AVENUES AND OPTIONS FOR INCLUSIVE LIVELIHOODS – IFC EXPERIENCE

THE LIVELIHOODS ASIA SUMMIT 2014

Jeeva Perumalpillai Essex, Manager, Advisory Services

IFC: A MEMBER OF THE WORLD BANK GROUP

IBRD IDA

International Bank for Reconstruction and Development International Development Association Loans to middle income and credit-worthy low-income country governments Interest-free loans and grants to governments of poorest countries

IFC

International Finance Corporation Solutions in private sector development 1

MIGA ICSID

Multilateral Investment and Guarantee Agency Guarantees of foreign direct investment’s non commercial risks International Centre for Settlement of Investment Disputes Conciliation and arbitration of investment disputes

WHY PRIVATE SECTOR IS CRITICAL FOR POVERTY?

Imagine Bangladesh without the garment sector industry?

Or Sri Lanka and Maldives without its tourism?

Or Bhutan where power generation sector had not been tapped?

Or Nepal not exporting Pashminas to the world and with an untapped hydropower sector?

And India without proper infrastructure and more!

The private sector is recognized as a critical stakeholder and partner in economic development, a provider of income, jobs, goods, and services to enhance people’s lives and help them escape poverty.

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DEVELOPMENT: THE PRIVATE SECTOR’S ROLE

Complementing Governments by

• • • Identifying Business Opportunities Providing Knowledge and Capital Creating Jobs

Strengthening Economies by Improving Lives by

• • • Increasing Innovation Building Competition and Efficiency Generating New Tax Revenue • • • Creating Opportunity Raising Living Standards Reducing Poverty

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector

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WHAT WE DO

Integrated Solutions, Increased Impact

INVESTMENT

       Loans Equity Trade finance Syndications Securitized finance Risk management Blended finance

$51.7 bn portfolio (FY14) ADVICE

   Firm-level advice PPP transaction advice In partnership w/World Bank, advice on broader market development and enabling environment for private sector

720 projects valued at $1.1 bn (FY14) IFC ASSET MANAGEMENT COMPANY

   Wholly owned subsidiary of IFC Private equity fund manager Invests third-party capital alongside IFC

$6.4 bn under mgmt (FY14) 4

The Reach of IFC’s Projects 2014

• 2.6 million jobs • Health services to 27 million patients • Education to 2.5 million students • Improved opportunities for 2.9 million farmers • Power and gas to 64 million customers • Water distribution to 30.3 million people

BANGLADESH 5

IFC PROVIDES ADVISORY SERVICES FOR LIVELIHOOD PROMOTION

STRATEGIC COMMUNITY INVESTMENT FARMER TRAINING SME VENTURES INCLUSIVE BUSINESS MODELS

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STRATEGIC COMMUNITY INVESTMENT Helps clients design local investment strategies that increase productivity and loyalty while mitigating risks via:

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building local supply chains

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strengthening government tax/royalty management

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training community monitors

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increasing stakeholder engagement.

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COMPANIES DISTRIBUTE BENEFITS TO COMMUNITIES IN 3 KEY WAYS:

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WE OFFER CLIENTS THE FOLLOWING SERVICES 9 Stakeholder engagement planning Community investment strategy development Business case for community spending Risk identification and prioritization Financial Valuation Tool for Sustainability Investments Monitoring and evaluation plans Increasing participation of local businesses in supply chain Business skills training for local entrepreneurs Promoting female workforce Water risk / footprint assessment Royalty management

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FARMER ENGAGEMENT

Supply Chains / Smallholders Better training delivery Farmer engagement and aggregation models Traceability solutions Farmer aggregation models & methodologies E&S Sustainability Climate Smart Agriculture Improved E&S practices and performance Food safety management systems Responsible land use – company and community engagement Agri water efficiency Climate resilient crops varieties, cultivation practices and technology Agricultural inputs Food processor resource efficiency Enhance farmer productivity and income Mitigate risk for clients and investors Produce more with fewer resources 10

SUPPLY CHAINS – ECOM NICARAGUA

Featured on the Forum

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Client Need Rebuild farmer supplier base affected by coffee leaf rust Build internal capacity to manage long term lending to farmers Strengthen extension services to farmers to support coffee replanting IFC Advisory

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Provide advice on LT loan lending technology and portfolio management Improve technician training program Develop a renovation marketing plan and producer communications Monitor the roll-out of the lending and agronomic program with Ecom Expected Results

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Renovate 5,000 ha of coffee plantations Support 500 farmers to replant 5,000 HA of coffee plantations with resistant varieties Establish an Ecom technician accreditation program

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SUPPLY CHAINS – DSCL INDIA

Featured on the Forum Client Need

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Low farmer productivity – only 66% capacity utilization of sugarcane crushing plant Limited knowledge of good agricultural practices IFC Advisory

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Designed training for farmers on good agricultural practices and planting related to seed management, soil improvement, water usage Implemented an effective monitoring and reporting system Developed delivery model to ensure information is on time and accurate Results

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Trained farmers obtained sugarcane yields that were 79% higher than the yields of those who did not receive any training Initially 2,000 farmers received training – this was scaled up to over 17,500 farmers The project is expected to be expanded to reach 50,000 farmers and, ultimately, all 150,000 farmers in DSCL’s supply chain

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E&S SUSTAINABILITY – JAIN IRRIGATION INDIA • •

Client Need Meet international buyers requirements on farm level practices and pesticide use Develop a cost effective internal standard that meets buyer requirements and factors supplier capacity IFC Advisory

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Adapted GLOBALGAP standard to meet buyer requirements and created JAINGAP Reduced cost for both processor and farmers while improving farm level practices Prepared supply chain for eventual full GLOBALGAP compliance if/when it is required by the market Results

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Certified 1340 farmers Covered 2189 hectares National IndiaGAP standard used JAINGAP step-wise approach for certification

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SME VENTURES • •

SME Ventures was created in 2008 with a $100 million allocation for SME funds investments + advisory in response to demand for access to finance for SMEs in Fragile and Conflict Affected States (FCS) The program includes 4 risk capital SME funds covering six fragile countries including DRC, CAR, Sierra Leone, Liberia, Bangladesh, Nepal, Bhutan (fundraising) and Yemen (on indefinite hold) 14 14

UNIQUE COMBINATION OF RISK CAPITAL & ADVICE FOR SMES IN THE FRONTIER

Our Role Bring financial innovation and growth to the frontier 8 Countries (so far) Sierra Leone, Liberia, DRC, CAR, Nepal, Bangladesh, Haiti and Rwanda Macro Intermediary Micro Investment IFC investment in funds Loans, quasi-equity, and equity for SMEs ($500k max) Advisory IC, governance, E&S, fund manager capacity building, SME training 15

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LEARNING : INCLUSIVE BUSINESS MODELS a. Development Marketplace: competitions targeting low income states. 3 held in 2011, 2013 and 2014 with 46 social enterprises awarded grant and TA across 9 states.

b. Development of PRISM tool: with GIZ and Intellecap that provides an impact measurement and fund performance framework for impact funds. c. Mapping studies: Extensive Health sector mapping study conducted in India and Bangladesh to identify innovative and scalable inclusive models in health. d. South - South replication:. Intra south Asia as well as India Africa. A replication readiness framework being developed to help social enterprises assess their readiness to replicate their model.

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Thank you… Questions?

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