones, up from just 1.2 million in 2007. Timor-Leste, and the Solomon Islands. The revenues for local accommodations exceed $500,000 in Vanuatu. Donor Funding 3. Access to Finance—Addressing the Financial Gap Funding for IFC Advisory Services over the past two decades in the Pacific Region has consistently included contributions from Japan, Australia, •• Between 1990 and 2005, IFC helped obtain funds from and New Zealand. Others have included Canada, Asian commercial banks for seven financial market projects Development Bank, Samoa, Fiji, Kiribati, and Palau. and provided advisory assistance to 65 financial market projects. Funding for IFC Advisory Services totaled $42.68 million from 1990 to 2010, of which $8.64 million came from the •• In total, IFC assisted in sourcing $12.68 million in government of Japan. Japan has contributed $500,000 funds from commercial banks for financial market proj- towards Papua New Guinea Microfinance Limited. ects between 1990 and 2005. •• $10 million in additional loans have been provided to microfinance clients since June 2008 due to an IFC- supported intervention in Papua New Guinea. Investment Climate - Creating Regulatory Conditions for Private Sector Growth The Challenge 1990 to 2005, with the support of the Australian and New Zealand governments, IFC’s work in this area involved Unnecessarily complicated and burdensome regulatory supporting governments to improve investment policy and environments compound the difficulties of doing business in agencies tasked with attracting foreign investment. In the the Pacific islands. The challenge for IFC Advisory Services post-2005 period, the Japanese government became a donor is to assist countries to improve their business regulatory partner in the program. environments to encourage private sector development, especially at the small and medium-size enterprise level, which will lead to broad-based employment and income growth. Results Highlights The World Bank Group’s Doing Business Report has helped create an impetus for regulatory reform in the Pacific Islands •• 34 significant reforms relating to business entry, business by measuring the ease of doing business in each country. operations, investment policy and promotion, alternative dispute resolution, and public private dialogue mecha- nisms since counting began in January 2009. The Pacific IFC’s Response team has generated the most significant reforms across IFC in the East Asia Pacific region to date. IFC’s Regional Pacific Investment Climate Advisory Services program is responding to this demand by assisting Pacific •• Nine new laws/regulations/amendments/codes have Island countries in improving business regulation and lifting been enacted in Papua New Guinea, the Solomon Is- their performance in the global Doing Business rankings. lands, Timor-Leste, Tonga, and Vanuatu as a result of IFC’s intervention over the last five years. The aim of the program is to create a more conducive environment for business in each country. By identifying and •• The creation of a public private dialogue group in Timor- addressing priority issues for government and private sector Leste, resulting in the establishment of a Chamber of counterparts, the program seeks to reduce the regulatory Commerce and subsequent improvement of the dialogue burden on businesses and modernize investment promotion between the private sector and the government. initiatives. Targeted program outcomes are to increase formal •• 71 cases were successfully settled through alternative dis- jobs, incomes, and aggregate costs savings to businesses pute resolution and 19 mediators have been trained in operating in these countries. Tonga and Vanuatu since the beginning of 2009, with a significant number of cases expected to be settled in Reforms are implemented in a number of sectors, anchored Papua New Guinea by calendar year end. The alternative by an in-country presence, and supported by specialized, best- dispute resolution process reduces the time to settle dis- practice advice from IFC Advisory Services staff members. putes, releasing an estimated $700,000 in Tonga. Close coordination with the World Bank and the Asian Development Bank is a key aspect of the delivery of the program. Creating a Foundation for Reform Recent efforts have been made to promote women’s 1990-2005. Although the majority of IFC’s Advisory participation in business by addressing their specific Services were already underway in the early 1990s, the focus challenges through the program initiatives. Improving the on improving the investment policy and overall climate investment climate in particular sectors such as tourism—a began in 1995 and continues today. From 1995 to 2005, vital industry in the Pacific—remains a key focus of the IFC’s activities focused on Fiji, with an extensive program program going forward. to review Fiji’s investment policy and incentives regime as well as develop a duty suspension scheme for exporters. In IFC’s work in the Investment Climate program has been the rest of the Pacific, IFC advised on foreign investment an enduring theme of IFC’s involvement in the Pacific. The policy reform and related issues in Palau, Samoa, the Solomon program is a joint initiative involving IFC, the World Bank, Islands, Tonga, and Vanuatu. IFC’s projects resulted in and the Multilateral Investment Guarantee Agency. From improved foreign investment laws and processes in all of these 8 IFC Advisory Services In The pacific countries—results that have provided a sound foundation for Easing Doing Business for Small and the wider regulatory reform work undertaken through IFC’s Medium-sized Enterprises Investment Climate Reform projects in recent years. 2006-2010. In 2006, IFC established the regional Investment Climate Advisory program to improve the investment climate Results: Papua New Guinea informality for small to medium-size businesses in the Pacific. The survey program covers Papua New Guinea, Tonga, Vanuatu, and the Solomon Islands. A separate project in Timor-Leste contains In 2004, the Government of Papua New Guinea similar components. Assistance provided includes the area of introduced the Informal Sector Development and regulatory simplification, investment policy and promotion, Control Act with the aim of regulating the development public private dialogues, ‘Doing Business’ rapid response, and of informal enterprises in the interest of health and safety. The government requested assistance from IFC alternative dispute resolution. to gather information about the sector and develop practical recommendations to guide development of the Enabling business start-up and operations. Starting a policy. business is a time-consuming and costly exercise in the Pacific region, with multiple steps that are often poorly understood • Conducted in 2007, the survey focused on business even by those who administer them. IFC’s 2010 Doing enterprises and investigated the nature and characteristics Business Report identified that the average number of days of small business and their obstacles to growth. A further required to start a business in the region is approximately focus was on the factors impeding informal businesses 41, compared to New Zealand’s one day. Moreover, it costs from fully formalizing their operations. business owners in the region on average approximately 33 percent of the income per capita to start their business whereas • In early 2008, IFC presented the key findings to the National Consultative Committee on the Informal in Denmark that cost is zero. IFC Advisory Services has been Economy and provided assistance to the Technical working with its client countries in the region to streamline Working Group on the Informal Economy in preparation processes and help reduce the cost and time required for of a concept paper on informal economy policy. The entrepreneurs to set up and operate their businesses. findings have been used in developing a national informal economy policy. Results: Vanuatu—reducing the time and cost of business start-up • The survey established the groundwork for IFC’s current program. Following the survey, IFC initiated discussions • In 2009, IFC helped reduce the cost of complying with with the Papua New Guinea Investment Promotion business regulations related to business entry by 20 Authority on a program of advisory assistance under the percent, to a cumulative total of 2,545 vatu. regional Investment Climate Regulatory Simplification Program aimed at addressing the identified impediments • The team worked to reduce the number of days to business formalization. required for foreign-owned enterprises to comply with business regulations related to business entry by 15 days, bringing the number of days related to business entry down to 47. • The number of procedures involved in complying with business regulations related to business entry was also reduced from eight to five—a greater than 10 percent reduction. Informal business operators, Papua New Guinea IFC Advisory Services In The pacific 9 Results: Tonga—electronic company registry increasing the transparency of business license processes by creating a series of brochures for the main sector • In 2009, Parliament adopted a new Companies Act, license types outlining and clarifying the steps businesses which IFC worked with the Asian Development Bank need to follow to obtain a license. to produce in order to streamline and simplify company registration procedures. • To produce the brochures, IFC guided the consultation mechanism—a working group consisting of private • IFC assisted the Tongan government in implementing sector representatives—to identify areas in which a new electronic company system, which replaced the license processes were unclear and non-transparent. paper registry that was burnt down during civil unrest The brochures included process maps, which provide in 2006. information for businesses on the authorized process for obtaining a license, removing uncertainty surrounding • The new electronic company registry shortens the time the process. required to comply with business regulations related to business entry from seven days to one day. It uses New Zealand’s existing company registry software and has Establishing alternative dispute resolution mechanisms. been implemented in cooperation with the New Zealand Resolving business disputes is expensive and, in many Companies Office. Tonga has signed a Memorandum countries in the Pacific region, takes a lengthy period of time. of Understanding with New Zealand to ensure that For instance, according to the World Bank Group’s Doing companies are registered in the system quickly. Under Business 2010 report, in Vanuatu it takes on average 30 previous processes, registration certificates were hand procedures and 430 days to resolve a business dispute, at a signed by the Minister for Labour, Commerce and cost of around 75 percent of the claim amount using standard Industries. The new registry generates certificates litigation processes. automatically once data is entered into the system and verified, eliminating the exercise of arbitrary ministerial IFC Advisory Services has responded by implementing discretions, which had been a significant cause of uncertainty among business investors. alternative dispute resolution programs in Tonga, the Solomon Islands, Vanuatu and Papua New Guinea. The program • 538 entities have been registered on the new system. assists the Courts and Ministries of Justice to provide parties with the option of resolving their disputes efficiently and on good terms by using court-referred mediation. Mediation is a flexible, non-binding dispute resolution process in which a neutral third party (the mediator) assists two or more disputants to reach a voluntary, negotiated settlement of their differences. The service can greatly reduce the time required to settle a dispute, providing substantial savings in legal costs, freeing up settlements more quickly, and reducing court backlogs. Staff member at the Ministry of Labour, Commerce and Industry inputting business registry data, Tonga Results: Tonga—business licenses now easier to obtain • In 2009, IFC assisted the Tonga government in Participants attending the mediation trainings, Solomon Islands. 10 IFC Advisory Services In The pacific Results: Tonga—reducing the time and disputes in which females are a party. A female master costs involved in resolving disputes among of mediation was also appointed. businesses • A Gender and Investment Climate Reform Assessment • IFC contributed to the drafting of mediation rules, was conducted for Vanuatu, finding that female including establishing a mediation coordinator position entrepreneurs are more likely to access mediation to oversee referrals to mediation at both the Supreme than the courts to resolve commercial disputes, and and Magistrates Court levels, in Nuku’alofa and the tend to prefer a female mediator to a male mediator. outer islands. Public awareness and outreach events involved strong participation from women. • In 2008, IFC trained five mediators—two of whom were women—and accredited four mediators to the • On average, mediated cases take 65 days to settle—a Australian National Mediation Standard to undertake dramatic improvement compared to the estimated mediations at the Supreme Court level in Nuku’alofa, average of 430 days through the existing court system. Tonga. A public awareness campaign was also conducted while training was provided for lawyers and magistrates. • IFC also supported the training of the judiciary and lawyers on mediation’s benefits and supported a • IFC funded a Tongan mediator to attend a Federal mediation public awareness campaign conducted Court of Australia mediator development course in throughout Vanuatu in November 2009. March 2009 and, in October 2009, provided a one-day workshop with an Australian mediator to refresh mediators’ skills. Strengthening investment policy and promotion. In Vanuatu, foreign direct investment is responsible for employing • In 2009, the court referred 80 percent of civil cases close to 40 percent of the workforce; however, in recent times to mediation, with 75 percent of those cases settling foreign investment levels have decreased compared to rates in successfully. other Pacific countries due to their reform efforts. • The cost and time for businesses to resolve a dispute IFC Advisory Services has been addressing this issue in have been reduced as a result of the introduction of mediation; 580,000 Pa’anga has been released by court- Vanuatu by helping to establish an effective legal, policy, annexed mediation as settlement amounts rather than and institutional framework for investment—both domestic remaining tied up in litigation. and foreign. Across the region IFC is strengthening existing institutions and streamlining procedures to ease the path • Cases referred to mediation take on average 24 days to for citizen and foreign investment. Increasing investment, settle as opposed to the 350 days to settle a civil dispute generally and in specific targeted sectors or industries, offers through the courts. the prospects of growth, jobs, and increased government tax revenues to countries in the region. • Through an extension in 2009 to the Magistrates Court level and the outer islands of Vava’u and Ha’apai, IFC helped train and accredit a group of six new mediators Results: Vanuatu—improving foreign at the Magistrates Court level in the outer islands of investment approval time Vava’u and Ha’apai. • In 2009, Vanuatu recorded a 50 percent reduction in • From the commencement of mediation in Tonga the time needed to obtain foreign investment approval to December 2009, 85 cases have been referred to after the government implemented new procedures mediation. recommended by IFC that enhance the transparency of the existing system and reduce application processing time. • The government also drafted its first ever set of Results: Vanuatu—involving women in mediation is vital National Foreign Direct Investment goals, with IFC’s support. • In Vanuatu, IFC assisted in the training of 13 mediators in July 2009; 24 cases have been successfully settled • IFC assisted in the improvement of the Vanuatu through mediation as of June 30, 2010. Investment Promotion Authority by successfully advocating for the separation of its regulatory and • Three of the accredited mediators are female; these promotion roles as well as identifying key areas of focus female mediators will be encouraged to mediate in developing its promotion capacity. IFC Advisory Services In The pacific 11 Fostering a public private dialogue. In 2010, an IFC- Results: Tonga—strengthening supported public private dialogue group succeeded in helping investment promotion institutions to establish Timor-Leste’s Chamber of Commerce and Industry. The group assisted in organizing and managing a • In 2008, the government created a separate Trade private sector congress attended by 200 delegates that agreed and Investment Unit and transferred foreign investment to create the Chamber of Commerce and Industry Timor- regulation to the Business Licensing Unit after IFC Leste. In the lead-up to the congress, consultants employed recommended separating the regulatory and investment promotion functions within the Ministry of Labour, under the project developed draft statutes for Chamber of Commerce and Industry. Commerce and Industry Timor-Leste and voting procedures for the congress to follow. During the congress, IFC project • IFC aided in the formation and start up of operations of staff facilitated discussion while a consultant employed under the new Trade and Investment Unit, which is responsible the project managed and supervised the voting process. for identifying relevant investment opportunities and guiding new investors through start-up and The Chamber’s function is to provide a variety of services establishment. for local businesses and represent the business community in dealings with the government. The importance of uniting the private sector was highlighted in a speech that the Prime Results: Supporting infrastructure for Minister gave during the opening ceremony of the congress. investment promotion in Papua New Guinea and the Solomon Islands “The development of the private sector is critical to the • In 2009, IFC helped improve the quality of the development and economic growth of the country,” Investment Promotion Authority’s investment promotion said Timor-Leste’s Prime Minister Kay Rala Xanana activity by assisting the information technology area to Gusmão. “We are committed to working with the produce an investor-tracking system. Chamber to ensure that Timor-Leste has the necessary business and economic conditions to further private • The system allows the Authority to maintain a record of all previous contact with investors that officers sector growth.” can access when required. Furthermore, it assists the Authority in coordinating and integrating its investment promotion activities among its different departments The overarching objective of IFC’s public private dialogue while ensuring that information on contact with initiative is to ensure that the private sector has a voice and investors flows within the agency. is engaged with the government. IFC Advisory Services has worked to institute public private dialogue groups— • IFC supported the upgrading of the Foreign Investment consisting of private sector representatives and government Registrar’s database and the provision of staff training on counterparts—in Timor-Leste, the Solomon Islands, how to use the enhanced database, resulting in greater Vanuatu, and Tonga. The groups have proved effective in efficiency due to staff’s ability to now automatically generating political will through coalition building and have generate reports required by client ministries (e.g., the Ministry of Finance and Treasury, Central Bank of the Solomon Islands, and the Ministry of Commerce Industry and Employment). Reports contain information such as new, amended, cancelled, and rejected registrations according to a number of search criteria, which are currently generated manually. prime minister Xanana Gusmão opening the national congress, Timor-Leste 12 IFC Advisory Services In The pacific served as an umbrella process to carry forward specific policy for women puts poverty reduction on a faster track and steps reform programs, from diagnosis and prioritization to the up progress toward the Millennium Development Goals, implementation stage. which include the eradication of poverty and hunger by 2015 as well as the empowerment of women. Increasing women’s economic opportunities. Women are Across the Pacific, some obstacles in the business-enabling a powerful force for economic growth and development, environment—such as a prevailing culture of informality making important contributions to the economy as amongst female entrepreneurs; unequal access to property, entrepreneurs and employees and to the welfare of their credit, and justice; and discrimination by uneducated families. Studies have demonstrated that, when women are government officials within business and licensing given economic opportunity, the benefits are also significant registries and the labor market—have a disproportionately for their families, their communities, and ultimately for greater adverse impact on women and hinder them from national development efforts. Generating economic options contributing even more to their country’s growth and Results: Timor-Leste—creating a strong private sector voice • IFC assisted in the creation of the Better Business Initiative, a public private dialogue forum, in May 2009 to guide the private sector reform agenda. • The IFC-supported Better Business Initiative succeeded in having the Banking Payments Authority adopt a new credit registry information system that covered non-bank financial institutions for the first time in 2009. These non-bank financial institutions serve a large number of small, rural entrepreneurs throughout the country. • In 2010, a single voice for the private sector in Timor- Leste was created through the establishment of the Timor-Leste Chamber of Commerce and Industry. Creation of the chamber was coordinated and facilitated by the Better Business Initiative—the IFC-created public private dialogue group. • The chamber has since carried out two strategic planning workshops for key business leaders and for business owners. Papua New Guinea businesswoman, Janet Sape, attending the IFC Economic Opportunities for Women in Business workshop, Vanuatu development. Furthermore, overly cumbersome regulations can unintentionally hurt women as well as both young and low-skilled workers more than others, raising the risk of excluding them from doing business due to a lack of education and lack of confidence to deal with government authorities and financial institutions. Women are less able to lobby the government to have cumbersome regulations reduced, in part because female political representation in the Pacific is among the lowest in the world. Removing such obstacles can help not only to empower women, but also unlock the full economic potential of Pacific nations. In this context, IFC Advisory Services in the Pacific analyzed and documented gender-based barriers to female participation in the private sector in Papua New Guinea, Vanuatu, the The elected members of the Chamber of Industry and Solomon Islands, Samoa, and Timor-Leste. Extensive Commerce, Timor-Leste IFC Advisory Services In The pacific 13 consultations have been carried out with businesswomen, reports are accessible through IFC’s Publications websiteiii. IFC’s client government ministries and departments, private sector representative organizations, lawyers, civil society, Results: Pacific— creating a platform for donors, and IFC investment climate and gender experts. The Pacific businesswomen’s voices result of the research was the production of six “Gender and Investment Climate Reform Assessments” for Papua New • Following the IFC and Australian Government Guinea, Samoa, the Solomon Islands, Timor-Leste, Tonga, sponsored ‘Economic Opportunities for Women in and Vanuatu as well as a Pacific Regional Executive Summary. Business in the Pacific’ conference held in Vanuatu in March 2010; participants from Tonga and Vanuatu were Four key investment climate areas were considered: inspired to start local business associations to support women in business. • Public private dialogue; • The starting and licensing of a business; • In April 2010, the Vanuatu Women in Business • Access to justice, the courts, and mediation; and organization was established, followed by the first- • Access to and enforcement of rights over registered land. ever Tongan businesswomen’s association, Women in Sustainable Enterprises, in September 2010. Within the reports, solutions are recommended to address gender-based barriers. These solutions are presented in the • Both organizations are designed to represent women’s interests in the business community and put forward a form of specific targets with associated activities. The reports gender perspective in discussions with the government also provide tools that offer the necessary guidance for on business regulations as well as provide a support implementing the recommended activities and for conducting network for women in business. monitoring and evaluation against the targets. The tools and solutions are being integrated into the existing Pacific • Fifty eight women from across the Pacific attended Investment Climate projects with the objective of increasing the conference and shared their stories and struggles in women’s participation in the private sector. business. In addition, a case study publication entitled “Economic • The six reports on gender-related investment climate Opportunities for Women in the Pacific” was produced, impediments were formally launched during the event. profiling 52 businesswomen in 30 case studies. The format for this case study publication was guided by the World Bank’s Gender Action Plan. Women in the case study report share lessons in starting their businesses, describe the obstacles and opportunities they encountered in their pursuit of growth, and outline their planned next steps. Their stories are intended to be a source of inspiration to other Pacific women who are considering starting or growing their businesses. All eight Women in Sustainable Enterprises Association meeting, Tonga. Tourism and Fisheries - Supporting Business in Key Sectors The Challenge contribute more than 40 percent of their Gross Domestic Product. Added to the challenge of ensuring the benefits of the Although a considerable amount of entrepreneurial activity fisheries resource flow to Pacific Islanders, is the sustainability exists in the Pacific region, the private sector mainly consists of tuna fishing industry or making sure that fish species are of small to medium-size businesses—many of which struggle not overfished and that fishing methods are environmentally to access markets or gain finance to start or expand their friendly. By increasing local participation in the value chain operations. Furthermore, a lack of business advisory support and ensuring the sustainability of the fish stock, the benefits services makes it difficult for entrepreneurs to improve their of the fishery sector could grow, creating more jobs and business. Without adequate advice, many business owners income streams for local businesses and communities in the fail to develop commercially viable and bankable business Pacific region. plans or understand how to transition from micro-enterprise level operations to registered, formal businesses. These challenges have affected the growth of two of the region’s most important sectors – tourism and fisheries – where small to medium size businesses mainly operate in. Besides low capacity on the part of small to medium-size businesses to deliver the products and services expected by overseas tourists, tourism growth has been further hampered by a lack of or need to upgrade infrastructure in areas such as transport and other essential services. Additionally, a lack of research to assess the impediments to tourism growth has meant government efforts to attract investment in the sector have been uninformed and uncoordinated. Without Airport infrastructure in Malekula, Vanuatu effective policy change, progress in the sector has been slow in several countries. This is illustrated in countries which IFC’s Response have relatively low income levels from tourism as compared to their more successful neighbors. According to the World IFC initially responded to these challenges by providing Travel & Tourism Council’s 2009 figures, tourism in advice and helping businesses in several sectors access the Solomon Islands accounts for 7.4 percent of the Gross financing from local financial institutions to help start and Domestic Product as compared to Fiji, where it accounts for expand operations. Between 1990 and 2005, IFC supplied a 25.6 percentiv. wide range of advisory services to strengthen projects pre- and post-financing. Toward the end of this period, IFC serviced Small to medium-size enterprises involved in the fishing 11 countries in the region, broadening its focus to include sector are further constrained by their inability to participate regional sector programs such as fisheries and tourism. IFC or add value to the tuna supply chain, which is the main fish helped businesses in these two sectors obtain financing species targeted by the fisheries sector in the Pacific region. from local banks, provided advisory services to strengthen The majority of Pacific island countries presently derive company operations and conducted workshops, seminars, most of their benefits through fishing access fees. In some and conferences for investors, bankers, policy makers, and cases, countries are involved in onshore processing; however, entrepreneurs. overall the benefits of the sector are inequitable and unevenly distributed and represent only about four percent of the Lessons learned from enterprise-level interventions. landed value of the catch of tuna. The total annual catch During this time, there was great demand for IFC’s services, in the Western and Central Pacific Ocean, which includes in part because IFC was the only provider of this type. Pacific island country waters, is presently around 2.4 million Furthermore, IFC was able to advise at an enterprise level tonnes, representing 55 percent of global tuna production. while bringing other programs, donor initiatives, and sources The value of the Pacific part of this tuna fishery is now around of finance to whatever activities they were working on. By $4 billion per year, and, for countries like Kiribati, fisheries IFC Advisory Services In The pacific 15 being based in Australia, an unexpected benefit for IFC was Throughout the transformation of IFC Advisory Service’s independence and objectivity—both perceived and real. As program, the focus on key sectors has been maintained. IFC worked closely with clients, staff members’ long-term tenure enabled them to build up strong relationships, while To further drive IFC’s work in the tourism sector and to help developing a deep understanding of small to medium-size focus efforts on promoting investment in the sector, an IFC businesses in the Pacific. These relationships and knowledge Pacific Tourism Strategy has been developed. The strategy is were critical in keeping the project lifecycles short and based on findings from a series of extensive diagnostic studies identifying viable projects, thereby keeping costs low. completed by IFC focusing on the impediments to the sustainable development of the tourism sector in Papua New In instances where IFC assisted in raising financing and Guinea, Samoa, the Solomon Islands, Tonga, and Vanuatu. provided advisory support, the businesses were more likely to In the fisheries sector, IFC has initiated a fisheries study, using achieve successful results, such as in the case of the Outrigger external expertise, aimed at gaining a detailed understanding Hotel in Fiji. However, working with small businesses of the tuna supply chain from the Pacific Islands and a sound involved a number of challenges. Due to limited resources, appreciation of the status of the resource to guide IFC’s small businesses required more training and support as strategy in the sector going forward. well as more frequent informal contact than standard IFC projects. Smaller projects also meant limited capacity for Results Highlights paying reasonable fees and poorer project preparation; generally, project completion required significant resources. • Between 1990 and 2005, IFC helped obtain funds from IFC’s product of business plans, while a quality product, was banks for 41 tourism projects and provided advisory often more than what was required for smaller businesses, assistance to 72 tourism projects. and staff spent more time on client consultation and training • In total, IFC raised $46.29 million in funds for tourism than anticipated. Hence, project completion was a lengthy projects between 1990 and 2005. and costly process, constraining IFC’s reach in the region. • In 2010, IFC assisted three larger hotels in Samoa to Over time it became clear that a higher-level strategic approach access financing from commercial banks for the rebuilding of their hotels following the September tsunami. was required to address the needs of the private sector. IFC Advisory Services responded by downscaling direct firm-level • More than 400 businesses are registered on the World assistance and targeting it to where IFC investment linkages Hotel Link portal for Fiji, Samoa, Vanuatu, Timor- could be established as well as shifting to a programmatic Leste, and the Solomon Islands. The revenues for local approach to create a better environment for doing business. accommodation exceed $500,000 in Vanuatu. • The development of the Tourism Sector Diagnostic Tool, which is a standardized product for identifying the impediments to a country’s tourism development, with a particular focus on investment constraints. • The completion of the Tourism Sector Diagnostic in Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu. • Between 1990 and 2005, IFC helped source funds from commercial banks for 78 fisheries projects and provided advisory assistance to 42 projects. • In total, IFC helped obtain $8.46 million in funds from commercial banks for fisheries projects between 1990 and 2005. Tourism infrastructure, Solomon Islands 16 IFC Advisory Services In The pacific Tourism: A Vital Sector in the Pacific 2006-2010. In 2006, IFC Advisory Services implemented a high-level strategic approach to assist the tourism sector Islands region by developing regional projects to increase the sector’s access to markets and to assess the impediments to tourism 1990-2005. Between 1990 and 2005 IFC Advisory Services development. More recently, the tourism team has developed completed many tourism projects—both large and small— a sector-wide strategy focused on generating tourism in almost all of the Pacific countries. In addition, IFC investment in the region. advised governments on investments in the tourism sector by conducting workshops, seminars, and conferences for investors, bankers, policy makers, and entrepreneurs. Results: World Hotel Link –linking small businesses to markets An IFC initiative, World Hotel Link began with a website Results: Papua New Guinea Milne Bay listing nine guesthouses in the Cambodian town of tourism project Siem Reap and now covers hundreds of small hotels In 1995, the Government of Papua New Guinea in developing countries from St Kitts & Nevis in the identified Milne Bay as an area of potential development Caribbean to Fiji, Vanuatu, Timor-Leste, the Solomon for the tourism industry. As a result, IFC received a Islands, and Samoa in the Pacific. number of requests for assistance from sponsors in the region who wished to develop tourist facilities. IFC’s aim for the project was to improve access to the market for small to medium-size enterprises in the • IFC assembled a selection of these sponsors into a tourism sector through an online marketing and booking client group and, on their behalf, carried out a technical portal. The unique hotel information and booking system assistance project to assess proposals and identify is a network of country-specific websites maintained by development opportunities. IFC established a regional local operators under a franchise agreement with World tourism information database that evaluated the sponsors’ Hotel Link, which was established by IFC. proposals as well as future project proposals. Individual project proposals were also evaluated to assist the sponsors Although the sites use IFC-developed technology and in the formulation and structuring of their projects. are consistent worldwide, the hotel information carried on each is gathered locally by the franchisee that takes • As a result, three projects obtained funds from a commission on bookings and is free to sell local commercial banks. advertising. • In the Pacific region, the project started in Fiji, Samoa, and Vanuatu, and soon expanded to include Timor-Leste and the Solomon Islands. Results: Fiji Outrigger Reef Resort In 1998, IFC was approached by Coral Coast (Fiji) Limited • Today, more than 400 businesses are registered on to assist the group in raising additional equity as well as the portal for those countries, with revenues for local securing the debt required to build the Outrigger Reef accommodation exceeding $500,000 in Vanuatu. Resort. As a result: • IFC carried a detailed market and financial feasibility study for the hotel, assisted in a range of technical evaluations including comprehensive environmental appraisals, and helped with negotiations with the Fiji government in relation to the relocation of a highway blocking the project. • In arranging financing, IFC helped raise approximately $24.1 million for the project, which was a redevelopment of the existing 60 room resort. The Outrigger Reef Fiji Resort created employment for 200 new staff in addition to the 100 existing full-time employees at the reef. • IFC’s investment arm committed $3.9 million to the project and it was fully disbursed. The loan was repaid in 2006. IFC Advisory Services In The pacific 17 Table 2. Impact of the World Hotel Link System in Samoa, Fiji, Vanuatu, Timor-Leste, and the Solomon Islands a. Value of Bookings Generated Fin Year Samoa Fiji Vanuatu Timor-Leste Solomon Is 2006 N/A N/A N/A 2007 N/A $ 103,025 N/A 2008 $ 147,695 $ 90,204 $ 133,538 2009 $ 376,053 $ 242,668 $ 464,979 $ 23,843 $ 8,475 2010 $ 381,733 $ 282,365 $ 525,785 $ 87,493 $ 98,025 b. Number of Businesses on the Site Date Samoa Fiji Vanuatu Timor-Leste Solomon Is Launch Date 44 97 28 26 26 (March 2005) (Oct 2005) (Sept 2005) (July 2008) (Oct 2008) 2010 67 203 61 30 44 Source: Data provided to IFC by WHL 18 IFC Advisory Services In The pacific pillars of the Pacific tourism strategy being developed to guide Results: Assisting Samoa’s tourism sector IFC’s medium-term direction in this sector. The second pillar through the tsunami recovery project reflects the financing of tourism investments while the third The September 2009 tsunami in Samoa impacted the involves sustaining tourism investments through advisory tourism sector with particular severity. More than 50 services. coastal tourism businesses were directly hit, and many of the hotels and smaller tourism operations that sustained severe damage have yet to reopen. Initial estimates from Adding Value to the Fisheries Sector an internal World Bank document indicated the value of damage and losses in the tourism sector were in the order of $32.8 million. The loss of a large portion 1990-2005. Since the early 1990s, IFC has been very active of the accommodation inventory will significantly across all countries, raising funds for businesses to start up or impact an economy relying on direct tourism receipts expand, providing advice on fishery infrastructure, supporting for approximately 21 percent of its Gross Domestic rehabilitation of poorly managed and/or disused facilities, Product, as noted by the World Bank development establishing fishery-specific associations, strengthening indicators. Immediately after the tsunami, the Samoan fishery suppliers, connecting business to export markets, and Minister for Tourism claimed that up to 30 percent of introducing new fishing techniques and products, such as the Gross Domestic Product relies on tourism (this figure tuna long-lining v. presumably includes both indirect and direct aspects of tourism). Therefore, an urgent need exists to rebuild the tourism businesses dislocated by the disaster. Results: Papua New Guinea workshop on tuna long-lining operations IFC responded by designing a project to assist several In 1995, 40 companies participated in an IFC-designed affected businesses in recovery planning and refinancing. workshop on developing tuna long-lining operations. No IFC has since assisted three larger hotels to access information about long-line tuna fishing was available financing for the rebuilding of their hotels following prior to the workshop, and no locally based firms were the September tsunami. Two of these have secured active in long-line tuna fishing. As a result: financing totaling $3.25 million, including support through the New Zealand-funded Concessionary • One company established a new long-line operation Finance Scheme; one has subsequently reopened. A with six vessels. third financing application lodged by IFC is pending. IFC has also assisted the first group of smaller hotels • Two other companies formed a joint venture to acquire to raise funds through the Tourism Tsunami Beach Fale two vessels, in which IFC later invested. Rebuilding Program by providing advice and training in financial management and in the raising of capital. • In total, at least eight locally based vessels became involved in long-line tuna fishing. • In addition, two other companies purchased vessels, A strategic plan for the tourism sector. IFC has undertaken one started a new business providing services for a series of extensive diagnostic studies focusing on the tuna vessels, and two others started promoting tuna impediments to the sustainable development of the tourism processing projects. sector in Papua New Guinea, Samoa, the Solomon Islands, Tonga, and Vanuatu. Developed by IFC with client and peer input from all regions, the Tourism Sector Diagnostic tool is Results: Samoa workshop on Hazard a standardized product for identifying the impediments to Analysis and Critical Control Points a country’s tourism development, with a particular focus on In 1997, IFC held a workshop in Samoa to train members investment constraints. of the local fishery industry to meet new US import requirements. Government officers, as well as six local The results of diagnostics have been presented to all partner private-sector fish exporting enterprises attended the governments, and solutions-based initiatives are now being workshop. As a result:: mainstreamed into the existing Investment Climate projects in Vanuatu and the Solomon Islands, with Papua New Guinea • Five of the companies succeeded in meeting the new requirements, which enabled them to continue and Tonga expected to follow. The sector-specific initiatives exporting to the US. All five of the companies that will focus on administrative and regulatory reforms as well as submitted plans to meet the new requirements stated investment planning and promotion. they would not have done so had they not attended the IFC workshop. These investment climate priorities represent one of three IFC Advisory Services In The pacific 19 2006-2010. IFC is currently considering the role it might Results: Solomon Islands Rural Fisheries play in supporting private sector participation in the Pacific Enterprise Project islands’ tuna fishery sector. This follows approaches from a Established in 2002, the Rural Fisheries Enterprise Project number of key stakeholders active in this sector requesting promoted the expansion and commercialization of rural IFC financing for various activities. fisheries throughout the Solomon Islands. The project set-up included a rural fisheries loan scheme that made monies available to approved applicants who were IFC may be well positioned to partner with potential Pacific participants in the rural fishery and who would land islands’ tuna industry investees to positively differentiate tuna their catches to one or another of the Rural Fisheries sourced from Pacific waters on global markets while at the Enterprise Project fisheries centers for sale. same promoting the sustainability of Pacific tuna fisheries and an improved flow of benefits from the fisheries to Pacific • IFC assisted the Rural Fisheries Enterprise Project in Islanders. the implementation of the scheme, including advice on applicant appraisal, administration of the scheme, IFC is mindful of the aspirations of its Pacific island client maintenance of accounting records, handling of countries, in regard to ensuring the sustainability of tuna monetary transactions, and compliance with taxation, resources and their determination to participate more fully reporting, banking, and other regulatory and statutory requirements. The assistance was extended over a two- in the benefits that flow from the fishery sector. IFC believes year period and included substantial hands-on training that—prior to developing an engagement strategy—it is and technical assistance. necessary to be consistent with these aims as well as with IFC’s own environmental sustainability and social standards. • In total, 38 loan applications were approved during 2003 and 2004. The Rural Fisheries Enterprise Project To this end, IFC has initiated a study, using external expertise, then successfully assumed total management of the aimed at gaining a detailed understanding of the tuna supply scheme. chain from the Pacific region and a sound appreciation of the status of the resource. The study also will detail a clear map of stakeholders and their views and aspirations as well as an effective strategy for engagement. IFC staff members visiting a tuna fishing processing Onshore tuna processing, Solomon Islands plant, Solomon Islands Access to Finance - Addressing the Financial Gap in the Pacific Region The Challenge Reliance on subsistence farming has also created a large ‘missing middle’ population that has limited or no access to Estimates suggest less than 20 percent of the population financial services. In Vanuatu, 80 percent of the population in the Pacific region has access to financial services. viDue lives in rural areas, viiiand given the high travel costs required to the geographically dispersed and isolated nature of the to access bank branches, only 13 percent have bank accounts. countries, traditional banking models have largely failed ix Providing these people with access to financial services is a in delivering services to the wider population. An access to crucial step in helping them improve their lives. banking services study undertaken in Papua New Guinea estimated that the average number of bank branches available per 100,000 persons is 1.64, viiplacing it at a similar level as Nigeria or Nepal. The lack of reliable credit information, both nationally and regionally, creates an added barrier for businesses to access financing. For example, Papua New Guinea is ranked 135 out of 183 in terms of the ease of getting credit for business in IFC’s Doing Business 2010 report. Samoa, one of the region’s best performers, also ranked low—127 out of 183 economies—in terms of the ease of getting credit for business. Graph 1. Percent of Population with Access to Financial Services in Some Pacific Countries Compared to Other Low Income Countries A microfinance client selling her goods, Fiji IFC’s Response Promoting sustainable and inclusive growth, by expanding access to finance through integrated investment and advisory services, is a priority for IFC in the Pacific region. In the early stages of our program, we worked directly with institutions to strengthen and expand their operations. Nowadays, IFC’s Access to Finance Advisory Services helps micro, small, and midsize businesses obtain financing by improving regional financial infrastructures and strengthening the capacity of local financial institutions to undertake sustainable lending. Furthermore, IFC is helping increase access to financial services for those who need it most by extending the geographic reach, product diversity, and awareness of financial services through technical innovation and the establishment of new partnerships. IFC Advisory Services In The pacific 21 In parallel with IFC’s Access to Finance program, IFC’s Credit Scoring System to address the demand for unsecured investments in the financial market sector aim to increase lending as well as to increase the bank’s efficiency and opportunities for small to midsize businesses to gain access standardize the credit scoring process. to finance in the region. Although these activities are not donor funded, IFC’s investment arm in this sector plays a Results: Bank South Pacific’s credit complimentary role to IFC Advisory Service’s program. The scoring system rest of the chapter highlights IFC’s Advisory and Investment IFC managed all phases of this project in Papua New Services work in the sector and provides an overview of the Guinea over 18 months. The delivery of the end-to- results achieved to date. end business model for unsecured credit (500-10,000 Papua New Guinea Kina) involved developing and calibrating an unsecured lending scorecard, creating an Results Highlights application processing system and automated scoring, and reengineering business processes. Training sessions • Between 1990 and 2005, IFC generated financing from were held for staff in Port Moresby, Lae, Papua New commercial banks for seven financial markets projects Guinea North, the Highlands, and the Island region. and provided advisory assistance to 65 financial markets projects. By improving credit application processes through • In total, IFC raised $12.68 million in funds for financial greater consistency and increased accuracy without market projects between 1990 and 2005. using more resources, the system reduced cultural issues and refocused operations. From lending primarily via • $10 million in additional loans have been provided to three urban branches, volumes shifted to almost 80 microfinance clients since June 2008 as a result of an IFC- percent being sourced from rural branches. Cost of supported intervention in Papua New Guinea. credit for borrowers also fell, increasing access to credit to the lower-end segment of the market. • In 2010, IFC signed a Memorandum of Understanding between two major banks in the Pacific, WestPac and ANZ, to support credit bureau operations in Samoa, Tonga The system generates significant revenues for the bank: and Vanuatu. In five years, the portfolio grew from 10 million to 150 million Papua New Guinea Kina, with less than eight • IFC signed an agreement with the Australian government, percent in losses. Bank South Pacific has strengthened and launched the Pacific Microfinance Initiative in June the model since its introduction and continues to use 2010, which aims to increase access to basic financial it to a great extent as it expands throughout the Pacific services in Timor-Leste, Papua New Guinea and the Pacific region. Islands. • IFC also completed the country payments system 2006-2010. More recently, IFC has provided investment diagnostic for Samoa, Vanuatu and Tonga in May 2010, and advisory support to Papua New Guinea’s first-ever with reports finalised in December 2010. In addition, a microfinance entity and, in 2010, IFC partnered with the Memorandum of Understanding was signed with the Bank Australian government to set up the Pacific Microfinance of Papua New Guinea in April 2010 to provide oversight and advisory services to help the bank in its Payments Initiative to increase access to finance in the region. System Reforms. • In 2010, IFC and IFC Capitalization Fund became Results: Papua New Guinea Microfinance shareholders in Bank South Pacific to help expand financial Limited services in Papua New Guinea and bolster the bank’s IFC is providing technical services assistance and presence across the Pacific islands. The complete package of management support to Papua New Guinea around $140 million represents IFC’s largest investment in Microfinance Limited, which was established in 2004 the Pacific region to date. as Papua New Guinea’s first commercial microfinance institution, under the sponsorship of Papua New Guinea Sustainable Development Program Limited. Expanding Micro and Small to Medium- However, operations did not start until 2005. sized Enterprises’ Access to Financing Licensed by the central bank of Papua New Guinea as a second-tier financial institution, Papua New 1990-2005. IFC recognizes the need for access to finance for Guinea Microfinance Limited specializes in credit and the micro and small business sector, for women in particular, financial services (including savings) to micro and small and for people living in rural areas. In 2004, IFC partnered businesses. with Bank South Pacific to extend their reach in Papua New Guinea. In doing so, IFC helped upgrade Bank South Pacific’s In 2007, IFC made its first investment in microfinance 22 IFC Advisory Services In The pacific Pacific Microfinance Initiative. As previously noted, in in the Pacific with an investment in Papua New Guinea 2010, IFC, with the support of the Australian government, Microfinance Limited. In 2008, IFC helped implement launched the Pacific Microfinance Initiative, which aims to a new organizational structure as well as policies and improve access to basic financial services, particularly for procedures including a business plan and training on credit policies. In addition, the daily monitoring system women, rural households, and enterprises in Papua New was revised to ensure the swift resolution of problems in Guinea, Timor-Leste, and the Pacific Islands. The Australian branches. A new group of loan products was designed, government is providing 9.5 million Australian dollars toward along with a policies and procedures manual. Services the total cost of the four-year, $11.3 million initiative. The were extended with the launch of a pilot lending initiative will improve the ability of microfinance institutions program in the Koki and Poppendetta branches. and other financial service providers to efficiently deliver financial services to Pacific Island communities lacking access • By helping to reduce administrative costs, increase to money, loans, and business banking services. revenues, and decrease the provision for bad debts, IFC has helped Papua New Guinea Microfinance Limited IFC will provide performance-based grants and business achieve greater financial sustainability. advice to financial service providers so that they can better • Annual operation losses also reduced from 6.8 million reach communities in isolated areas. Additionally, IFC to less than 3.8 million Papua New Guinea Kina in the will help participating providers, including banking and first year of assistance. microfinance institutions, non-governmental organizations, and non-traditional financial service partners, such as mobile • By shifting from consumer lending to more classic phone and agribusiness companies, develop business plans micro and small business lending, Papua New Guinea with measureable expansion targets. Grant disbursement Microfinance Limited records now show 2,507 active will be contingent upon meeting the pre-agreed performance loans, and 63,677 active deposit accounts valued at targets. $13.61 million as of June 30, 2010. The initiative also will work with governments to improve the • The bank’s gross portfolio as of June 30, 2010, regulatory, legislative, and financial infrastructure to broaden amounts to $3.35 million, surpassing the projected financial inclusion in the region. Other donor partners are expected to join this program. IFC’s first partner under the initiative is the South Pacific Business Development Microfinance Network, whose customers are mainly female micro-entrepreneurs. The South Pacific Business Development Microfinance Network anticipates that it will significantly broaden its outreach over the next few years from its current 12,000 member base by developing new products and expanding credit, savings, and insurance services. Strengthening Financial Service Providers and Reforming Financial Markets’ Infrastructure 1990-2005. During this period, IFC specifically raised the majority of its project financing from local banks and worked with many of them to strengthen their lending practices, better manage and expand their portfolios, and introduce new products. IFC recognized the value of providing Customers lining up at PNG Microfinance Limited, Papua New Guinea support where opportunities arose to ensure the financing flow continued and, at the same time, to impart credit and portfolio management skills to bank staff. IFC Advisory Services In The pacific 23 Results: National Bank of Samoa Results: Setting up credit bureaus in Tonga IFC provided a wide range of support to the National and Samoa/Vanuatu/the Solomon Islands Bank of Samoa, a Samoan-owned private retail bank In 2010, major banks ANZ and Westpac signed a that was the first of its type in the region. Memorandum of Understanding with IFC committing to support credit bureaus in the Pacific countries. The • Apart from raising additional capital in 1999, IFC central banks in Tonga, Vanuatu, and Samoa have reviewed its Treasury operations in 1998, working indicated their support for private sector credit bureaus with the bank to implement appropriate systems and that operate within the laws of the country. IFC has since processes. agreed with ANZ and Westpac that the first initiative will be in Tonga. The objective of the project is have two • Post capital raising, customer service, international, bureaus up and running in two countries and, pending and loans areas were reviewed, structures re-designed, the software customization and legal and regulatory and manuals produced, followed by extensive training issues, IFC will extend the model to a third country. for all staff. • In 2000, the bank’s computer systems were reviewed Results: Assistance for Papua New Guinea and appropriate hardware and software sourced and credit bureau installed. Strategic planning also took place and the The Credit and Data Bureau of Papua New Guinea credit systems were reassessed for robustness. approached IFC for technical assistance to streamline, improve, and expand its operations in early 2010. IFC • In 2003, IFC worked with the board on governance undertook a diagnostic study and submitted a proposal and conducted a complete commercial review of the for technical assistance to the Credit and Data Bureau entire business, establishing plans for better strategic Board for its consideration. The support proposed related focus. Later that year, IFC undertook a review of the to three key fronts: building internal capacity, improving bank’s loan portfolio to determine its compliance with the bureau’s utilization by members, and strengthening International Accounting Standards and the Central the bureau’s legal position with its members, their Bank of Samoa’s prudential guidelines. customers, and the outsource agreement with their software provider. Discussions are currently underway to • Two new loan products were constructed by the design the technical assistance program for the Bureau National Bank of Samoa using market intelligence and and finalize an agreement between IFC and the Bureau. product development information provided by IFC. IFC’s input helped the Bank tailor its financial products to specifically meet local market needs, capture and retain additional customers, and provide important financing Results: Advisory services to Bank of PNG for tools for small to medium and micro enterprises to Payment Systems Reforms Program access financing. Following the signing of a Memorandum of Understanding to provide technical support for quality • National Bank of Samoa, with its predominantly retail assurance to the Bank of PNG during the Payment System and commercial customer base, is a vital part of the reform project, IFC conducted a workshop with the finance sector in Samoa. IFC’s work strengthening the Bank of PNG’s Payments Reform Steering Committee. bank’s governance from the board level down ensured The outcome was a scope of services that was delivered a reliable source of financing for domestic businesses. to the Bank of PNG. IFC also gave the Bank advice on the proposed contract with the payment system consulting company. 2006-2010. With the introduction of a programmatic approach in 2006, IFC’s focus shifted to include an emphasis on strengthening the financial infrastructure within the Pacific Payments Remittances and Securities Settlement region to enable the provision of effective and efficient Initiative. This Initiative stemmed from other successful financial services. The four pillars of the program are credit regional experiences that the World Bank has developed bureaus, company registries, secured transactions, and in recent years in Latin America and the Caribbean, the payment systems. Commonwealth of Independent States, the Arab Region, and South Asia. IFC continues to support the banking sector via direct investment and technical assistance to assist them to expand The objective of the Initiative is to study payments, their portfolios and broaden their customer base. Expanding remittances, and securities settlement systems in the countries access to finance to small to medium-size enterprises, rural areas, women, and the underserved remains a priority area for of the Pacific, with a view to identifying strategies and action IFC going forward. plans to improve their safety, efficiency and integrity. The 24 IFC Advisory Services In The pacific project also seeks to promote policies and actions for the and IFC Capitalization Fund became shareholders in Bank harmonization of payment systems throughout the region South Pacific to help expand financial services in Papua New and in line with international standards and best practices. Guinea and bolster the bank’s presence across the Pacific islands. In supporting the bank’s long-term growth plans, IFC also completed the country payments system diagnostic IFC bought a 5 percent equity stake in Bank South Pacific for Samoa, Vanuatu and Tonga in May 2010, with reports from the Independent Public Business Corporation of Papua finalised in December 2010. Reviews are also being carried New Guinea, a government-owned investment body, while out in Fiji and the Solomon Islands. Initial scoping for setting the IFC Capitalization Fund acquired another 5 percent up a regional payments systems initiative in the Pacific was equity by subscribing to newly issued shares. In addition, IFC undertaken in parallel with these reviews. is providing a long-term $30 million senior loan, enabling Bank South Pacific to increase its lending to eligible borrowers The regional payment systems initiative will include the in Papua New Guinea. The complete package of around $140 Pacific countries, Australia and New Zealand. The reserve million represents IFC’s largest investment in the Pacific Banks of Australia and New Zealand have shown support for region to date. the initiative in principle. IFC’s investment and expertise will further build and diversify the bank’s capital and customer base, allowing Bank IFC Investments Increase Access to South Pacific to grow and broaden services to small to midsize Finance businesses and rural clients by expanding innovations such as mobile phone banking. Efforts also will be made to create 2006-2010. To complement our advisory work, IFC has professional development opportunities for the bank’s staff. strategically made investments in the financial market sector to further increase access to finance for small to midsize Bank South Pacific is Papua New Guinea’s largest retail and businesses in the region. The Kula Fund and a recent commercial bank, with operations extending to the Pacific investment in Bank South Pacific are two examples of how islands of Fiji, Niue, and the Solomon Islands. IFC is assisting in extending access to financing in the Pacific. IFC is currently in discussions with the Bank to develop Founding investor in Kula Fund II. IFC participated as a an advisory services program that will assist the bank in founding investor in Kula Fund II Limited (“Kula Fund”), expanding its small and medium-size business banking and a $20 million, 10-year closed-end equity fund that focuses rural outreach programs. The areas of intervention include investments in small and medium-sized enterprises in the capacity building to improve the bank’s internal processes Pacific Islands. IFC committed an investment of $4 million and systems in risk management and credit, staff training, for the project. market research, alternate distribution channels, and technological innovations to enhance outreach of financial Kula Fund aims to make equity and quasi-equity investments services, including a mobile phone banking initiative. across a variety of industries and sectors, including the key industrial sectors of mining, tourism, and other related sectors. In 2008, Kula Fund completed the following investments: • 15 percent shareholding in Chemical Limited, a leading wholesaler and retailer of agro-chemical, stock feed, and hardware items in Papua New Guinea. • 30 percent shareholding in Pacific Retail Group Limited, a holding company for OE Limited (office equipment, stationery, and printing supplies) and PTH Limited (hardware and building construction) in Tonga, along with a $1 million shareholder loan. • An additional shareholder loan in Pacific Communications Solutions Limited (sells and maintains telephone systems in Fiji and Western Pacific), in which Kula Fund already had a 33 percent shareholding. A new partnership with Bank South Pacific. In 2010, IFC Infrastructure - Connecting People to Markets The Challenge • IFC’s $100 million in financing to Digicel Limited in Papua New Guinea has helped to increase mobile phone penetration rates to 18 percent in financial year 2009 from Given the isolation and sparse populations spread out across 3 percent before Digicel entered the market in 2006. In wide swathes of ocean in the Pacific, infrastructure service Papua New Guinea, more than 3.5 million people now delivery in the region is difficult and costly. Economies of scale have access to mobile phones, up from just 1.2 million in are hard to achieve, contributing to the high cost of travel, 2007. communications, and logistics. State-owned enterprises dominate the landscape, and while competition has been IFC Supports Transport in Papua New introduced—namely in telecommunications and aviation— Guinea and Fiji large gaps in infrastructure service delivery remain. More development is needed to increase access to infrastructure 1990-2005. Most infrastructure services in the region and connect communities to employment and economic were—and continue to be—the purview of governments, but opportunities. between 1990 and 2005 IFC completed work in key areas such as shipping, power, and aviation. In power, the work ranged from municipal waste to energy production in Fiji and IFC’s Response Samoa. From 1990 to 2005, IFC supported infrastructure development Results: Shipping and aviation in Papua by providing advice directly to companies in the sector and New Guinea by helping to access finance to expand and strengthen their • In 1993 IFC helped an established local Papua New operations. During this period, IFC completed work in key Guinea coastal shipping company, Kula Kaiun, by areas such as shipping, power, and aviation. The governments assisting in obtaining financing for the purchase of a of Australia, New Zealand and Japan supported IFC’s work 1,000 ton vessel to complement its existing fleet. The in these areas. project sponsor was the Sharp group of companies, which controlled a group of seven companies that owned 20 ships and employed 162 people, 148 of More recently in the Pacific, IFC has strengthened its whom were citizens of Papua New Guinea. response to these challenges and has increased access to basic services by financing infrastructure projects and advising • IFC also helped Massim Expeditions and Tours evaluate client governments through IFC’s Advisory Services in the an amphibious aircraft service for passengers, light Public Private Partnerships department. As a result, IFC has freight, and medivac work between Rabaul, Buka Island, participated in advancing catalytic change in the region, in Cartret, Mortlock, and Tasman Islands in Papua New the area of telecommunications in particular, and has helped Guinea in 1994. The new service was the only fast and narrow the gap in infrastructure service delivery. reliable access to the islands for visitors, urgent freight, and medical emergencies. The service was implemented, and IFC also assisted with route, cargo, and equipment Results Highlights evaluation. • Between 1990 and 2005, IFC raised funds for four infrastructure projects. • In total, IFC raised $3.61 million in funds for infrastructure projects between 1990 and 2005. • IFC served as the lead advisor on the successful public- private partnership between the government of Samoa and Virgin Airlines, which established a new national airline, Polynesian Blue, and restructured the existing flagship carrier. Figures suggest that more than 2,000 new jobs have been created as a result—a significant figure in a country with a population of 180,000. 26 IFC Advisory Services In The pacific The Pacific Regional Infrastructure Facility aims to help Results: Strengthening Fiji’s aviation improve infrastructure outcomes in several economic sector infrastructure sectors, including energy, telecommunications, • Fiji Air was a privately owned airline in Fiji with a 23 transport (land, air, sea), waste management, and water percent government shareholding. In 1992, IFC reviewed and sanitation. The current partner countries are the Cook the airline’s operations, provided a strategic overview Islands, the Federated States of Micronesia, Kiribati, Nauru, to the formulation of a long-term plan to acquire new aircraft, and raised the requisite financing needed. Niue, Palau, the Republic of the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu, and Vanuatu. • Sunflower Airlines was one of the two private airlines in Fiji providing a network of internal flights on the Suva- Nadi-Labasa routes. In 1993, IFC helped the company Results: Polynesian Blue - public private access financing from the Fiji Development Bank to partnerships in Samoa acquire an additional Twin Otter aircraft. In Samoa, IFC has worked with the government of Samoa for a number of years on privatization matters. IFC assisted the government with the privatization of the Samoa Coconut Products Ltd. as well as with Samoa Catalytic Impacts Breweries Ltd. in 1996. 2006-2010. In line with the revised programmatic and In 2004, IFC won the contract to complete the strategic approach in 2006, IFC included expertise from the transaction of the privatization of Polynesian Airlines. IFC Advisory Services in the Public Private Partnership’s As lead transaction advisor to the government, IFC team. This department advises governments on private sector played an instrumental role in turning around the flailing national carrier, spurring tourism, and promoting jobs participation in infrastructure and other public services. By in the island nation. The joint venture between the helping to generate investment opportunities that result in government of Samoa and Virgin Blue airlines resulted long-term economic growth, better living standards for our in the launch of Polynesian Blue Airlines in 2005. client countries are achieved. IFC’s infrastructure-related advice balances the needs of investors with public-policy Prior to the partnership, the airline was proving to be considerations and the needs of the community, while also a significant burden for the government. In 2004, the supporting broader access to public infrastructure and government heavily subsidized the airline to the tune of services, including health and education. $7.5 million—70 percent of its budget deficit. As a result of the partnership: Pacific Regional Infrastructure Facility. As a means of enhancing donor coordination in the infrastructure area, • In 2007, the government received a dividend of 3 IFC and the World Bank in 2008 joined with the Asian million from the 16.6 million Western Samoa Tala Development Bank, the Australian Agency for International profits, which was up by 71 percent from the previous year’s profit. Development, and the New Zealand Government’s International Aid and Development Programme to set up the • Polynesian Blue’s low-cost airfares created a new Pacific Regional Infrastructure Facility. The facility is a multi- market in Samoa, pushing up tourism numbers by 15 partner infrastructure coordination and financing mechanism percent annually compared to the historic trend of four to support infrastructure in the Pacific region. The facility percent. aims to support infrastructure planning, development, and management in Pacific Island countries, with a specific focus • This had a multiplier effect for employment with on: estimates that, for every $10,000 earned from tourism, one new job is created. Figures suggest that more than • Country-led development—The Facility will respond to 2,000 new jobs have been created in Samoa as a result requests for support from Pacific island countries based on of Polynesian Blue Airlines—a significant figure in a their plans and priorities. country with a population of 180,000. • Sector-based approaches— The Facility aims to address DevCo, a multi-donor program affiliated with the Private the long-term challenges of maintaining and managing Infrastructure Development Group and supported by existing and new infrastructure to improve the efficiency the UK’s Department for International Development, and sustainability of service delivery. the Dutch Ministry of Foreign Affairs, the Swedish • Harmonized support— The Facility will bring together International Development Agency, and the Austrian support from multiple development agencies to make Development Agency, funded the advisory work for this assistance go further and make a bigger difference. project. IFC Advisory Services In The pacific 27 Investing in telecommunications and promoting competition. While IFC Advisory Services played a significant role in improving access to aviation in Samoa, IFC Investment Services has played an equally catalytic role in the telecommunications sector. In 2006, IFC provided more than $100 million in financing to Digicel Limited for the construction and expansion of cellular networks in Papua New Guinea, Fiji, Samoa, Tonga, and Vanuatu. In doing this, IFC helped establish a pan-Pacific mobile service, competing head on with long-established players, lowering costs, and introducing new and improved services, such as roaming between islands. Digicel Pacific is now the biggest telecommunications company across the Pacific Island markets, employing more than 1,200 local staff.x In Papua New Guinea, the introduction of Digicel has meant that thousands of people now have access to reliable Digicel beneficiaries, Papua New Guinea and affordable mobile phone services. In addition to the loan, IFC has also committed to providing financing and capacity-building support for Digicel’s distribution networks in Papua New Guinea. Research has shown that penetration rates have increased from 3 percent before Digicel’s entry in 2006 to 18 percent in financial year 2009. Today, more than 3.5 million people have access to mobile phones, up from just 1.2 million in 2007. Digicel Papua New Guinea employs 400 people locally and contributes to the livelihoods of some 30,000 people who have become affiliated Digicel sales representatives. xi According to the Treasury Department, an increase in competition contributed to a 0.7 percent growth in the country’s Gross Domestic Product in financial year 2008.xii Looking Forward Given the many challenges in the region—a volatile and on private sector cost savings by generating employment fragile economic and political climate, limited economic opportunities. diversification, and small, remote, and isolated markets—IFC continues to strengthen its strategy and partnerships in order Access to Finance: In the Access to Finance program, IFC’s to produce results. Going forward, IFC envisages continued goal is to enable more people—particularly the poor—to integration between Investment and Advisory Services, have access to financial services. By forging institutional greater synergies with the World Bank, and enhanced partnerships and assisting in the development of new partnerships with other key private sector development players and members of the donor community. IFC’s strategy for the Pacific Region incorporates three themes: • Diversifying sources of growth and sustainable employment: Focusing on maximizing opportunities in the extractives, tourism, and agribusiness sector as well as labor exports and remittances. • Expanding the link between communities and markets: Assisting in increasing access to infrastructure, formalization, connectivity, microfinance, and linkages to IFC investments. • Catalyzing private investment and enhancing competition: Improving the investment climate and facilitating state-owned enterprises privatization, competition, A local entrepreneur in the Solomon Islands and catalytic investments. products, services, and technologies in the financial services IFC Advisory Services sector, IFC will promote innovative schemes to respond to the challenges of expanding access to finance. Furthermore, To further these strategic goals, IFC will concentrate on IFC will continue to improve the enabling environment for broad-reaching reform efforts in investment climate, access to extending financial access to allow for more choices, more finance, and infrastructure, particularly in the poorest Pacific access points, and lower transaction costs. To deliver this countries classified as International Development Association outcome, IFC’s focus will remain on strengthening the nations. financial market’s infrastructure in the Pacific, particularly credit bureaus, secured transactions, company registries, and Investment Climate: In the Investment Climate Advisory payment systems. Services program, IFC will sustain a programmatic approach and increase its sector focus to sharpen the investment Sustainable Business Advisory: In the area of Sustainable facilitation impact by developing coordinated investment Business Advisory Services, IFC intends to maximize the promotion strategies for priority sectors. Synergies with other development impact of the expansion of telecommunications business lines will be strengthened, and new products, such as by promoting value-added services and improved distributor trade logistics and business taxation, will be introduced. The network performance. Resources will also be utilized to gender mainstreaming and tourism work will be accelerated, broaden access to markets to smallholder farmers through and we will continue to seek out regional cooperation lead firms and improved agri-finance systems. Promoting opportunities in programs such as alternative dispute sustainable agriculture, forestry and mining, and oil and resolution. The overarching objective is to make an impact gas practices that deliver benefits to local communities will IFC Advisory Services In The pacific 29 become a stronger focus. In addition, in an effort to align with our programmatic approach to tourism, increasing the benefits for local communities from possible new tourism investments will be incorporated into our strategy. Public Private Partnerships: IFC Advisory Services in Public Private Partnerships will continue to pursue work on transaction advisory mandates across most infrastructure sectors, including social infrastructure Public Private Partnerships such as in the health and education sectors. IFC will explore options for the private delivery and operation of infrastructure that is not viable on a purely private basis through pilot transactions using output-based subsidies and/ or multi-year capacity/availability payments. IFC Investment Services IFC is committed to continuing to deliver catalytic investments in the Pacific that benefit the broader community. Enhancing competition either by privatizing state-owned enterprises or investing in locally owned companies is a key part of our strategy. Furthermore, IFC will continue to help local businesses grow by assisting them to link into supply chains. Integrating IFC’s Investment and Advisory Services remains a key focus that will enhance our impact. Ultimately, IFC will ensure that its investments contribute to the diversification of the private sector, create employment opportunities, and improve services for people who need it most in the Pacific region. ENDNOTES i All macro-economic data have been sourced from an amalgam of Asian Development Outlook (various publications since 1996); Central Intelligence Agency (CIA) World Fact Book (various publications since 1990); World Development Indicators September 2009; Ministry of Foreign Affairs and Trade, New Zealand October 2009 (and earlier years); Department of Foreign Affairs and Trade, Australia June 2010 (and earlier years); and United Nations Economic and Social Statistics 2000–2010. In this case, IFC raised the funds for 13 businesses to start up, expand operations, buy equipment, upgrade ii manufacturing lines, install new product lines, etc. The 24 advisory projects initially requested help in raising funds; however, these projects required technical assistance as a primary means of support. Donor funds were used for all project activities. IFC paid for administration costs. iii Refer to http://www.ifc.org/ifcext/sustainability.nsf/Content/Publications_Report_EconOpWomenPacific. Tourism refers to the ‘Travel & Tourism Economy’ which includes the direct (industry) and indirect (flow on) iv economic contribution of tourism. v Long-line fishing is a commercial fishing technique that uses a long line, called the main line, with baited hooks attached at intervals by means of branch lines, called “snoods.” A snood is a short length of line attached to the main line using a clip or swivel, with the hook at the other end. Long lines are classified primarily by where they are placed in the water column—namely, at the surface or at the bottom. Lines can also be set by means of an anchor or left to drift. Hundreds or even thousands of baited hooks can hang from a single line. Long-liners commonly target swordfish, tuna, halibut, sablefish, and many other species. vi Source: Internal IFC Documents. vii Source: World Bank survey, refer to http://www.yearofmicrocredit.org/docs/Reaching_Out_Sept9.pdf. viii Source: Asian Development Bank paper, refer to http://www.adb.org/documents/caps/van/appendix.pdf. ix Source: Asian Development Bank fact sheet, refer http://www.adb.org/Documents/Fact_Sheets/VAN.pdf. x Source: Digicel. xi Source: Digicel. xii Source: Papua New Guinea Treasury Department. Sydney Office IFC Advisory Services - Pacific Level 18, 14 Martin Place Sydney, NSW 2000 Tel: +612 9235 6519 Fax: +612 9223 2533 Port Moresby Office Level 13, Deloitte Tower PO Box 1877, Port Moresby Papua New Guinea Tel: +675 321 7111 Fax: +675 321 7730 Dili Office Rua Dos Direitos Humanos, World Bank Group Building, Dili, Timor-Leste Tel: +670 332 4649 Fax: +670 332 1178 Website: www.ifc.org/ifcext/eastasia.nsf/Content/Pacific+Islands