Japan and IFC

							Japanese Executive Office for the World Bank, IFC, and MIGA Makoto Hosomi Executive Director 1818 H Street, NW Washington, DC 20433 USA Phone: + 1 (202) 458-0098 Fax: + 1 (202) 522-1581 e-mail: EDS02@worldbank.org IFC Headquarters Laurence W. Carter Director, Small and Medium Enterprise Department 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA Phone: + 1 (202) 473-8628 Fax: + 1 (202) 522-3742 e-mail: lcarter@ifc.org Tokyo Office Hiroshi Arichi Director, IFC Tokyo Office Fukoku Seimei Bldg., 10F 2-2, Uchisaiwaicho 2-chome Chiyoda-ku, Tokyo 100-0011 Japan Phone: + 81 (0)3 3597 6657 Fax: + 81 (0)3 3597 6698 e-mail: harichi@ifc.org

Japan and IFC
Creating Opportunities Together

We would like to thank the following IFC staff for their assistance and contributions: Max Aitken, Hiroshi Arichi, Ann Bishop, Laurence W. Carter, Kristen Klemperer Fenster, Tomohiro Fukagata, Evelyn P. Hartwick, Urkaly Isaev, Yumiko Ito, Kareem Makhlouf, Marjorie Pavia, Toshiya Masuoka, Ikuko Matsumoto, Shinya Nishimura, Makiko Toyoda, Benito Zapata. Editorial and Production Team: Andrea Engel, Reina Kawaguchi, Akihiro Tanaka Design: Design Army, Washington, DC Printing: CSI Limited, Falls Church, VA Printed on recycled paper with soy based inks

ABOUT JAPAN’S MINISTRY OF FINANCE
Japan’s Ministry of Finance represents the Japanese government in its relations with international financial institutions, including IFC. The Ministry of Finance is actively engaged in strengthening Japan’s partnership with such institutions to maximize efforts to reduce poverty in developing countries. For more information, visit http://www.mof.go.jp

I. Executive Messages ........................................................................... 2 II. An Introduction to IFC ..................................................................... 4 III. The Japan-IFC Partnership .............................................................. 5 IV. Cooperation with the Japanese Government ........................................ 8 V. Opportunities for the Japanese Private Sector .................................... 16

ABOUT IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, visit www.ifc.org Note: All monetary amounts are in U.S. dollars, unless otherwise noted. IFC’s fiscal year (FY) is from July 1–June 30.

I. EXECUTIVE MESSAGES

IFC creates opportunities for people to escape poverty and improve their lives. We do this by investing and providing advisory services primarily to private sector companies in emerging markets. We work with a number of important partners, including Japan. Such partnerships allow us to maximize our impact on developing the private sector in emerging markets.
Over the past year, I have traveled to over 40 countries and seen many examples of how globalization benefits people around the world. But many more have yet to benefit. At the bottom of the economic pyramid remain 4 billion people who live on less than $2 a day. This is the segment where IFC focuses and where we, along with our partners, can add value. It is a market with an estimated purchasing power of $5 trillion. Advisory services are a key part of addressing the remaining challenges because they can help create the conditions that allow small enterprises—often the backbone of the economy in developing countries—to prosper. These activities are a cornerstone of the cooperation between Japan and IFC and are also a key part of IFC’s unique contribution to development. Advisory services allow us to go into frontier markets. They allow us to drive innovation and continue to raise environmental, social, and corporate governance standards. One way Japan and IFC have worked together successfully is in developing small businesses, especially by facilitating access to finance in emerging markets. Together, for example, we have helped transform a small Cambodian microfinance organization, ACLEDA, into one of the country’s largest commercial banks. Today ACLEDA is a top performer among microfinance institutions worldwide. Most of its loans go to entrepreneurs selling basic commodities and artisanal goods. Some 63 percent of its customers are women. In 2006, our investment portfolio contained 62 projects involving 51 Japanese sponsors, partnerships that are spread over 29 countries and 37 sectors. I encourage Japan’s private sector to continue to work with IFC to find innovative and sustainable ways to reduce poverty in the world. Our Japanese private sector partners share IFC’s approach to development, which is firmly grounded on the conviction that sustainability is a key element of successful development. The fact that Japan’s three largest banks are signatories to the Equator Principles is a clear testament to this fact. We are pleased to present this brochure, which provides an overview of the multitude of ways that Japan and IFC work together. Thank you, Japan, for all your support throughout the years. We are grateful that we can continue to count on you as a trusted and committed partner in our shared fight against poverty.

The beginning of Japan’s relationship with IFC dates back to 1956, when IFC was founded. Since then, both partners have closely collaborated on a wide range of issues that are at the top of the global agenda.
Japan strongly supports IFC’s goal of promoting sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives. Helping recipient countries establish competitive investment climates to foster the private sector is a critical part of sustainable development in emerging markets. In this context, we believe that IFC can play a catalytic role in delivering best practices of “doing business” across developing countries. The Japanese government and IFC closely consult each other on their respective strategies and priorities in overseas assistance. Much of IFC’s activity is relevant to the issues regarded as high priorities in Japan. I hope that readers will gain a better understanding of the partnership between Japan and IFC and seek opportunities to participate in some of its diverse activities. With thanks,

Makoto Hosomi Executive Director for Japan June 30, 2007

Lars H. Thunell IFC Executive Vice President and CEO

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II. AN INTRODUCTION TO IFC

IFC is the largest multilateral provider of financing in the developing world, promoting sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives. IFC combines its investments with advisory services to maximize development impact.
IFC has 179 member countries, including Japan. IFC is headquartered in Washington, DC and has 80 offices around the world, mainly in developing countries. IFC also has an office in Tokyo. IFC is a member of the World Bank Group but is legally and financially independent. IFC’s Additionality IFC does not compete, but complements and facilitates the role of the private sector in developing countries by: • Taking educated investment risks that the private sector can not take alone • Pioneering opportunities in frontier countries and sectors to maximize the demonstration effect and catalytic role of projects • Innovating by developing new products and services to drive private sector development • Providing quality advice when the private sector is unwilling or unable to do so • Sharing knowledge to promote successful private investment, entrepreneurship, and enabling business environments • Integrating and promoting best environmental, social, and corporate governance practices and in all our projects and work

Financing for Development
IFC operates under market discipline, earning a profit while contributing to sustainable development. IFC screens all projects and seeks opportunities for better social, environmental, and corporate governance performance to strengthen the financial health and long-term sustainability of its client companies and local economies. Investment services: IFC finances private sector projects in developing countries through loans, equity finance, and quasi-equity investments. IFC also offers financial risk management products and intermediary finance. A growing number of investments are in local currency. Resource mobilization: IFC helps companies in developing countries tap into international capital markets through its loan participation program, which arranges syndicated loans from banks. IFC also mobilizes financing from international financial institutions through structured finance, investment funds, private placement, and other innovative approaches. The impact of this work has been significant. For example, IFC support to health and education projects reached 2.4 million patients and 320,000 students in 2006. IFC’s investments in telecommunications firms helped 80 million people gain access to phone service between 1996 and 2006.

Beyond Financing: Advisory Services
Increasingly, IFC goes beyond financing by combining its investments with advisory services. This combination allows IFC to maximize the impact of its work by taking a comprehensive approach to promoting private sector development in emerging markets. This work is financed through the generosity of donors, including Japan, as well as by IFC itself. IFC’s advisory services focus on five areas: creating a business enabling environment, value addition to firms, environmental and social sustainability, infrastructure, and access to finance.

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III. THE JAPAN-IFC PARTNERSHIP

JAPAN’S GOVERNING POWERS IN IFC Japan was one of IFC’s founding members in 1956. Along with IFC’s other 178 member countries, Japan provides share capital, determines policies, and approves investments. IFC’s shareholders provided IFC’s start-up capital and a capital increase in the 1990’s; day-to-day operating expenses are, however, solely financed through the profits IFC generates by operating under market discipline.
IFC’s corporate powers are vested in a Board of Governors. Japan’s Minister of Finance usually acts as the Governor for Japan. The Board of Executive Directors is responsible for conducting the day-to-day business of IFC. Japan is IFC’s second largest shareholder, having contributed more than $1.41 billion to IFC’s share capital, and holds its second largest voting block, with 5.87 percent of its total votes. ANNUAL CONSULTATIONS BETWEEN JAPAN AND IFC In addition to day-to-day communications, Japan and IFC hold formal consultations once a year. IFC’s main counterpart in Japan is the Ministry of Finance. During these annual consultations, IFC also meets with other partners such as the Ministry of Foreign Affairs; the Ministry of Economy, Trade, and Industry; Japan Bank for International Cooperation (JBIC); and Japan International Cooperation Agency (JICA) to provide updates on major policies and strategies and seek opportunities for cooperation. The Japanese government and IFC continuously strive to strengthen this strategic partnership in order to sharpen strategic directions, identify areas for collaboration, learn from experience, and avoid duplication of work. IFC’S OFFICE IN TOKYO IFC’s office in Tokyo works to enhance the partnership between Japan and IFC through building relations with Japanese companies; liaising with Japanese ministries, other governmental agencies, and foundations; helping to recruit Japanese staff; and conducting external communications. IFC IN JAPAN’S FINANCIAL MARKET The Japanese market is an important source of funds for IFC. Between fiscal years 2000 and 2006 about 43 percent, or $9.2 billion equivalent, of IFC’s funding was raised in the Japanese capital markets in yen as well as in other currencies. This market represents the second most important source of funds for IFC, where the principal buyers of our debt products are both Japanese institutional and retail investors. JAPANESE STAFF AT IFC The number of Japanese staff at IFC has gradually grown since 2002, currently reaching about 40 staff members. Japanese staff work on a variety of IFC activities ranging from investment to strategy, advisory services, and legal. About thirty percent of Japanese staff at IFC hold leadership positions. IFC also regularly hosts staff seconded from major Japanese private companies. IFC dedicates significant effort to recruit Japanese talent globally, which in 2006 resulted in record recruitment of nine Japanese nationals. IFC’s recruitment activities include participating in recruitment fairs, holding an annual online career event targeting alumni of Japanese universities and participants in global MBA programs, conducting interviews in Tokyo, and liaising with Japanese universities to expose undergraduates to IFC’s work and mission. IFC has also hired a dedicated staff member to focus on Japanese recruitment.
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Working for IFC–A Japanese Perspective
“I strongly believe in IFC’s mission of reducing poverty through the private sector. People in the developing world want jobs and access to basic services and finance— not charity. Postwar Japan is an excellent example of the role the private sector can play as an engine of growth. China, India, and many other countries are following a similar path. This example inspires me every day. At IFC, I enjoy working at the corporate level, thinking how we can make a difference at the local level.” Toshiya Masuoka Director, Operational Strategy Group Toshi joined IFC in 1990, and held positions in the South Asia, Infrastructure, and Latin America and the Caribbean Departments. He joined the Operational Strategy Group in 2004 and is currently its director. Toshi worked for Fuji Bank, Ltd. and the World Bank before joining IFC. He holds an MBA from the Wharton School and a BA in international economics from Waseda University. “IFC gives you opportunities if you are willing to take them. At IFC, I have worked in both investment and advisory services, in the field and at headquarters. I enjoy working at IFC because of the role it plays in taking the risks that the private sector cannot take alone in the developing world. This allows IFC to make a difference and develop the markets that are otherwise impossible for the private sector to enter. By working for IFC, I am given a chance to work on such a mission while contributing to the international community.” Makiko Toyoda Projects Officer, Global Financial Markets After working for Industrial Bank of Japan and the European Bank for Reconstruction and Development, Makiko joined IFC’s East Asia & Pacific Department in Hong Kong in 2003. She moved to headquarters in 2006 and now works for the Global Financial Markets Department. Makiko holds an MA in international public policy from SAIS, Johns Hopkins University, and a BA in economics from Keio University. “IFC is a fascinating place to work because of the variety of tasks, industries, clients, and colleagues that one has to deal with on a daily basis. People who thrive here are people who are good communicators, open, proactive, and have a positive attitude. I am also deeply committed to IFC’s development mission, and the fact that business can help developing countries is very attractive to me. My best experience so far has been to meet clients that are willing to grow. They are real entrepreneurs, and they see the value of IFC.” Yumiko Ito Associate Investment Officer, Agribusiness Department Yumiko joined IFC in 2005 and has worked in the Infrastructure and Agribusiness Departments. Before joining IFC, Yumiko worked for Deloitte for five years. She holds an MA in international affairs from UC San Diego, a BA in policy management from Keio University, and also undertook a 10-month development studies program at Japan’s Institute of Developing Economies.
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For more information, please visit: www.ifc.org/careers

IV. COOPERATION WITH THE JAPANESE GOVERNMENT

Japan is one of the most important donors to IFC’s advisory services. Japan’s Ministry of Finance is IFC’s main partner in this work. TARGETING SUPPORT TO DEVELOPMENT NEEDS: TRUST FUNDS Japan has a trust fund with IFC, through which it supports private sector development globally, with a focus on Asia and the Pacific. Japan is IFC’s largest donor supporting advisory services through trust funds. Since 1995, Japan has approved 126 projects through its IFC trust fund. The largest beneficiary in geographic terms continues to be Asia with 45 percent of all approved projects, followed by Europe and Central Asia with 24 percent. Twenty-nine percent of projects were allocated in frontier markets. Top sectors covered by the Japanese trust fund are financial sector development, followed by utilities.

Cambodia: Supporting the Provision of Microfinance
Japan, IFC, and other partners helped Cambodia’s ACLEDA Bank grow from a small nongovernmental organization into the country’s second largest commercial bank in six years. Initially, the focus was on helping ACLEDA establish international standard banking procedures and practices, and improve managerial systems. Ongoing advisory services focused on training loan officers to appraise the businesses of would-be SME borrowers. In 2001, IFC and other international investors took equity in ACLEDA. In 2003, IFC led ACLEDA’s five shareholders in increasing their equity by another $8 million—the final step in ACLEDA’s transformation into a commercial bank. In 2004, IFC provided ACLEDA with a $6 million credit line to increase lending to small and medium enterprises. Japan’s support: Japan has contributed to ACLEDA through two channels. Through its trust fund with IFC, Japan provided a $150,000 grant that allowed the bank to hire an expatriate resident advisor. Japan also supports IFC’s multidonor facility that promotes private sector development in the Mekong region, which has provided considerable advisory work to ACLEDA. Impact: ACLEDA’s transition to a commercial bank—and its steady but prudent growth, profitable business model, sound reporting and information systems, and transparent governance—make it a role model for microfinance institutions in East Asia and around the world. Today, ACLEDA has the widest reach of any financial institution in Cambodia and is the only bank specializing in loans to poorer people. Most of its loans go to microentrepreneurs selling basic commodities. The bank also enables customers to transfer funds easily throughout the country, and between other countries and Cambodia: important steps because many Cambodians are migrant workers who support extended families in rural areas.

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Cambodia and Indonesia: Making Small Handicrafts Businesses More Competitive
In countries such as Cambodia and Indonesia, the sale of handicrafts is often the only source of income for disadvantaged, rural populations. To address the constraints faced by many of these producers, IFC and its partners—including Japan— have established design and export promotion centers called “CraftNetwork.” The centers aim to increase export sales by facilitating orders for local producers to leading export buyers, and to build more competitive and sustainable local businesses through strengthened business operations and improved efficiency. In Cambodia, the project cooperates with ACLEDA bank to provide loans to grassroots businesses. JICA, IFC, and other partners also provided producers with specific input to make their products more attractive to the Japanese market through videoconference seminars that were delivered to over 200 local artisans in Indonesia. Japan’s Support: Japan has supported this initiative through a series of channels. It has provided $455,000 in direct backing to the project, as well as indirect backing through IFC’s facilities that make small enterprises more competitive in the Mekong region and Indonesia and assist grassroots businesses around the world. Impact: The CraftNetworks are currently assisting 44 local producers (12 in Cambodia and 32 in Indonesia). To date, these centers have generated sales of nearly $500,000 for its members and $450,000 for other Balinese producers through its marketing partners. These sales have led to the creation of approximately 700 jobs. In addition, product development, production management training, and advisory services in implementation of ethical trade standards were delivered with the support of the Japanese funds. CraftNetwork-Indonesia is in the process of transitioning into a partnership with a private enterprise in Bali, a shift that will further increase the program’s efficiency and effectiveness in assisting member producers and generating increased sales. In addition, the CraftNetworks are working with partners such as IFAT and Traidcraft to further develop ethical trade standards, and create practical tools for the improved implementation of these standards.
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Mongolia: Helping Herder Families Obtain Solar Energy
Japan is IFC’s main partner in a project that since 2004 has worked to introduce leasing in Mongolia. Leasing has benefited many in the country, in particular SMEs that would otherwise have difficulty in accessing financing to support and grow their operations. One of the most unusual beneficiaries of this project are Mongolia’s isolated herders. Through work with a rural finance company, the project facilitated leasing of solar panels to herders, giving them access to energy for cooking and to run appliances—such as radio and TV, through which they can access crucial information on the weather and livestock prices. Solar panels have also been made available to a school dormitory and wind generators to two hospitals. Japan’s support: In 2001, with a $100,000 grant, Japan supported a market study and backed efforts to help the government of Mongolia establish an adequate legislative framework for leasing. Japan followed this up with a $550,000 grant that helped launch the Mongolia Leasing Development Project in 2004. Impact: Since its launch, the project has advised the government on its leasing and taxation law, culminating in the adoption of the Law of Financial Leasing in 2006—including recommendations made by the project. The project has educated private enterprises and financial institutions on leasing: 46 training courses have been conducted, reaching 650 people. The project also provided more than 100 hours of consultations to leasing companies and assisted four universities and three training centers in developing courses on financial leasing. The project also trained journalists and had materials on leasing published in popular daily newspapers.
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Mekong Region: Enhancing Vietnam’s Wood Furniture Exports
Japan and IFC are contributing to the growth of Vietnam’s wood furniture sector—one of the country’s major sources of export earnings—by working with a cluster of 70 wood furniture manufacturers in Binh Dinh Province in central Vietnam. Some 20,000 people work in Binh Dinh’s wood industry, 60 percent of whom are women in low-income brackets who support extended families. The focus is on helping these companies increase compliance with environmental, health, and safety standards; improve management and operational efficiency; obtain timber from legal, certified sources; and improve material use and energy efficiency. A five-step Japanese quality improvement system called “5-S System” is increasing productivity and improving occupational health and safety in wood furniture factories in the province. The system is one of many innovative Japanese-designed tools for creating lean and efficient production and management systems.

DELIVERING ADVISORY SERVICES THROUGH FACILITIES THAT FOCUS ON SPECIFIC REGIONS

In addition to its trust fund with IFC, Japan backs six IFC regional initiatives that deliver advisory services specifically tailored to local needs and priorities. Japan supports this work in Asia and the Pacific, the Middle East and North Africa, and Sub-Saharan Africa.
South-East Asia: Supporting Small Farmers in Indonesia
IFC’s agribusiness program in Indonesia aims to raise the incomes of farmers and their communities. It concentrates on South Sulawesi, one of the country’s poorest provinces, and focuses on the seaweed, cocoa, and maize-poultry sectors; helping farmers improve their businesses and facilitating their access to markets. JBIC has provided loans to improve and regenerate irrigation systems in Sulawesi, as well as two of Indonesia’s other poorer provinces. The improved irrigation systems are primarily benefiting rice farmers. IFC has instructed some of them to grow maize, which provides an extra crop each year and thus more income. The program is also helping introduce best practice in seaweed production, using a computer-based system to improve the flow of information into farming villages, and expanding markets. Mini-processing facilities are being established so more value can be added to the crop closer to the farmers. To develop a long-term sustainable cocoa industry, the project is helping to attract major investments by large commercial players and international financial institutions into the country. Japan’s support: Japan supports this program by providing backing for IFC’s facility that delivers advisory services to smaller companies in Indonesia. Impact: Started in early 2004, the program now works with about 2,500 maize and poultry farmers, whose incomes have grown by 64 percent. The seaweed program has offered more than 5,300 training days to farmers, government officials, and intermediaries. Income has grown by up to 20 percent. A key outcome has also been the formation of the Cocoa Sustainability Partnership, through which public and private stakeholders will collaborate on technology transfer, farmer empowerment, and R&D for Indonesia’s cocoa industry.
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Japan’s support: Japan backs efforts to make Vietnam’s wood sector more competitive through its support to IFC’s facility delivering advisory services to the Mekong region. In addition, Japan has also backed the 5-S project through a Japanese JICA-supported expert working in collaboration with IFC. Impact: Since the launch of the program, 5-S has achieved exceptionally good results and is being scaled up. Not only has productivity improved by as much as 12 percent in the three pilot factories, but workers have benefited directly from cleaner, safer workplaces and higher earnings from the outdoor furniture they manufacture on a piece-work basis. In 2006, over 350 people were trained. Ninety-one percent of participants stated that they were either satisfied or very satisfied with the training, and 93 percent stated that they had acquired new knowledge as a result of it. BRINGING RETAIL BANKING TO VIETNAM Japan is not only helping the direct beneficiaries of the projects it supports, but is helping to build capacity among local IFC staff. They, in turn, use these skills when they move to the marketplace. Phan Bich Van knows banks. A staff member of IFC’s facility in the Mekong—supported by Japan—Phan helped Vietnamese banks gear up to provide loans to SMEs. One of her clients was Sacombank, which set out to become a leader in small business lending. After leaving IFC and receiving a master’s degree in business administration, Phan became Sacombank’s first deputy chief executive officer, and soon, its CEO. A main task is to encourage savings by individuals. “If retail banking grows, we will have more capital to lend to small businesses,” Phan explains. “So we need to keep identifying more companies that will be good lending prospects for the bank.” She credits IFC for shaping her populist approach to access to credit. Now, in her high-profile position, she has the chance to put strategy into action, in ways that will benefit an entire nation.

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Middle East and North Africa: Improving Business Skills in Afghanistan
Many Afghan entrepreneurs lack the basic business skills necessary to run a profitable enterprise. Key skills such as business planning are poor; as a result, many opportunities go unrealized. This is largely due to an insufficient supply of management training locally. To address these needs, IFC partnered with Kabul University to introduce basic business skills in Afghanistan. The project was designed to demonstrate the viability of and demand for business training; and to build the capacity of Kabul University to provide business training on a sustainable basis. The project included a training needs assessment survey, development and translation of content, four three-week training courses with progressive involvement of Kabul University professors as trainers, and a sustainability plan. Trainees were drawn from the university, the private sector, NGOs, donors, and government. Japan’s support: Japan is helping to address training needs in Afghanistan through its support to IFC’s facility that delivers advisory services in the region. Impact: Between July and November 2006, 260 Afghans were trained, including 35 women. More than 80 percent of trainees indicated that the training topics were highly relevant and useful. To ensure the sustainability of the program, 16 Afghan instructors were trained on business training skills and techniques. An initial impact assessment demonstrated that at least 10 trainees were able to find employment as a direct result of the training program, some of them into senior management positions in areas such as marketing and finance.

Sub-Saharan Africa: Helping to Meet the Education Challenge in Africa
IFC and its partners, such as Japan, are helping bring developing countries in Africa closer to the Millennium Development Goal of achieving universal primary education by 2015. Through a risk-sharing facility with local banks, IFC is providing advisory services as well as financing, whereby IFC guarantees the bank portfolio of loans to qualifying schools. The project improves the ability of the schools to operate as effective, sustainable businesses, thereby improving their ability to access finance. To ensure sustainability, the project produces a series of operating manuals for the schools and sets up local service providers. It also focuses on improving the ability of local financial institutions to assess, process, and monitor school loans. Additional roll-outs are planned in Kenya, Liberia, Mali, Mozambique, Nigeria, Senegal, Tanzania, and Uganda. Japan’s support: Japan supports this project by backing IFC’s advisory services in Sub-Saharan Africa. In addition, Japan provided support that extended the program to Kenya, where more than 100 private schools are expected to receive advisory services and financial support. Impact: In Ghana, where the program was first piloted, IFC extended a $2.1 million risk sharing facility to the Trust Bank of Ghana, which has enabled the bank to increase the size and tenor of its financing to private schools, while allowing it to build a track record in the education sector. The support has benefited more than 10 schools and has enabled private primary and secondary schools in Accra to improve their financial and managerial capacities. The advisory services linked to the project have set a standard for the private sector and improved the business environment for private education.

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V. OPPORTUNITIES FOR THE JAPANESE PRIVATE SECTOR

The Japanese private sector is an important partner for IFC. IFC’s portfolio contained $821.4 million in equity and quasi-equity investments and over $1 billion in loans from Japanese companies and financial institutions as of mid-2006. IFC’s fiscal year 2006 portfolio contained 62 projects involving 51 Japanese sponsors spread over 29 countries and 37 sectors.
Mozambique: Launching a Frontier Investment
The Mozal project is an outstanding example of successful investment in a frontier country in which Japan played an important role. Launched in 1998, the Mozal aluminum smelter was Mozambique’s largest-ever industrial project: a joint venture of Mitsubishi Corporation, BHP Billiton, Industrial Development Corporation, and the government of Mozambique. IFC and JBIC both provided financing to the project. The Mozal Community Development Trust, created by Mozal’s shareholders, has also had a significant impact on the local community. It has supported schools, aided the fight against HIV/AIDS and malaria, and constructed a maternity and child health care center. In addition, the trust has worked with local businesses to make them more competitive, allow them to become suppliers to Mozal, and access other opportunities in Mozambique. Mozal spends $15 million per month on Mozambican companies. The project created 2,750 direct jobs and an estimated 10,000 indirect jobs. Since Mozal’s commissioning, Mozambique’s export earnings have almost quintupled, from $220 million to more than $1 billion. Mozal contributed 3.2 percent of Mozambique’s GDP as of 2003 and an impressive 5 percent of the country’s 15 percent economic growth.

The Philippines: Demonstrating the Benefits of Combining Hydroand Photovoltaic-based Power
IFC and Cagayan Electric Power and Light Company, Inc. (CEPALCO) jointly financed the developing world’s first large-scale joint hydroelectric/photovoltaic (PV) grid-connected project. The combination of PV and hydro is meant to reduce the cost of the PV component by eliminating the need for storage batteries, since the hydro component provides natural storage. The project, on the island of Mindinao in the Philippines, is thus important as a demonstration of the environmental and economic benefits of the combined use of hydro and PV-based power. It also offers an interesting example of how Japanese companies can support such projects by becoming suppliers to them. Sumitomo Corporation acted as the turnkey contractor for the project, and Sharp Corporation supplied the solar modules for this 1 MW PV facility. The facility was completed successfully in December 2004 and is now fully operational.

Emerging Markets: Helping Banks Link to the International Economy
IFC’s Global Trade Finance Program plays an important role in fostering trade in emerging markets. In its first 15 months of operations, it facilitated 610 transactions with a total value of about $582 million, over three-quarters of which have supported small and medium businesses in developing countries. Japanese exporters are one of the largest end-beneficiaries of the program. More than 10 percent of the program’s guarantees have been issued for Japanese exports. In addition, three Japanese financial institutions are partners in the program’s confirming bank network: the Bank of Tokyo-Mitsubishi UFJ, Ltd.; Mizuho Corporate Bank, Ltd.; and Sumitomo Mitsui Banking Corporation. The program has, for instance, supported automobile exports from Japan to Lebanon worth $700,000 in which IFC issued the guarantee for a letter of credit and a Japanese financial institution acted as the confirming bank. IFC also provides advisory services and training to local banks in developing countries to help build their capacity in trade finance operations and link them to a leading correspondent bank network globally. Japan was the first donor country to support this initiative, contributing nearly $1 million to be used specifically for the training of local banks.

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WORLDWIDE: SETTING SOLID PROJECT FINANCE STANDARDS

Three major Japanese banks—the Bank of Tokyo-Mitsubishi UFJ, Ltd.; Mizuho Corporate Bank, Ltd.; and Sumitomo Mitsui Banking Corporation—have joined 51 partners around the world to ensure that minimum environmental and social standards are maintained in the private sector projects they finance by adopting the Equator Principles, based on IFC’s own social and environmental standards.
The Equator Principles:
• Are applicable to projects in all industry sectors, and to project finance advisory activities • Specifically cover upgrades or expansions of existing projects where the additional environmental or social impacts are significant • Take a streamlined approach in applying the principles to countries with existing high standards for environmental and social issues • Commit to “not provide loans directly to projects where the borrower will not or is unable to comply with our environmental and social polices and procedures” • Require annual reporting on the progress and performance of the implementation of the principles • Include public consultation requirements “We strongly support the new Equator Principles as a clear standard for the international financing community. We embrace the Principles as one of the essential elements of our Environmental Policy…” Nobuo Kuroyanagi, President The Bank of Tokyo-Mitsubishi UFJ, Ltd. “As the first Japanese bank to adopt the Equator Principles in October 2003, Mizuho Corporate Bank, Ltd. furthers its leadership in sustainability through readoption of the updated Equator Principles, paralleling the IFC’s adoption of its new Performance Standards.” Hiroshi Saito, President & CEO Mizuho Corporate Bank, Ltd. “Recognizing the importance of realizing a sustainable society, SMBC is committed to making continuous efforts to harmonize social and environmental preservation and corporate activities. The Equator Principles will strengthen our commitment to corporate social responsibility.” Masayuki Oku, President & CEO Sumitomo Mitsui Banking Corporation

Applying for Funding
There is no standard application form for IFC financing. Interested parties seeking to establish a new venture or expand an existing enterprise can approach IFC directly by submitting an investment proposal. IFC may request a detailed feasibility study or business plan to determine whether to appraise the project. A project proposal can be submitted to an IFC industry department or to an IFC field office. To determine where to submit the proposal, read more about IFC’s corporate structure, including information on field offices, on the Web site www.ifc.org. To be eligible for IFC funding, a project must: • Be located in a developing country that is a member of IFC • Be in the private sector • Be technically sound • Have good prospects of being profitable • Benefit the local community, and • Satisfy the environmental and social standards of IFC and the host country

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Participating in Syndicated Loans
Through its syndicated loan (B-loan) program, IFC offers commercial banks and other financial institutions the chance to lend to IFC-financed projects. Participants share fully in the commercial credit risk of projects, while IFC remains the lender of record. Participants share the advantages that IFC derives as a multilateral development institution, including preferred creditor access to foreign exchange in the event of a foreign currency crisis in a particular country. Where applicable, these participant banks are also exempt from mandatory country-risk provisioning requirements. The B-loan Program was launched in 1957 as the cornerstone of IFC’s mobilization mandate. Since the inception of the B-loan program, IFC has mobilized $26.1 billion for 752 financings in 98 countries with 495 participants. As of 31 March 2007, the committed portfolio totaled $5.1 billion for 139 projects in 42 countries with 135 participants. For more information, visit http://www.ifc.org/ifcext/treasury.nsf/Content/SyndicationandResourceMobilization Japanese financial institutions held approximately $170 million in B-loans as of mid-2006 and ranked tenth in terms of total held commitments. In fiscal year 2006, Japanese financial institutions signed approximately $42.6 million in B-loans, 2.7 percent of all B-loans signed.

Consulting with IFC-funded Projects
The World Bank Group contracts for a wide variety of consulting services from individuals and firms. Databases of available contracts, operating guidelines, and information on how to register can be found on the World Bank website (www.worldbank.org). Requests for proposals and invitations to bid may also be posted on the UN Development Business Web site (www.devbusiness.com), the dgMarket Web site (www.dgmarket.com) or on the World Bank’s econsult Web site. Consultant can also register with World Bank Group consultant databases. These databases are used by World Bank Group borrowers, beneficiaries, and staff to assist in short-listing and long-listing consultants for projects www.dgmarket.com/DACON - Companies only www.ifc.org/tatf - Companies and individuals Registration in World Bank Group databases does not represent an endorsement by the World Bank Group of the information or qualifications provided. Interested parties in Japan may also contact the IFC Tokyo office for assistance: Hiroshi Arichi, Director Koichi Hiramoto, Investment Officer IFC Tokyo Office Tel: +81 (0)3 3597 6657 Fax: +81 (0)3 3597 6698

Supplying IFC-funded Projects with Goods and Services (Procurement)
Please note that IFC is involved only in the financing of projects, and has no part in the procurement process for any of these projects. The local project company is responsible for all aspects of procurement, such as evaluation of bids and contract awards, and is the contact point for any information regarding the bidding process. Capital equipment suppliers interested in supplying equipment and supplies to projects funded by IFC are encouraged to search the Web site below, where a summary of project information is made public before the IFC’s Board of Directors considers these projects: http://www.ifc.org/projects/recentdocuments IFC follows the World Bank Group’s purchasing guidelines. Where master agreements do not exist, low value acquisitions may be made without formal competitive bidding. All other purchases made by the World Bank Group follow a formal competitive bidding whenever possible. World Bank Group Information for Bids and Requests for Proposals valued over $200, 000 are advertised on the following Web site: http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS

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