Monday, December 11, 2017 12:00:55 PM
Philippe Le Houérou :
Last April, I wrote about the changes we are making as we re-examine our engagements with financial institutions, or FIs. We are doing this in order to create a more responsible banking system, as well as to boost financial inclusion globally. I want to provide an update on our progress in the past six months.
My commitment was that IFC would be more selective in terms of our financial intermediary investments and lending. We can report now that we have been more selective, but that we still face challenges in some other areas in our engagement.
In the last fiscal year, we have increased our targeted investments. For instance, we tripled our climate commitments with financial intermediaries, with more than $1.4 billion going to this sector. Our clients also made about 8.3 million loans to small- and medium-sized enterprises and 54 million microloans last year. Overall, 35 percent of our FI projects were in our category of the poorest countries - called IDA - and we exceeded our targets for investing in fragile and conflict-affected countries.
Our staff and management make every effort to ensure that we reduce our exposure to higher risk FI activity and apply greater selectivity to these transactions. In the last fiscal year, for instance, we financed five projects that we classify as higher risk under our Sustainability Policy, compared to 18 in FY16. We have also been reducing the number of general lines of credit. In fact, we have turned down several large deals in FY17 because of our greater selectivity.
Enhanced client support
We are also making progress on the support we provide to our portfolio clients. We have just completed a successful pilot project in Latin America and Asia, where we provided enhanced support to 15 higher risk FI clients that were either struggling with environmental and social risk management implementation, or operated in markets where standards were low or nonexistent.
Despite their higher risk profile, these FIs have significant positive impact in their local markets and contribute toward our development goals. Working with these clients requires a greater commitment from us - more time and resources - but this investment is well worth it. We have started rolling this successful model out in other regions and with more portfolio clients. If we find that clients refuse this enhanced support, we will consider ending those relationships.
We have also changed our internal structures to better support the delivery model of environment and social risk management (E&S) to our clients. Now each region has a designated E&S regional sector lead for financial intermediary transactions. These key IFC staff oversee the quality of E&S assessments and supervision of FI clients performed by our dedicated E&S specialists. An additional global sector lead has been appointed to ensure consistency across regions.
In April, I also committed to greater transparency of how our FI funds are used. When we talk, for instance, about making a targeted loan to women-owned business, we want to specify the definition of those businesses. On our website, we recently provided clear definitions of targeted sectors, including small- and medium-sized enterprises, women-owned businesses, housing finance, and climate business.
And, as committed, we are disclosing the use of these targeted funds to show that they are being used for the stated purpose. For instance, if we sign a deal with a bank for $20 million in loans to small- and medium enterprises, our team will update the public Summary of Investment Information to confirm this deal. This adds another layer of accountability for IFC and its clients.
Raising standards across the finance industry
We also are working to expand transparency throughout the finance industry. We are continuing our efforts to establish an industry working group on disclosure. This has not been easy and has gone slower than we anticipated. As a start, we have mapped existing disclosure practices, and we plan to share a working paper on this issue soon.
Another commitment to bring about systemic change in the finance industry is now unfolding with the IFC-supported Sustainable Banking Network. SBN members represent 34 countries, which collectively cover 85 percent of banking assets from the emerging markets. In the past five years, 15 member countries have already launched sustainable finance policies and voluntary principles with IFC support.
Over the past year, SBN also has developed a new measurement framework to systematically track and measure policy comprehensiveness and adoption across members and countries. The goal of this exercise is to develop a practical methodology, tools, and indicators that SBN members can apply to their own national contexts, with state-of-the-industry reports issued annually.
Making progress with our FI partners and across the finance industry will take time. But we are committed to raising standards not just with our own projects, but throughout the finance industry. We also are committed to providing regular updates on our progress and our ongoing discussions with all parties interested in these issues.
(Philippe Le Houérou is CEO of IFC. Since joining IFC in March 2016, Mr. Le Houérou has led the organization's efforts to create new markets in developing countries and redefine development finance by promoting initiatives and reforms that unlock billions of dollars in additional private sector investment).
AFP, New York :Billionaire Guo Wengui, who is seeking asylum in the United States after accusing officials in his native China of corruption, wants "a change of the regime" in Beijing and the introduction of democracy in the world's most populous country."I want to try and to have rule of ...
PASSING the Aman harvest, rice price has not come down as government leaders earlier said and rather gone up to the dismay of the common people all over the country. Though farmers are happy with higher price; although they have suffered production loss at many places due to late receding ...
For the fourth consecutive year, Bollywood actress and model Gauhar Khan has been voted to the top 10 list of ‘50 Sexiest Asian Women list’ in the world. It is an annual UK poll, which has been released in London recently. The actress, who is known for her choice of ...
Huff Post :A former Fox News anchorwoman who accused Bill O'Reilly of sexually harassing her in 2011 is now claiming that Donald Trump kissed her on the lips in an elevator.Juliet Huddy said Thursday morning on the "Mornin!!! With Bill Schulz" podcast (which has a paywall) that it happened around ...
PRESENCE of dust and pollution in the air of our cities has reached alarming levels. It's happening mainly due to chaotic construction works, poor management and protracted traffic jams. According to Air Quality Index Report of the Department of Environment's (DoE) "Clean Air and Sustainable Project" earlier this month, air ...
BSS, Dhaka :Chanchal Kumar Ghosh emerged as unbeaten champion in the Blitz Chess Championship with 6.5 points after the 7th round game on Friday at E Commerce Club hall room in Uttara. Five players finished in second to sixth position with 5.5 points after the tie breaking system. They are ...
Akshay Kumar, who has films like Padman and 2.0 lined up for 2018, has created a stir after rumors of him stepping out of the film titled Mogul came to the forefront. Mogul is a biopic on the creator of T-series, Gulshan Kumar. According to the rumors, Akshay Kumar and ...
DESPITE fertile land loss, inclement weather and depleting irrigation water, Bangladesh's agriculture keeps contributing a fifth of the GDP each year. Along with other factors, government's policy support in the form of fertiliser subsidy plays a big part here. But misappropriation of the key agro input such as fertiliser by ...
Over the past few days, there are some reports doing the rounds that ace cricketer Virat Kohli and Bollywood starlet Anushka Sharma are getting married. According to these reports, both these love-birds will tie the knot in Italy. The manager of Anushka has already slammed these reports by saying these ...