In June 2008, the 12th annual St. Petersburg International Economic Forum brought together more than 2,000 local and international businesspeople, experts, economists, and state officials to Russia’s second-largest city. The forum addressed the global food crisis, Russia’s growing role in the global market, its future development, potential in agribusiness and the country’s infrastructure needs.
IFC’s EVP and CEO Lars Thunell spoke at the forum, saying that IFC's response is a market-driven and private sector–led action plan that complements the World Bank's public sector efforts. IFC believes that the private sector has an essential role to play in helping the agribusiness industry address the issue.
Russia’s Potential in Agribusiness
Russia has significant potential in agribusiness. Through investments and advisory services, IFC supports Russia’s full agribusiness value chain—from developing new technologies to efficient processing and retail.
IFC has invested $684 million in agribusiness-related projects in Russia since 1996. It expects investments to reach $1.3 billion in FY08 and to continue growing.
As an exporter of grain, the country could help increase global supply by:
- Sustainably cultivating land that was abandoned during transition
- Improving farm management and increasing the application of agricultural inputs and plant genetics, which will help boost productivity
- Investing in handling, storage, and transportation infrastructure
- Putting in place sustainable social and environmental policies
These efforts could help address the global food crisis, create more jobs, and improve the livelihoods of people in rural areas. |
Infrastructure and Access to Finance
Infrastructure is also a priority sector in Russia. With an eight-hour time difference between east and west, transportation and logistics are critical for sustaining economic growth, improving market access, and raising living standards. Of IFC's $2.8 billion portfolio in Russia, 10 percent is in infrastructure. This includes air, rail, shipping, logistics, water, roads, health, and education. Working with the World Bank, IFC has begun focusing on subnational projects, targeting Russia's remote and poorest regions and supporting their efforts to improve social infrastructure and public utilities.
Energy efficiency is another area that needs attention. Russia is the world's third-largest energy consumer, and spiraling costs are a concern for local businesses. According to a recent World Bank Group study, improving energy efficiency would make the economy more competitive and decrease carbon emissions. To support this effort, IFC is providing advisory services and lines of credit to local banks for energy efficiency financing.
IFC is also supporting Russia's banking sector to expand access to finance throughout the country, particularly in underserved regions. Key areas include housing finance, SME finance, and new financial instruments such as securitization.
IFC and Russia
Russia became a member and a shareholder of IFC in 1993. Since then we have invested more than $3.9 billion in the country, including $566 million in syndicated loans, in 168 projects across a variety of sectors. Today, IFC's investment portfolio in Russia stands at $2.76 billion, making it our largest country exposure globally.
We have invested in key sectors, including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care.
