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Financial Institutions Group
IFC believes that sound, inclusive, and sustainable financial markets are essential to building shared prosperity and eradicating poverty. They ensure efficient resource allocation, create jobs, spur economic growth and play a critical role in private sector development. Yet it is estimated that 2.5 billion adults lack access to savings or credit, and 200 million micro, small and medium businesses have no access to credit.
IFC investment and advisory teams offer joint solutions to our financial intermediary clients that address their financing needs and offer know-how and tools to use the capital to their best advantage.
Financial Institutions Group
The Financial Institutions Group is committed to providing universal access to finance by 2020 Working through financial intermediaries allows IFC to support far more micro, small, and medium enterprises than we would be able to on our own. We work with a network of 900 financial intermediaries in more than 120 countries. Using a combination of investment and advisory services, we help strengthen financial institutions and overall financial systems - including capital markets – to enable them to play a constructive role in economic growth.
The Financial Institutions Group’s total committed portfolio is about $20 billion. At the end of 2012, our financial-intermediary clients provided about 30 million MSME loans to companies which in turn employed more than 180 million people.
We also encourage financial institutions to become more involved in strategic sectors that, while important to the development agenda, might not ordinarily attract much private sector capital. These include women-owned businesses, climate change and agri-finance and underserved regions such as fragile and conflict-affected states. Through our investment clients, we help support a full range of financial services such as insurance, housing, capital market development, private equity, trade finance as well as loans for individual micro entrepreneurs and small businesses.
Our investments are often accompanied by advisory services. This gives our clients the benefit of expertise from seasoned sector specialists and helps to addressing systemic issues such as risk management, corporate governance and the introduction of environmental and social standards. Our projects are tailored to include assistance to banks and specialized financial institutions to improve their ability to provide financial services to micro, small, and medium enterprises.
IFC’s approach to environmental and social risk management (E&S) helps build the capacity of our financial-institution clients to assess and mitigate their own E&S risks, in a manner commensurate with the level of exposure to such risks. The 2012 update to the IFC Sustainability strengthened our risk management and transparency with regard to our financial-institution clients.
Access to Finance Advisory Services
IFC’s Access to Finance Advisory Services help transfer knowledge and best practices to strengthen and build the capacity of our financial intermediary clients to provide broad-based financial services to individuals and micro, small and medium enterprises. We provide advice in areas such as SME banking, microfinance, housing finance, insurance, corporate governance, agrifinance, risk management, sustainable energy finance, and others.
During fiscal year 2013 A2F actively engaged with 299 clients, working closely with investment colleagues, to offer joint solutions. We reached 41 million microfinance and over 1 million SME clients together with investments, facilitating an estimated 11.6 million microfinance loans; 210,000 housing finance loans; and 2.7 million SME loans, for a total of $11.4 billion, $7.3 billion, and $91.3 billion outstanding, respectively.
Through our financial infrastructure work we help develop transparent credit reporting systems that can tackle information asymmetries and secured transactions regimes that enable the use of movable assets as collateral for loans; and securities markets that develop local currency bond markets.
Access to Finance Advisory also plays a key role in advancing IFC’s thought leadership in areas such as SME finance and financial inclusion. As an implementing partner for the Global Partnership for Financial Inclusion of the G-20, we shape and advance the global agenda on financial inclusion—particularly through our work on finance data for SMEs hosted on the SME Finance Forum, and in areas such as women-owned businesses and agrifinance. Our annual knowledge sharing event – FinNet, is an important vehicle for exchange of knowledge and experiences with peers, donors, and clients on approaches for greater access to finance. We advance the international dialogues on these topics through our wide array of research publications and seminars held throughout the year.