IFC’s Financing Instruments

IFC’s Mission To promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC: Part of the World Bank Group IFC is owned by its 178 member countries, which collectively determine policies.

To assist private enterprise in developing countries, IFC: Provides loans and equity for viable projects Mobilizes capital from other sources Provides technical assistance and advisory services IFC Products and Services

Financial Strength Paid-in capital: Paid-in capital: $2.4 billion Total capital (net worth): Total capital (net worth): $11.1 billion Capital strength: Capital strength: IFC’s capital resources currently stand at 54 percent of risk- weighted assets, well above the 30 percent minimum for this ratio required by the capital adequacy policy. (As of June 30, 2006)

Defining Characteristics of IFC Participates only in private sector ventures Shares same risks as other investors Invests in equity Has market pricing policies Does not accept government guarantees Is profit oriented

IFC’s Beneficial Role IFC presence reassures   Foreign investors   Local partners   Governments Reputation and standing to help negotiations Measure of political risk cover Catalyst for other investors and lenders

Services Offered by IFC Financial products:Financial products: loans, equity, quasi- equity, guarantees, risk management products; includes transactions in many local currencies Resource mobilization:Resource mobilization: loan participations and structured finance Technical assistance and advisory services:Technical assistance and advisory services: on environmental/social performance, links with small businesses, corporate governance, capacity building, investment climate—many other issues

Global Financial Markets Group 34.5% Agribusiness 6.9% Global Manufacturing and Services 21.7% Health and Education 1.4% Global information and Communication Technologies 4.6% Oil, Gas, Mining and Chemicals 10.6% Municipal Fund 0.2% Infrastructure 15.6% Private Equity and Investment Funds 4.4% IFC Portfolio as of June 30, 2006 by Industry Total : $21.6 billion An additional $5.1 billion is held and managed for participants.

IFC Investment Guidelines A project must be : In the private sector Financially, economically, environmentally, and socially sound 25 percent maximum IFC's share of project cost Investment size   $1 million to $100 million in standard projects   Investments in local financial institutions often support on-lending to small and medium enterprises

Currency of choice Fixed or floating market-rate pricing Features   Tailored to cash flow   Long maturities, usually 7 to 12 years   Appropriate grace periods IFC Loans

Equity investments based on anticipated return IFC not normally the largest shareholder (not more than 35 percent) Passive investor Often considered “local” shareholder Long-term investor of 8 to 15 years Public listing the preferred exit mechanism IFC Equity Investments

IFC Quasi-Equity Financing Convertible debentures Subordinated loans Income warrants Other hybrid instruments Appropriately priced

IFC Risk Management Products:Products: swaps, options, forward contracts Purpose:Purpose: helps client companies hedge interest rate, currency, or commodity price exposure— improving their credit and profitability

Structured Finance Products:Products: partial credit guarantees and securitizations in local or foreign currency Purpose:Purpose: allows clients to diversify funding, extend maturities, and obtain financing in their currency of choice; helps develop local capital markets

Financing IFC’s Indirect Financing Credit and equity lines Venture capital Leasing Emphasis on investments in local financial institutions that on-lend to small and medium enterprises

IFC Loan Syndications Agreement with borrower: loan funded by IFC and participant banks Benefits: participant banks receive   Reduced risk   Exemption from country-risk provisioning   Immunity from taxation   Extensive emerging-market experience   Detailed preinvestment appraisal   Sound due diligence and ongoing supervision

IFC’s Technical Assistance and Advisory Services Business Enabling Environment Value Addition to Firms Environmental and Social Sustainability InfrastructureAccess to Finance Diagnostic Policy and legislation Cross-border Subnational Industry-specific Dispute resolution Business advocacy Corporate governance Entrepreneurship Business service providers Small business linkages (supply chain) HIV/AIDS Gender Direct assistance to small and medium enterprises Grassroots organizations Sustainable energy Biodiversity Cleaner technologies and production Sustainable investing Social responsibility Health and education Infrastructure Banking Nonbank financial institutions Housing and property finance Securities markets Microfinance Trade finance Credit bureau Insurance Municipal finance Sustainable finance

IFC Project Financing Sub-Saharan Africa Commitments, US$millions

FY06 Investments Committed $700 million in financing for 38 projects* in 11 countries Project financing (for IFC’s own account):   Loans $393 million   Equity & quasi-equity $72 million   Guarantees and risk mgt. $235 million Loan syndications $0 million *Includes regional share of selected global investments Sub-Saharan Africa

Regional Portfolio for IFC’s account FY06 Sub-Saharan Africa  Nigeria544  South Africa206  Cameroon190  Kenya152  Mozambique121 Largest Country Exposures (millions of U.S. dollars): Total committed portfolio2,201 Committed portfolio for IFC’s account2,033 Committed portfolio held for others (loan and guarantee participations) 168 (millions of U.S. dollars):