Role of IFIs in Enhancing Global Trade 16 th Private Sector Meeting for OIC Member Countries

1. Role of IFIs in Enhancing Global Trade • 16th Private Sector Meeting for OIC Member Countries • Sharjah, United Arab Emirates • March 19, 2014

2. Trade Finance at IFC • The Global Trade Finance Program (GTFP) program provides confirming banks with partial or full guarantees covering payment risk on banks in the emerging markets. These guarantees are transaction specific and apply to: • Letters of credit • Pre-export financing • Trade-related promissory notes and bills of exchange • Bid and performance bonds • Advance payment guarantees • Supplier credits for the import of capital goods • The Trade Advisory Program • The Trade Advisory Program is an integral component of the GTFP, and is designed to help local banks build their capacity in the areas of trade finance and international trade operations. IFC provides local financial institutions with training and support in order to: • Upgrade skills in structuring basic and complex trade finance transactions • Improve trade finance risk mitigation techniques • Upgrade the operational and technical skills of the trade finance backoffices • Transfer current international best practices in trade finance to local markets. 15 January 2014

3. Our Products for Global Trade & Supply Chain Solutions • Transactional trade • Global Trade Finance Program (GTFP) • Trade portfolio and systemic solutions • Global Trade Liquidity Program (GTLP) • Critical Commodities Finance Program (CCFP) • Working Capital Systemic Solutions (WCSS) • Supply chain finance • Structured trade commodity finance • Global Warehouse Finance Program (GWFP) • Global Trade Supplier Finance (GTSF) • Distributor finance 15 January 2014

4. Our Value Proposition Our solutions provide essential working capital to emerging market firms, propelling goods through the economic value chain. MARKET NEEDS Inputs, Harvest Storage, Transportation Raw Materials, Labor, Energy Export OUR SOLUTIONS Pre- and Post-Harvest Financing Inventory and Warehouse Receipts Financing Working Capital and Supply Chain Financing Pre-Export Financing

5. Global Trade Finance Program (GTFP) • Launched in 2005, the $5 billion GTFP provides risk mitigation by guaranteeing trade-related payment obligations of more than 275 eligible financial institutions in emerging markets. • PROGRAM FEATURES • AAA-rated – Basel III benefits • Coverage up to 100 percent • Umbrella guarantee covers country and commercial risk • Same-day issuance • Three-year maximum tenor • L/C applicants must be majority private sector Latin America & the Caribbean Brazil Honduras Middle East & North Africa Lebanon Pakistan FY13 GUARANTEES BY REGION (year-to-date; most active countries listed) Europe & Central Asia Russia Turkey Asia & Pacific Vietnam Bangladesh Sub-Saharan Africa Nigeria Ghana

6. Breakdown of GTFP Guarantees • USD Volume by Industry, FY13

7. 281 issuing banks in 96 countries Updates at ifc.org/GTFP Current Issuing Bank Coverage EUROPE & CENTRAL ASIA 19 countries 63 banks MIDDLE EAST & N. AFRICA 12 countries 39 banks ASIA & PACIFIC 14 countries 47 banks LATIN AMERICA & CARIBBEAN 20 countries 63 banks SUB-SAHARAN AFRICA 31countries 69 banks

8. Working Capital Systemic Solutions (WCSS) Program partnersco-finance alongside IFC • Under our Working Capital Systemic Solutions, we issue short-term loans to emerging market banks to inject USD liquidity in markets where macro events have led to a USD liquidity squeeze. Program partners IFCextends loan to one or more local banks • Benefits to Bank: • Foreign exchange: fills void left by international commercial banks in the FX market due to concerns over regulatory uncertainty and/or sovereign risk • Risk mitigation: IFC’s AAA rating, effective in managing the effects of Basel II & III • Ease of administration: deal only with IFC, as agent • Structure: • IFC provides funding as agent with co-financing from program partners • One-year traditional “A” loan with potential to be renewed twice for total of three years • Pricing: 6-month Libor + spread • Focus Areas: • Global:low-income countries where macro factors create USD constraints • Sectors: SMEs, including export-oriented enterprises, in need of trade finance and working capital Local banks extend USD financing to their SME clients to support their working capital needs Local bank #2 Local bank #1 Emerging market SMEs Emerging market SMEs

9. Structured Trade Commodity Finance Funding for commodity players and risk mitigation for partner banks • Supports large cross-border commodity trade using collateral management to support lending at all stages of the supply chain: exporter/producers, trading companies, importer/processors • Emphasis on strategic commodities, such as energy, soft commodities, and agricultural inputs • IFC risk-shares by lending in parallel with Bank on underlying assets or by providing credit guarantee • Bank should have solid track record in managing the transaction flow and can act as the security agent • Environment & social requirements to be met by facility IMPORT EXPORT Producers Exporter Traders Offtakers Pre-export financing, inventory-based financing, receivable-based financing Borrowing base financing: lending against commodity or off-take agreements Partner bank Financing is secured by pledge of commodities as collateral, assignment of receivables, insurance, cash collection account

10. Global Warehouse Finance Program (GWFP) Risk mitigation for banks’ food/agriculture portfolio • Supports banks when lending to the agricultural sector against warehoused commodities • Banks can support increased use of WR or CMA by trading companies or producers • Prequalified sub-borrowers • Funded or unfunded: 50-50 risk sharing • Facility tenor: one year extendable up to three years • Average transaction tenor: 4-6 months Program partners Program partners co-finance with funding or counter-guarantees 3. IFC channels funding or guarantees for up to 50% on portfolio of warehouse receipts Bank 2. Warehouse receipts issued by warehouse 4. WHR facility 1. Grain/produce stored in third-party warehouse Agricultural producers Storage company

11. Global Trade Supplier Finance (GTSF) 2. Supplier views invoices and requests early payment of approved invoices 1. Buyer uploads invoices (automated process) Funding and risk mitigation for banks’ supply chain finance clientele • Provides banks with additional credit capacity to support clients’ suppliers from higher-risk countries • Provides funded and unfunded risk-sharing of up to 100% of a client’s accounts receivable • IFC may also provide liquidity and discount A/R itself • A/R is discounted using market-based pricing • IFC accepts bank proposed discount rate on risk-shared receivables Buyer SCF platform Emerging market suppliers 3. Financier accepts early payment requests 5. Financier pays discounted invoice amount Bank 6. Buyer pays full invoice amount on due date (automated transfers established) 4. IFC provides funding or guarantee coverage Program partners Mobilization

12. Leading Confirming Banks • For FY14 Q1 By NUMBER OF GUARANTEES Deutsche Bank Citibank J.P.Morgan Commerzbank BNP Paribas KBC BTMU SMBC Banco Pichincha ABN Amro By USD VOLUME Deutsche Bank J.P.Morgan Citibank BNP Paribas Scotiabank Banco Pichincha Standard Chartered Zenith Bank Commerzbank BTMU

13. IFC Guarantees – Trade Instruments • Import Letters of Credit • Standby Letters of Credit • Guarantees • IFC covers the obligation of the issuer of the performance bonds, bid bonds, payment/advance payment guarantees • Bills of Exchange/ Promissory Notes for Trade • IFC covers the obligation of the issuer for pre-export financing or post-import financing extended by a participating Confirming Bank

14. Global Trade & Supply Chain Solutions Best Trade Finance Program Best Development Finance Institution Critical Commodities Finance Program Global Trade Supplier Finance Program Structured Trade Commodity Finance

15. Local Bank (Issuing) Importer Exporter Typical Transaction: Import L/C L/C in favor of exporter Payment Payment Payment International Bank (Confirming) Request L/C issuance Confirm L/C Documents Documents Documents Goods International Finance Corporation IFC guarantee

16. Import Letter of Credit Grains from Switzerland to Georgia • L/C issued by Bank of Georgia • Confirmed by Switzerland-based bank • Tenor: 6 months • Value: USD 5 million • IFC covers: 100% Switzerland Georgia

17. Local Bank Exporter Importer International Finance Corporation • Typical Transaction: Pre-Export Financing Goods Pre-export funding Pre-export funding International Bank Request pre-export advance SBLC/PN for pre-export funding Request IFC guarantee for pre-export loan IFC guarantee

18. Pre-Export Financing • Sugar from Brazil to Japan • Promissory note issued by Brazilian bank • Funded by U.S.-based bank • Tenor: 6 months • Value: USD 3.9 million • IFC covers: 100% Brazil Japan

19. International Bank Exporter Importer International Finance Corporation • Typical Transaction: Post-Import Financing Goods Post-import funding Post-import funding Local Bank SBLC/PN for post-import funding Request post-import funding Request IFC guarantee for post-import loan IFC guarantee

20. Post-Import Financing • L/C issued by Techcombank • Funded by Singapore-based bank • Tenor: 6 months • Value: USD 500K • IFC covers: 100% • Cotton from China to Vietnam Vietnam China