An Evaluation of the World Bank's Trust Fund Portfolio

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APPENDIX F: RELIANCE ON DONOR FUNDS TO SUPPORT INTERNATIONAL FINANCE CORPORATION ACTIVITYEuropean Commission) committed just under $20 million, and private foundations, $9.6million.Donor commitments are now typically pooled, 1 for multiyear programs, and IFC’scontribution through FMTAAS is designed as a complementary long-term pot of funds,covering regions or activities where donor funding is scarce. Hence Advisory Servicesprograms are, in effect, funded several years out. Donor funding is in some cases still raisedon a project–by–project basis, as in Central and Eastern Europe. FMTAAS involves taking aportion of IFC’s retained earnings and designating it to FMTAAS (using a sliding-scaleformula) on a yearly basis by the IFC Board, based on IFC management proposal.Recognizing the likelihood of fluctuations in IFC’s financial performance, FMTAAS wasdesigned to provide a stable (multi-year) funding source for the advisory business. Annualdesignations to FMTAAS are linked to IFC’s financial performance through a sliding-scaleformula based on net income. Allocations from FMTAAS to specific programs are made byIFC management, with Board approval required, depending on the size of the fundingrequested.Trust-funded Advisory Services activities are fully aligned with IFC’s regional strategiesand create an integral part of IFC’s overall business strategy. Each regional strategy forFY11–13 presented to IFC management included Advisory Services programs financedthrough trust funds. IFC manages an active portfolio of 736 Advisory Services projects forover $850 million commitments (as of FY10). In FY10, Advisory Services expenditurestotaled $268 million. IFC employs over 1,000 advisory staff in 84 offices across 66 countries.Through its Advisory Services, IFC provides advice, problem solving, and training tocompanies, industries, and governments and is organized into four business lines: access tofinance, investment climate, public-private partnerships, and sustainable business advisory.Access to Finance: IFC’s goal is to help increase the availability and affordability offinancial services, particularly to micro, small, and medium enterprise clients. Thisbusiness line focuses mainly on building bank and nonbank financial institutions;improving financial infrastructure; and improving the legal and regulatoryframework. At the end of FY10, IFC had an active portfolio of 238 projects in 68countries valued at nearly $290 million.Investment Climate: IFC’s goal is to help governments implement reforms toimprove their business environment and encourage and retain investment, thusfostering competitive markets, growth, and job creation. At the end of FY10, theactive portfolio accounted for 144 projects in 67 countries for over $185 million.Public-Private Partnerships: IFC advises governments on structuring public-privatepartnership transactions in infrastructure and other public services. IFC’s advicehelps governments achieve long-term economic grown and better living standardsby harnessing the potential of the private sector to increase access, enhance quality,and improve the efficiency of public services such as electricity, water, health, andeducation. IFC’s advice is based on global best practices and balances the needs ofinvestors with public-policy considerations and the needs of the community. At theend of FY10, the active portfolio amounted to 91 projects in 53 countries for $130million.114
APPENDIX F: RELIANCE ON DONOR FUNDS TO SUPPORT INTERNATIONAL FINANCE CORPORATION ACTIVITYSustainable Business 2 : IFC promotes sustainable business practices, specificallyamong firms in infrastructure, extractive industries, manufacturing, agribusiness,and services sectors. IFC’s programs encourage good corporate governance, buildthe capacity of small and medium firms, support women entrepreneurs, andpromote management and investment decisions that are sustainable and inclusive.At the end of FY10, the active portfolio accounted for 263 projects in 70 countries for$255 million.The management of trust funds in IFC is decentralized and executed through globaldepartments for programs in headquarters and in regional departments for programs inregions across the four business lines. Advisory programs/facilities are typically establishedfor 4–5 year horizons and are pooled by theme or regions. Among other areas, FMTAAScovers strategic activities where donor funding is insufficient or unavailable.Donor-Funded Investment ActivitiesThe portfolio of donor trust funds for investment purposes has been expanding recently (seetable F.2) due to donor contributions to IFC’s crisis response initiatives such as the GlobalTrade Liquidity Program and the Microfinance Enhancement Facility, which account for 78percent of the value of the total IFC trust fund portfolio. IFC invests these funds along withits own resources.The Global Trade Liquidity Program (GTLP) began its operations in May 2009, channelingfunds to support trade in developing markets and to address the shortage of trade financeresulting from the global financial crisis. It raises funds from international finance anddevelopment institutions, governments, and banks, and it works through global andregional banks to extend trade finance to importers and exporters in developing countries.With targeted commitments of $4 billion from public resources, the program expects tosupport $45 billion of trade in three years. IFC’s commitment to the program is $1 billion.IFC mobilized $882 million for the program by facilitating and structuring partnerships andnegotiating legal agreements with four donors (Saudi Development Fund, UnitedKingdom’s DFID, Dutch MOFA, and Canada’s Ministry of Finance). IFC has created aninnovative Trust Fund Mechanism to allow channeling these funds through IFC trust fundsto the global and regional banks to extend trade finance to importers and exporters indeveloping countries. In the GTLP, IFC, in addition to being an agent, acts as animplementing entity for the GTLP donors. At the end of FY10, Latin America and theCaribbean and East Asia and the Pacific represented 62 percent of the GTLP tradesupported, whereas Sub-Saharan Africa accounted for 19 percent.The Microfinance Enhancement Facility (MEF) has been launched by IFC and the Germandevelopment bank KfW to support microfinance institutions. IFC and KfW invested $150million and $130 million, respectively, to help fundamentally sound microfinanceinstitutions facing severe credit constraints in the wake of the financial crisis. The goal of theMicrofinance Enhancement Facility is to provide refinancing to more than 100 microfinanceinstitutions in as many as 40 countries and to support lending to as many as 60 million lowincomeborrowers.115
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The World Bank GroupWORKING FOR A W
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©2011 The Independent Evaluation G
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CONTENTSAllocation of Trust Fund Re
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CONTENTSFigure 5.3 All Networks, Es
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AcknowledgmentsThis report was prep
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SummaryAs development challenges ex
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SUMMARYchannels? In addition, the B
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SUMMARYinnovative development finan
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SUMMARYdonor funds in line with rec
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Management ResponseIntroductionMana
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MANAGEMENT RESPONSEplay at the leve
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MANAGEMENT RESPONSEattention needs
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MANAGEMENT ACTION RECORDMajor Monit
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Chairperson’s Summary:Informal Me
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1. The Role of Trust Funds in theGl
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CHAPTER 1THE ROLE OF TRUST FUNDS IN
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CHAPTER 2THE WORLD BANK’S TRUST F
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CHAPTER 3THE RELEVANCE AND EFFECTIV
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CHAPTER 4MANAGEMENT AND ACCOUNTABIL
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Page 109 and 110: 6. Findings and Recommendations6.1
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Page 115 and 116: the evaluation, namely operational
Page 117 and 118: Appendix A: Methodology NoteCalcula
Page 119 and 120: Appendix B: Trust Fund Use in the E
Page 121 and 122: APPENDIX B: TRUST FUND USE IN THE E
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Page 125 and 126: APPENDIX C: LIST OF INDIVIDUALS CON
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Page 139 and 140: APPENDIX E: FINANCIAL INTERMEDIARY
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Page 149 and 150: Appendix H: Organizational Aspects
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Page 154 and 155: ENDNOTES3. Over fiscal 2002-10, the
Page 156 and 157: ENDNOTES31. Cited in a 2008 indepen
Page 158 and 159: SELECTED BIBLIOGRAPHYKharas, H. 200
Page 160 and 161: SELECTED BIBLIOGRAPHY____. 2010l.
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An Evaluation of the World Bank's Trust Fund Portfolio

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