review of 2008–11 commitments,5 only five projects had no tracking information on additionality.
DATA GATHERING The first source of data is the client: audited financial statements, other reports, and additional information requested by IFC. According to the staff survey conducted for this evaluation, client information is the dominant source. Eighty-two percent of survey respondents used client data in some form, even for nonfinancial information. Sixty-eight percent used audited financials and 65 percent use corporate annual reports. Use of other data sources has been limited. Thirtyeight percent of survey respondents used third-party data (including government statistics and/or international databases, excluding data from the client), and 36 percent referred to data within IFC. IFC’s portfolio has increasingly been concentrated in the financial sector. About half of the current portfolio is financial market, and during the past five years, there have been surges in guaranteeing short-term finance through trade finance programs such as the Global Trade Finance Facility. Increased “wholesaling” of IFC support through financial intermediaries is associated with more efficient delivery of IFC financing. However, the wholesaling approach poses several challenges for tracking and assessing results. First, the short-term finance projects had not been covered by the DOTS results framework. The approval documents are streamlined and do not have specific discussions of expected outcomes at the transaction level or indicators for development results. Second, measuring development results of financial projects at the sub-borrower level (or the level of end beneficiaries) is inherently difficult, and IFC has gaps in information. IFC has no direct relationship with, access to, or often even knowledge of the companies or microenterprises that are borrowing from the financial institutions. In practice, DOTS tracking for indicators such as number of small and medium-size enterprise (SME) borrowers is based on “proxy” figures from the financial institutions’ portfolio: number of loans below a maximum, the total portfolio of the targeted business segment (such as housing, energy efficiency), and the credit quality of that portfolio (such as number of nonperforming loans). IFC recently surveyed 34 banks in 25 countries and looked at 3,157 SME loans (based on the proxy) to determine whether the recipients are actually SMEs. It found that 63 percent of the credit files had sufficient information on employees, assets, and sales. Based on that, IFC mapped the micro, small, and medium-size enterprise (MSME) definition; 80 percent would have been defined as SMEs and 18 percent as microenterprises. Only 2 percent would not be classified as SMEs. However, there was considerable overlap among the micro, small, and medium categories. Also, these indicators reveal little about the intermediary’s record of extending credit to the most productive companies or the impacts. Although nonperforming
20
Biennial Report on Operations Evaluation