The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the
governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB
official terms.

Development Partner Roundtable on Sustainable Sanitation in Asia

21 September 2018
Tokyo
Dialogue Session 2: Institutional arrangements for sustainable sanitation.

IFC’s commitment to Water & Wastewater in Emerging Markets

By
Sachi Nakayama
Senior Investment Officer, International Finance Corporation – World Bank Group
 Development Partner Roundtable on Sustainable Sanitation in Asia

The Importance of Water Security

The Top 5 Global Risks of Highest Concern 4 billion people could be living in water-
for the Next 10 Years scarce areas by 2050 (41% of projected
WATER – the highest risk world population)

According to the World Water Council, 80% to 90% of the scarce water in
many of the world’s arid and semi-arid river basins is already being used.
Source: Global Risks Perception Survey 2015, World Economic Forum

Source: World Economic Forum, The Global Risks Report

2016 11th Edition, The Organization for Economic Co- 2
operation and Development (OECD) estimation
 Development Partner Roundtable on Sustainable Sanitation in Asia

Water Resources and the 2030 supply-demand gap

• Global water requirements are estimated to grow from 4,200 bn m3 in 2010 to 6,900 bn m3 by
2030 with a CAGR of 2%, assuming no change in technology or water efficiency.

• The gap between demand and supply will be 2,700 bn m3 – a 40% shortfall by 2030.
Source: 2030 Water Resources Group: Charting Our Water Future Economic frameworks to inform decision-making

Total World Water Breakdown of Freshwater Resources

30% 0.3%
Groundwater – Freshwater is
contained in the easily accessible
Earth’s crust in lakes and
rivers

70%
Of the world’s freshwater
is in the form of ice and
permanent snow in 3
mountains
About IFC
• A member of the World Bank Group
• ~60-year history in Emerging Markets (EM) Shareholders 184 member countries

• LARGEST global development institution focused exclusively on S&P & Moody’s Rating AAA/Aaa
the private sector in developing countries Total Assets US$92.3 billion
• A global institution, now owned by 184 member countries Portfolio US$55 billion
• More than 100 regional offices Committed in FY17 US$19.3 billion
• 3,860 staff (56% are based outside Washington DC) - Own Account - US$11.9 billion
• Take market risk with no sovereign guarantees - Mobilized - US$7.4 billion
• Promoter of Environmental, Social & Corporate Governance # of New Projects 342

• Focus on Development Impact

Global Presence in A Network of Over

~2,000 94 900
Private Sector Clients Countries financial Institutions

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 Financing/Business models for sustainable sanitation
Development Partner Roundtable on Sustainable Sanitation in Asia

IFC participates along the entire project cycle with a range of tools & expertise

We apply our financial

resources, technical
expertise, global
experience, and
innovative thinking to
help our partners
overcome financial,
operational, and
political challenges.

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 Leadership/Enabling Factors/Institutional arrangements at the national/ subnational level for sanitation
Development Partner Roundtable on Sustainable Sanitation in Asia

IFC provides
financing for
Water &
Wastewater
projects
across the water
value chain

6
 Ongoing/ planned initiatives / achievements (using the categories for SDG 6 report)
Development Partner Roundtable on Sustainable Sanitation in Asia

• IFC committed $1.432bn and mobilized $392m in 55 projects in water and wastewater projects globally
over the last 10 years.
• In 2017, 21.8 million people were distributed water through IFC’s financing projects in emerging markets.
IFC’s financing in Water & Wastewater projects: by country and product

Loan / Quasi-Loan

Equity / Quasi-Equity

Committed (incl. mobilized) ($M)

Number of Investments (count)

B Loan / Mobilization

7
 Development Partner Roundtable on Sustainable Sanitation in Asia

IFC’s Financing in Water and Wastewater Projects

Metito
IFC Total $96.6 M AEGEA Saneamento
BEWG
Loan / Quasi IFC Total$20.8M Equity &
IFC Total $300M
Equity/Equity $49.6M Debt
A/MCPP/B Loan
2007/2010/2013/2014 2012/2013
WWT 2015
• Project: $300 M loan to support • Project: Expand its operations • Project: Capital expenditures and
development of 8 WWT plants and throughout the Middle East, North acquisitions
4 water supply plants in China Africa, China, Southeast Asia, and • IFC Product: Initial loan
• IFC Product: 10-year tranche and sub-Saharan Africa commitment and subsequent equity
5-year tranche. IFC participated in • IFC Product: Minority shareholder commitments
both while 13 commercial lenders in Metito in 2007 and since then • Use of Proceeds: Improved water
and development bank joined the has provided almost $100m in and wastewater treatment service
5-year tranche. 90% of the total financing and efficiency. Extended services to
loan was through mobilization • IFC’s Role: Having IFC as a minority less developed areas
• Use of Proceeds: Improve shareholder boosted investors • IFC’s Role: (i) Improved
environment by reducing the confidence and enabled Metito to environmental and social standards;
pollution. Bringing rivers back to attract strategic investors and (ii) Helped attract other equity
life for people and fishing investors (Government of Singapore
• IFC’s Role: IFC’s ability to provide Investment Corporation, IFC AMC
long-term loans that better match GIF)
the concession life of water assets 8
 Development Partner Roundtable on Sustainable Sanitation in Asia

IFC also provides Municipal Finance Case Study: City of Johannesburg

• Unsecured loans directly to local governments: • Project: A US$31.2m partial credit
Colombia, Moldova, Montenegro, Romania, Russia, guarantee (PCG) for municipal bond
Turkey issuance
• Loans to a municipal company guaranteed by a • Product: Local currency partial credit
guarantee – credit enhancement for
City of Johannesburg
local government: Russia, Turkey, Ukraine IFC Total
• Partial credit guarantees for local government US$31.2 M senior unsecured bond issuance by the
debt that broadened client access to capital
Guarantee – Municipal
South Africa
City for sale in the domestic capital
markets: South Africa (Buffalo City & 2004 market
Johannesburg), Russia (Chuvash Republic) • Use of Proceeds: Support of
• Risk Sharing with local banks on loan granted to a investments in essential infrastructure
municipality: LAC Region, Morocco, Russia – water and wastewater, electricity
• Technical assistance on institutional, technical, and roads
environmental, social and other aspects of • IFC’s Role: The bond achieved a
investments in municipal infrastructure at early national scale rating of AA with IFC’s
stages and throughout implementation. PCG – three rating levels above the city
of Johannesburg’s stand-alone rating
at that time
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 IFC and Izmir: Cities Engagement
• Izmir is the 3rd largest metropolitan city in Turkey with other 4m inhabitants. It is located on the Aegean coast and is a
tourism hub.
• The city has a diversified local economy as well as a strong socio –economic profile with GDPPC 30% above national
average and 8% of national GNP, 10% tax receipts & 6% of country export.
• The priority investment needs of the city are urban transport, wastewater and waste management.
• Since 2010 IFC has supported the city through direct financing, mobilization, advisory services and by
supporting private sector projects that address municipal needs.

April
June June April March May July December June August December

2010 | 2012 | 2013 | 2014 | 2015 | 2016

IZSU IZSU IZSU

Traffic & Sea Trans- Astra Izmir Izmir Electric
TCE Ege Waste- Tramway Hexagon Sewer- impact
Emergency port Dorms Railcars Waste Buses
water age study

Loan + Loan +
Loan Loan Mobilization Loan Equity Loan + equity Loan Advice Advice Advice
mobilization mobilization

$20 $59 $68 $36 $10 $167 $70 $58 $12

million million million million million million million million million

Port Traffic New Treatment New New Waste- New New Envi. and Support Analysis
expan- management ferry plant dormi- tramway to- metro sewer- social of waste of electric
sion and new boats expansion tory lines fertilizer cars age lines impacts project buses
ambulances rooms of sewers

1 2 3 4 5 6 7 8 9 10 11 12
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 Development Partner Roundtable on Sustainable Sanitation in Asia

IFC’s Local Currency Financing for Long Term Loans

Asia: Africa: EMENA: Latin America:

▪ Cambodian Riel ▪ Angolan Kwanza ▪ Armenian Dram ▪ Argentine Peso
▪ Chinese Renminbi ▪ Botswana Pula ▪ Azerbaijani Manat ▪ Brazilian Real
▪ Hong Kong Dollar ▪ Ghanaian Cedi ▪ Czech Koruna ▪ Chilean Peso
▪ Indian Rupee ▪ Kenyan Shilling ▪ Egyptian Pound ▪ Colombian Peso
▪ Indonesian Rupiah ▪ Nigerian Naira ▪ Georgian Lari ▪ Costa Rica Colones
▪ Korean Won ▪ Rwandan Franc ▪ Israeli Shekel ▪ Dominican Peso
▪ Myanmar Kyat ▪ South African Rand ▪ Jordanian Dinar ▪ Guatemalan Quetzal
▪ Nepalese Rupee ▪ Tanzanian Shilling ▪ Kyrgyzstani Som ▪ Haitian Gourde
▪ Philippine Peso ▪ Ugandan Shillings ▪ Kazakh Tenge ▪ Mexican Peso
▪ Singapore Dollar ▪ Zambian kwacha ▪ Moroccan Dirham ▪ Peruvian Soles
▪ Sri Lankan Rupee § Madagascar Ariary ▪ Polish Zloty ▪ Paraguay Guarani
▪ Thai Baht § Namibian Dollar ▪ Romanian Leu ▪ Uruguay Peso
▪ Vietnamese Dong § West African CFA Franc ▪ Russian Ruble
▪ Turkish Lira
▪ Tajikistani Somoni
▪ Tunisian Dinar
▪ Ukrainian Hryvnia

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EDGE: IFC’s Software, Standard & Green Building Certification System for
Emerging Markets
Homes, Offices, Retail, Hotels, Hospitals, Schools, Warehouses
STEP 1 STEP 2
SELF EVALUATION IN 20 MINUTES USING FREE SOFTWARE CONFIRM CHOICE OF GREEN OPTIONS TO REDUCE:
(1) WATER; (2) ENERGY; AND (3) EMBEDDED
ENERGY IN CONSTRUCTION MATERIALS

-20%
STEP 3
CERTIFY EDGE STANDARD IS MET

www.edgebuildings.com

12
 Business Case for Building Green

BUILDERS BUYERS BA NKS

Higher Resale Value

Higher Sale Price • UK: +10%-14%9
Quicker Sale Lower Utility Bills
• Portland: 8%
more1 • Portland: - • USA: 15% Netherlands: +3.7%10
18 days4 Lower Default Rate •
less6
• Seattle: 9% • USA: 33% less8
• Seattle: 4 • California: +8.7% 11
more2
times5
• Singapore: 4% • Switzerland: .5%- 7%12
more3

Energy efficient homes already demonstrate commercial value in developed markets.

Energy efficiency certificates can demonstrate the same business case in developing countries.

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 Development Partner Roundtable on Sustainable Sanitation in Asia

Thank You for your attention !

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