International Finance Corporation Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The mission of the International Finance Corporation (IFC), a member of the World Bank Group, is to foster sustainable economic growth in developing countries. IFC focuses its development efforts on the private sector, mobilizing capital in the international financial markets, and providing advisory services to business and governments. IFC emphasizes the actual impact that funded projects will have on the country’s economic and societal development.

Since its establishment in 1956, IFC’s task has been to work with the private sector to reduce poverty in developing countries. Today, private sector development is seen as the key driver of growth and poverty reduction. IFC supports private companies by providing capital, financial expertise, advisory services, and leadership in setting standards in 140 emerging markets.

IFC provides two main streams of support: investment services and advisory services. Investment services include loans and intermediary services, equity, syndicated loans, structured finance, risk management products, trade finance, sub-national finance, and treasury operations. IFC’s advisory services are aimed at creation of a favorable regulatory environment for businesses, providing corporate advice to firms, supporting environmental and social sustainability and infrastructure, and providing access to finance.

IFC uses these services to help companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. The goal is to improve lives, especially for people in developing regions who most need the benefits of growth. These regions include sub-Saharan Africa, east Asia and the Pacific, south Asia, Europe and central Asia, Latin America and the Caribbean, as well as the Middle East and North Africa.

In addition to the direct investments, IFC has substantial impact through its “convening power.” This means that when IFC takes the lead entering a new market or offering a new product, other financial institutions often follow along. Accordingly, IFC mobilizes capital through syndications. For many clients, the IFC “seal of approval” for projects is as important as the actual financing.

IFC’s largest shareholders include the United States, Germany, Japan, Switzerland, the Netherlands, Australia, Canada, and the United Kingdom. Together the member countries provide IFC’s authorized share capital of $2.4 billion, collectively determine its policies, and approve investments.

The president of the World Bank is also president of IFC. IFC’s executive vice president and CEO lead its strategy. IFC’s corporate governance is vested in a board of governors, whose members are appointed by shareholder governments. The Board of Governors delegates many of its powers to the board of directors, which also represents IFC’s member countries. They review all proposed investments. Voting power on issues brought before them is weighted according to the share capital each director represents. IFC’s operations are carried out by its departments, most of which are organized by world region or global industry/sector. IFC has over 3,100 staff, of whom 51 percent work in field offices and 49 percent at headquarters in Washington, D.C.

IFC’s focus on sustainable economic growth by creating opportunity and improving lives in developing countries sets it apart. Being a member of the World Bank Group, IFC shares the World Bank’s commitment to societal development and growth. Investment services focus on long-term partnerships with its clients and sustainable investments. IFC’s association with the World Bank allows it to provide a wide range of advisory services to businesses and governments.

IFC promotes investment including micro financing in frontier markets, those of the poorest countries or in the poorer regions, and particularly industries of middle-income countries. To foster development and growth in these markets, IFC strives to increase private-sector participation in infrastructure, health, and education. In addition, IFC supports efforts to mitigate global climate change by investing in new clean production technologies and providing financing so companies can upgrade to more efficient and cleaner equipment.

Bibliography:

Denis T. Carpio, Financing Micro, Small, and Medium Enterprises: An Independent Evaluation of IFC’s Experience with Financial Intermediaries in Frontier Countries (International Finance Corporation, World Bank Group, 2008);
Dan Crabtree and Hiroyuki Hatashima, Independent Evaluation of IFC’s Development Results 2007: Lessons and Implications From 10 Years of Experience (International Finance Corporation, 2007);
International Finance Corporation, www.ifc.org (cited March 2009);
Elisa Morgera, “Significant Trends in Corporate Environmental Accountability: The New Performance Standards of the International Finance Corporation,” Colorado Journal of International Environmental Law and Policy (v.18/1, 2007);
Edward Russell-Walling, “Issuer Strategy—A Successful Issue by the International Finance Corporation Proves the Rand Can Still Attract Interest,” The Banker (v.158/990, 2008);
World Bank, Doing Business: An Independent Evaluation: Taking the Measure of the World Bank-IFC Doing Business Indicators (World Bank, 2008).

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