International Finance Corporation, IFC of World Bank

The International Finance Corporation (IFC) of the World Bank

The International Finance Corporation (IFC) is one of the two major affiliates of the World Bank. It was established on July 24, 1956, and became a specialized agency of the United Nations in February 1957. 

The purpose is to assist the World Bank, provide funds to private enterprises in member countries, especially developing countries, by means of loans or investment shares to promote the economic development of member countries. 

The bank's main sources of funds are: 

(1) Subscriptions paid by member countries. It was initially 100 million US dollars, divided into 100,000 shares, and after several capital increases, it reached 650 million US dollars.

(2) The company's accumulated profits, repayments from member countries, and income from the sale of IFC investments. 

(3) If necessary, you can borrow from the World Bank up to four times the sum of your subscribed capital and provident fund.

Organization Name:    The international finance corporation

Location:    One of the World Bank's agencies 

Officially Established in:    July 1956

Abbreviated:    IFC

Established:    February 1957

Establishment purpose of International Finance Corporation (IFC)?

The opening speech of Robert Ghana, the first president of the International Finance Corporation, on July 25, 1956

It was mentioned that IFC was the first intergovernmental organization to promote private enterprise development as its main goal.

The main purpose of the International Finance Corporation is to cooperate with the World Bank’s business activities to provide loans or investments that do not require government guarantees to key private enterprises in member countries, especially developing countries. Also, to encourage international private capital to flow to developing countries to promote the growth of the country’s private enterprises promotes its economic development.

What is the Organization Structure of International Finance Corporation (IFC)?

The IFC’s organizational structure and management methods are the same as those of the World Bank, and its highest authority is the Council; the Council has an Executive Board, which is responsible for handling daily affairs. director.

What are the Sources of funds for International Finance Corporation (IFC)?

There are three main sources of funding for IFC:

(1) Shares paid by Member States.

(2) Funds borrowed from the World Bank and other sources.

(3) Net operating income of IFC business operations.

IFC Business Content

IFC is committed to promoting the sustainable development of the private sector in developing countries.

It is meant to promote economic development by promoting the growth of production enterprises and efficient capital markets in member countries.

IFC investment in emerging market companies and financial institutions can create jobs, strengthen the economy, and generate tax revenue. 

They also recognize that economic growth is only sustainable if it guarantees environmental and social well-being and improves the quality of life of people in developing countries.

The International Finance Corporation uses its own resources and funds raised in the international financial market to finance projects.

It also provides technical assistance and advice to governments and enterprises.

The International Finance Corporation is the multilateral financial institution that provides the largest share capital and loans to developing countries in the world. It provides long-term commercial financing.

The IFC’s capital comes from its 175 member countries, and the governments of these countries jointly formulate policies and approve investments.

IFC shares risks with the sponsoring company and financing partners, but does not participate in project management.

Of the total investment in the project, IFC is only responsible for part of the financing. For every dollar invested by the International Finance Corporation, it can bring in $ 5 of investment from other investors and creditors.

The IFC's charter stipulates that it operates according to commercial principles and obtains profits. Since its establishment, the company has been profitable every year.

IFC investments do not require government guarantees.

Projects involving IFC usually enhance the confidence of all parties, such as foreign investors, local partners, other creditors, and government agencies, while balancing the interests of all parties.

What are the Principles of International Finance Corporation (IFC)?

The International Finance Corporation is a member of the World Bank Group and a global investment agency and advisory body, designed to promote development.

Sustainability projects in member countries make them economically effective, financially and commercially robust, and environmentally and socially sustainable.

The International Finance Corporation believes that healthy economic growth is the key to reducing poverty.

It should be rooted in entrepreneurship and successful private investment development, and a favorable business environment is essential for the latter’s prosperity and will contribute to the improvement of people's living standards.

IFC seeks to continuously improve our performance by responding to customers in a timely manner, sharing successes and learning lessons.

It adds value to developing member countries by the actions as:

• Assume reasonable risks that the private sector will not bear alone.
• Create opportunities in marginal countries and sectors to maximize the demonstration effect and catalytic effect of our projects.
• Through innovative activities to develop new products and services to better meet the needs of our customers.
• Provide quality consulting services when the private sector is unwilling or unable to do so.
• Achieve knowledge sharing, promote successful private investment, entrepreneurship and a favorable business environment.
• Fully implement environmental, social and corporate governance best practices at work.
• Respond in a timely manner to their needs and the needs of private sector customers.
• Integrity-Abide by the following principles of integrity in transactions and daily work.
• Ensure that you and your clients adhere to the highest professional and ethical standards.
• Remember the importance and value of good corporate governance in every investment.
• Try to be transparent, responsible and fair.
• Be honest, open and fair in dealings with each other, with our customers and local communities.

Environmental and social sustainability

The International Finance Corporation implements our core commitment to sustainable development through the following measures:

• Ensure that our projects meet high environmental and social standards.
• Consult with local communities on project-specific environmental and social impacts and opportunities.
• Cooperate with responsible customers, other loans and local NGOs.
• Actively listen to the voices of stakeholders and respond to their concerns.

What is the Investment scope of International Finance Corporation (IFC)?

IFC has investments in companies with major property rights in the private sector in many developing countries around the world.

In FY2005, IFC invested in 236 projects in 67 countries, covering all developing regions:

• Sub-Saharan Africa
• East Asia and the Pacific
• South Asia
• Europe and Central Asia
• Latin America and the Caribbean
• Middle East and North Africa

What is the Development strategy of International Finance Corporation (IFC)?

For all new investment projects, IFC first determines the expected effects of sustainable development; for mature projects, IFC evaluates the quality of the realized development benefits. In order to maximize the impact of sustainable development, IFC particularly emphasizes the following five strategic priorities:

(1) Strengthen the focus on marginal markets, especially the small and medium-sized enterprise sector.

(2) Establish long-term partnerships with emerging global business institutions in developing countries.

(3) Distinguish IFC from its competitors through sustainable development.

(4) Resolve restrictions on private sector investment in infrastructure, health and education.

(5) To develop the domestic financial market through system construction and the application of innovative financial products.

Related investment

China is currently one of the countries with the fastest growth in IFC investment. In the single year of fiscal year 2006, IFC committed a total of USD 63.8 billion to 24 projects. 

From the approval of the first project in 1985 to June 30, 2006, IFC has invested in 115 projects in China and provided US $ 2.86 billion in funding for these projects. 

With funds, $ 625 million came from other banks in the syndicate.

The key points of IFC's investment in China are:

• Encourage the development of China's local private sector, including SMEs.
• Invest in the financial industry and develop competitive financial institutions so that they can meet internationally accepted corporate governance mechanisms and operating standards.
• Support the development of western and inland provinces in China.
• Promote private investment in infrastructure, social services and environmental industries.
• The private sector has become a pivotal part of China's economy. IFC actively seeks opportunities to provide financing to local private companies that currently only have limited support from investment institutions.

IFC’s support for SMEs can alleviate the pressure brought about by the reform of state-owned enterprises.

China's opening to the financial industry will bring new opportunities for IFC to further support the development of commercially viable private financial institutions, especially the banking and insurance industries.

Financing example

Energy efficiency industry

China Utility Energy Efficiency Financing Project

In China's public utility energy efficiency financing projects, IFC will provide a risk-sharing mechanism for Chinese banks participating in the project with an investment of up to US $ 50 million to support energy efficiency projects with a total loan amount of US $ 115 million. 

China's public utility energy efficiency financing projects will have a huge development impact in promoting energy efficiency, reducing pollution and greenhouse gas emissions, and promoting Chinese SME loans. 

The Chinese utility energy efficiency financing project was supported by a grant of US $ 16.5 million from the Global Environment Facility and US $ 3 million from the Ministry of Trade and Industry of Finland.

China's public utility energy efficiency financing project hopes to finally achieve the following goals:

1. Support the strategic focus on energy efficiency and environmental protection in the 11th Five-Year Plan formulated by the National Development and Reform Commission;

2. Operate according to commercial principles;

3. Promote the use of energy-efficient equipment by providing technical assistance and risk-sharing mechanisms;

4. Form partnerships with utility companies, banks and energy efficiency equipment suppliers to implement the project;

5. Actively solve the current marketing and financing obstacles in the energy efficiency industry;

6. Support the government's strategy to accelerate the use of natural gas.

For the first time, China ’s public utility energy efficiency financing project has brought together utility companies, energy efficiency equipment providers, and banks to create a new financing model to promote energy efficiency projects. 

Through this project, IFC will support the financing of energy efficiency projects totaling more than US $ 150 million, which will result in a reduction of 5-10 million tons of greenhouse gas emissions.

Financial market industry

(1) Panda bonds

In October 2005, IFC issued the first domestic currency panda bond in the Chinese domestic market. 

The RMB 1.13 billion bond with a 10-year maturity was issued to institutional investors in the interbank market. 

IFC raised the bond proceeds to Guangzhou Development Industrial Co., Ltd., Anhui Conch Cement Company and Beijing United Family Hospital.

The issuance of bonds by the International Finance Corporation standardizes that the Chinese RMB bond market has begun to open to international financial institutions. 

The issuance also served as a model for the issuance of RMB bonds by high-credit issuers in the future, and it will also help China's capital market to further reform. 

The issuance of RMB bonds by IFC shows that China's capital market has taken another important step forward. It will further promote the development of China's non-government bond market, thereby increasing private companies' financing channels. 

The bond issuance has also given IFC a unique opportunity to help the further development of better-quality domestic companies that require domestic currency financing.

(2) Hangzhou United Bank

In 2006, the International Finance Corporation bought a 5% stake in Hangzhou United Bank. This was the first case of a foreign shareholding in China Rural Cooperative Bank. 

This innovative project will provide valuable, first-hand practical experience for the reform and restructuring of China's rural credit cooperatives. 

IFC has used its deep experience of investing in 

The IFC’s technical assistance fund will support the reform of the provincial rural cooperative system.

IFC will also appoint a senior bank manager with rich domestic and international banking experience as a board member of Hangzhou United Bank to advise on the management of Hangzhou United Bank and the construction of modern financial institutions.

The reform of the rural credit cooperation system has far-reaching significance for the development of China's rural areas and poverty alleviation. The purpose of this project is to establish a scale for China's Agricultural Cooperative Bank. 

The International Finance Corporation is committed to helping Hangzhou United Bank reach a higher standard in corporate governance, risk disclosure, environment and social responsibility. In this way, they can play a greater role in China's rural financial reform.

Agricultural industry

North Andre Apple Juice Concentrate

After IFC provided a $ 15 million loan to North Andre Concentrated Apple Juice in 2005, IFC provided a $ 4.5 million equity investment to it in 2006. 

North Andre was established in Shandong in 1996, and then quickly grew into a leading German producer and exporter of concentrated apple juice in China and the world. The loan from IFC will help Northern Andrea Company complete the expansion of the production facilities of its main production bases in the country, especially the expansion of production bases in the economically underdeveloped western regions. 

This is consistent with the Chinese government's strategy to support economic development in the western region. 

The investment will also help Northern Andrea increase production efficiency and increase production capacity to the level of processing 1 million tons of apples per year. 

The IFC’s funds will also help optimize the company’s capital structure and ultimately benefit about two million farmers directly from the production and processing of Apple by Andrea North.

To help Northern Andrea expand its support to local farmers, IFC will also provide a three-year supply chain technical assistance project with a total amount of 750,000 US dollars.

The technical assistance project will promote the use of good agricultural production practices such as improving the management of apple growing areas, strengthening the health and hygiene conditions of workers’production in China’s apple production process, reducing the pollution of agricultural chemicals to the environment, and reducing solid and Discharge of liquid waste.

The technical assistance project will introduce Apple’s traceable supply chain system to North Andre, so that the quality of its products can meet the standards expected by international food manufacturers.

Infrastructure

In 2006, IFC provided a long-term loan of US $ 22 million to Yunnan Zhongda Yanjin Power Generation Co., Ltd. 

International Finance Corporation, in cooperation with DEG, Proparco and FE Global and Asian Clean Energy, jointly support the construction and operation of three runoff power plants with a total installed capacity of 78,000 kW on the Baishui River in Yunnan Province, China. 

Yunnan Zhongda has 6 small hydropower stations with a total installed capacity of 18,500 kilowatts, all located in Yanjin County, Zhaotong City, Yunnan Province. The main sponsor of the project is Zhejiang Zhongda Sanchuan Hydropower Development Co., Ltd. Located in Hangzhou, Zhejiang, the company is a domestic holding company that develops, owns and operates small hydropower assets in China.

This is the first time IFC has invested in China’s underdeveloped western province of Yunnan, which will create more job opportunities. Since the project will consume a lot of materials and services, it will greatly promote the development of the local economy. 

This project will also have a demonstration effect, hoping to attract more investors to invest in Yunnan and other western provinces.

The construction of this project will further promote the Chinese government's policy of developing hydropower resources to replace thermal power generation. 

The project is expected to provide approximately 380 million kilowatts of clean energy annually during the 30-year operating period, thereby alleviating the power shortage problem in southern China and expected to reduce 8 million tons of greenhouse gas emissions.

Development Plan of International Finance Corporation (IFC)

On October 13, 2018, at the World Bank Annual Meeting held in Bali, Indonesia, the members of the World Bank International Finance Corporation (IFC) and Alipay jointly announced the launch of the 10x1000 technology inclusive plan, which is planned to be an emerging market in the next 10 years The country trains 1,000 technology leaders.