Approach Paper
Evaluation of the International Finance Corporation’s
Short-Term Trade Finance Programs, 2006-2011
May 8, 2012
Background and Context
1.
The International Finance Corporation (IFC) seeks to help expand access to trade
finance as part of the World Bank Group’s (WBG) broader strategy to enhance trade in
developing countries. The 2011 strategy Leveraging Trade for Development and Inclusive
Growth identified areas that the WBG is emphasizing in its support for enhanced trade in
developing countries.1 The strategy is premised on the central role of trade as a driver of
economic growth and development in developing countries. WBG documents cite research
indicating that “no country in the last 50 years has sustained high levels of growth and
significantly increased per capita incomes without greatly increasing trade”.2 Open trade enables
countries to exploit their comparative advantage, create and expand competitive industries, and
generate economic opportunities and employment. The main objectives of the Bank Group’s
strategy to support trade are to help enhance trade competiveness and export diversification;
reduce trade costs; expand market access; improve management of shocks; and enable greater
participation in trade activities (see illustration in Figure 1). Progress toward each of these
objectives is considered critical to attaining the overall goal of enhancing trade in developing
counties.
2.
Among the intermediate objectives to help reduce trade costs is increasing access to
trade finance. Access to trade finance is identified as an important determinant of the ability of
firms to engage in trade. Trade finance creates the liquidity for firms to operate efficiently,
reduces risks to firms, and enables transactions between unknown parties.3 Lack of access to
finance for micro, small and medium industries (MSMEs) in developing countries, in particular,
remains an important constraint to their viability and growth. IFC estimates that the absence of
short-term finance for MSMEs can significantly slow their potential growth.4 The expansion of
developing country economies over the past two decades has increased the demand for banking
1
World Bank Group, Leveraging Trade for Development and Inclusive Growth: The World Bank Group Strategy
2011-2021, June 2011.
ibid. p 1l; IFC, IFC Road Map FY12-14 – Impact, Innovation, and Partnership: Supplemental Paper, April 28
2011. (Internal document)
2
3
IFC, IFC Road Map FY12-14 – Impact, Innovation, and Partnership: Supplemental Paper, April 28 2011.
(Internal document)
4
ibid. p 6
1
sector intermediation in trade transactions. However, a gap in the supply of affordable trade
finance exists due to the perception of high commercial and sovereign risk in developing
countries as well as funding, regulatory compliance, and due diligence costs. IFC derives the
rationale for its engagement in trade finance from these high perceived risks, a general lack of
guarantors, a dearth of capacity from development banks, and the limited mandates of export
credit agencies. Multilateral support is expected to help banks improve their positioning and
expand the supply of trade finance.5
Figure 1. The World Bank Group’s Strategy to Support Trade, 2011-21
ECONOMIC GROWTH AND POVERTY REDUCTION
INCREASED TRADE
Enhanced Trade
Competitiveness and
Export Diversification
Increased value of exports
Increased # of export markets
Improved survival rate of exporters
Improved economy-wide
incentive framework
Reduced Trade Costs
Effective Management
of Shocks and Increased
Opportunities to
Participate in Trade
Reduced costs associated with
moving goods and services along
international supply chains,
including transport, logistics, and
finance costs
Improved trade corridors
and regional trade facilitation
frameworks
Improved markets for
transport and logistic
services
Improved international
trade rules and institutions
Better management of
trade shocks by most
vulnerable
Improved regional
Inclusion of the gender
dimension in trade support
activities
integration of markets
Increased trade in services
Improved border
management
Specific actions to address
market failures
Expanded Market
Access
Improved intergovernmental regulatory
reform and cooperation
INCREASED ACCESS TO
TRADE FINANCE
Improved response to
food price increases and
volatility
Expanded benefits of
trade to lagging regions
within countries
Source: IEG, based on Leveraging Trade for Development and Inclusive Growth: The World Bank
Group Strategy 2011-2021, June 2011.
3.
Since 2005, IFC’s primary instrument to support trade finance has been the Global
Trade Finance Program (GTFP). In November 2004, the Board approved the GTFP to
“support the extension of trade finance to underserved clients globally.” The program allows IFC
to assume the trade-related payment risk of financial institutions in developing countries by
issuing guarantees to their correspondent (usually international or regional) banks. By mitigating
the risks of trade transactions, the program aims to help less creditworthy countries and firms
gain access to finance by reducing funding and regulatory compliance costs, improving liquidity
in banks, lowering the costs of finance, decreasing collateral requirements, and supporting
relationships between financial institutions (see Box 1). IFC emphasizes the potential of the
program to increase access to trade finance in low-income countries, the Africa region, MSMEs,
and critical economic sectors such as agriculture and energy.
IFC, Report to the Board of Directors on a Proposed Investment in Global Trade Facility Program
World Region, October, 26, 2004.
5
2
Box 1. Operation of a Typical GTFP Letter of Credit Transaction
Most of the GTFPs guarantees (around 80 percent) have supported letters of credit transactions.
Under the program, IFC conducts due diligence and establishes a roster of approved local
“issuing banks” in developing countries. It can then guarantee their payment obligations on
specific transactions at the request of the local bank or the correspondent international or regional
“confirming” bank. The
guarantees are comprehensive,
covering both political and
commercial risks, and IFC can
cover either the full amount or a
partial amount of the
transaction. Tenures have
ranged from 1 day to over 5
years and average 5 months.
The diagram at right illustrates
the operation of a typical letter
of credit transaction guaranteed
by the GTFP. An importer
places an order from an
exporter. The importer’s bank,
the “issuing” bank, issues a
letter of credit to its
correspondent bank (usually in
the same geographical region as
the exporter). The
correspondent bank then makes
payment to the exporter on
presentation of relevant
documents. The correspondent
bank may then request a partial
or full guarantee from IFC to
cover the payment risk of the
issuing bank. Upon
presentation of relevant
shipment documents, the
issuing bank makes payment to
the correspondent bank.
Source: IEG diagram based on IFC program information.
4.
After the onset of the global financial crisis, IFC significantly enhanced its shortterm trade finance activities. In December 2008, IFC positioned the GTFP as a key element of
its crisis response. An expanded and modified GTFP was expected to help address the limited
availability and rising cost of trade finance during the crisis. In addition, in May 2009, IFC
3
established the Global Trade Liquidity Program (GLTP) to address liquidity constraints and
temporarily support trade finance flows to developing countries. The $1 billion program was a
collaborative effort among bilateral and multilateral development finance institutions and
governments to disburse funds to global and regional banks with extensive trade networks. The
program was enhanced in January 2010 with a further $1 billion in unfunded guarantee support.
As a temporary crisis response measure, the GTLP was scheduled to be phased out in 2012, but
it has since been extended due to continued weaknesses in global financial markets. In FY11,
two additional short-term trade finance programs were initiated: the Global Trade Supplier
Finance (GTSF) program and the Global Warehouse Finance Program (GTWP). The two
programs aim to enhance trade activities by supporting access to working capital for suppliers in
developing countries (GTSF) and for farmers and SMEs in the agriculture sector (GTWP). Box 2
describes IFC’s current short-term finance programs.
5.
IFC has also administered a Trade Advisory Program to help banks build capacity
in their trade operations. The program was established in 2006 to help transfer international
best practices and improve bankers’ technical and operational skills in trade. Training is focused
on trade finance and international trade operations and consists of online courses and workshops
run from field offices. The program also seeks to place trade finance professionals in client banks
for several months to provide more in-depth training. Participants are GTFP banks, as well as
other banks that request training. IFC reports that since program inception in June 2006, 140
training courses have been conducted, with over 3,800 attendees in over 60 countries.
6.
IFC’s current trade finance program model sought to address past weaknesses.
Before the launch of the GTFP in 2005, IFC had established 21 trade finance facilities between
1998 and 2003, for a total commitment of $542 million. Of these 21 facilities, 11 were never
used, and of the 10 that were used, the average utilization rate was just 27 percent.6 Weaknesses
with previous programs included their restriction to bilateral agreements, designed for use with a
single country with a narrow set of eligible parties; cumbersome procedures that undermined the
ability to respond to changing market conditions; fixed prices that may not have been in line with
markets; stringent financial reporting requirements that were not standard market practice for
trade-related transactions; and high capital charges that were not in line with the lower-risk
profile of trade transactions and that reduced the profitability of the trade facilities. The new
model represented by the GTFP was based on the European Bank for Reconstruction and
Development’s (EBRD’s) trade finance program, which had been in operation for 10 years. Key
elements included the flexibility to support trade as it shifted with market conditions, a quick
response process and documentation in line with the nature of short-term trade transactions,
flexible pricing according to market, and the ability to take 100 percent of the risk coverage.
6
IEG, The World Bank Group’s Guarantee Instruments, An Independent Evaluation, 1990-2007, 2009.
4
Box 2. IFC’s Short-Term Finance Products
Global Trade Finance Program (GTFP)
Established in FY06, the GTFP is IFC’s leading trade finance program that developed a
new, more flexible, quicker-response platform.
It aims to support access to trade finance in underserved markets worldwide and its
authorized ceiling has grown from $500 million in 2006 to $3 billion in 2011.
Global Trade Liquidity Program (GTLP)
Established in FY09, the GTLP is a multi-partner initiative of governments, development
finance institutions, and private sector banks that aims to help address the shortage in
trade finance resulting from the global financial crisis.
Using both funded (phase 1) and unfunded (phase 2) instruments, the program seeks to
increase access to trade finance in emerging markets by providing liquidity and risk
mitigation to international banks with substantial emerging market trade networks.
Global Trade Supplier Finance (GTSF)
Established in FY11 the GTSF is a joint investment and advisory program that provides
short-term financing to exporters in emerging markets that sell to large international
companies on open account terms.
The program seeks to increase direct access to finance for exporters in developing
countries (supplementing credit from local banks); reduce the costs of finance for
exporters; and increase local supplier sales to large international firms in the program.
Global Warehouse Finance Program (GWFP)
Established in FY11, the program aims to increase working capital financing to farmers
and agriculture producers by leveraging their production.
The program provides banks with liquidity or risk coverage backed by warehouse
receipts, which can be used to provide short-term loans or guarantees to agricultural
producers and traders ahead of export.
Critical Commodities Finance Program (CCFP)
Established in FY12, the CCFP supports the movement of agricultural and energy
products to and from developing countries by promoting commodity-backed finance.
Source: IFC documents
7.
The volume of IFC’s trade finance operations has expanded significantly since 2005
and continued growth is expected. Since the GTFP commenced operations in September 2005,
it has experienced significant growth. The program’s authorized exposure ceiling was increased
from $500 million in November 2004 to $1 billion in January 2007, to $1.5 billion in October
2008, and then to $3 billion in December 2008, following the onset of the crisis (Table 1).
Annual commitments rose from $265 million in 320 guarantees in FY06 to $4.6 billion in 3,100
5
guarantees in FY11, or 38 percent of IFC’s total commitments for the year.7 Between 2006 and
2011, the number of participating developing country banks increased from 20 to 220 and the
number of developing countries covered rose from 6 to 67. Guarantees have been concentrated
on issuing banks in the Middle East and North Africa (32 percent) and Africa (30 percent).
Thirty percent of guarantees issued have covered payment risks of banks in low-income
countries. The GTLP also saw substantial usage, and by the end of FY11, it had disbursed nearly
$1.8 billion to 8 program banks, with the Latin America and the Caribbean and the East Asia and
Pacific regions accounting for 70 percent of transactions. Further expansion of IFC’s short-term
finance activities is expected. Along with an expected request for an increase in the GTFP’s
authorized ceiling in FY13, IFC also plans to increase the GWFP ceiling to $500 million and see
an expansion of its CCFP and GTLP programs. Total commitments for short-term finance
products are expected to reach $8 billion in FY15.
Table 1. GTFP Basic Indicators, FY06-FY11
Authorized exposure ceiling ($ million)
Total commitments ($ million)
Number of guarantees
Number of guarantees—letters of credit
Average guarantee size ($ millions)
Number of participating confirming banks
Number of participating issuing banks
Average guarantee tenure (days)
FY06
500
265
320
295
0.83
28
19
179
FY07
1,000
770
564
439
1.37
50
50
189
FY08
1,000
1,448
1,008
815
1.44
56
79
157
FY09
3,000
2,376
1,869
1,576
1.27
86
137
133
FY10
3,000
3,461
2,811
2,408
1.23
96
165
142
FY11
3,000
4,623
3,106
2,390
1.49
98
186
143
Source: GTFP database
8.
IFC Board reports identify various development results of its trade finance
programs. An evaluation of the GTFP was conducted by external consultants on behalf of IFC
in 2009, and IFC regularly reports to the Board on the development effectiveness of its trade
finance programs.8 In its Road Map FY12-14, for example, IFC stated that the GTFP had “a
strong track record of development impact across regions and sectors.” Among the indicators it
reported were: 73 percent of the GTFP’s transactions were in IDA countries; the GTFP/GTLP
had supported over $4.8 billion in trade in Africa; over 80 percent of transactions supported
SMEs; and one-third of transactions supported agribusiness, a strategic focus area for IFC (Table
2). The GTFP had also supported trade between developing countries, with about 35 percent of
its volume supporting south-south transactions. IFC also indicates several other benefits of the
Commitments under the GTFP include repeated turnover of short-term facilities and do not
reflect actual exposure, which remains under the $3 billion program ceiling. In addition, the
commitment levels for short-term finance products do not reflect the capital usage of long-term
investments. For example, IFC estimates that in FY14, its commitments under its short-term
finance programs would be around 48 percent of new commitments. However, this would
translate into use of only about 5 percent of IFC’s capital.
7
International Financial Consulting, Evaluation of the Global Trade Finance Program, Final Report
submitted to the International Finance Corporation, August 12, 2009.
8
6
GTFP. In particular, the program had become an entry product for IFC - a means to engage with
and establish relationships in difficult countries. The GTFP had played such a role in 15 fragile
states and challenging markets, including Democratic Republic of the Congo, Haiti, and Liberia.
The program also served as a means for IFC to develop relationships with new financial
institution clients in developing countries, with initial in interaction through the GTFP leading to
more than 30 projects involving other IFC instruments.
Table 2. IFC-Reported Reach of the GTFP/GTLP into Underserved Markets
Indicator
Percentage of transactions in IDA countries
Percentage of dollar volume of guarantees in IDA countries
Percentage of transactions supporting agribusiness
Percent of transactions supporting SMEs (by number)
Percentage of south-south transactions
Number of fragile states involved (as issuing banks)
Geographic Reach (FY 2010)
Africa
East Asia and the Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
GTFP
GTLP
(Cumulative
(Cumulative
FY06-11)a
FY09-11)b
73%
53%
33%
83%
35%
15
31%
26%
GTFP
(FY10)
GTLP
(FY10)
22%
8%
15%
34%
16%
5%
20%
25%
2%
36%
2%
14%
81%
Sources: IFC Road Map FY12-14 – Impact, Innovation, and Partnership: Supplemental Paper, April 28 2011. GTLP Newsletter
No.3, July 2010; GTFP Transaction database; IFC Short Term Trade Finance Strategy Presentation, May 5, 2011.
Notes:
a. Data are from 2005 to 2011
b. Data are from 2009 to 2011
9.
IFC plans more systematic assessments of its development contributions through
monitoring of its active trade finance portfolio. In 2011, IFC instituted more systematic
project-level data gathering and monitoring to enhance its ability to measure and report on the
development results of its trade finance activities. Under the Development Outcome Tracking
System (DOTS) framework, IFC is collecting information to gauge its impact at four levels: (i)
at the country level, through indicators such as the volume of trade finance transactions and the
number of banks active in trade finance in a country; (ii) at the bank level, through indicators
such as the size of trade finance in the institution or its SME reach; (iii) at the beneficiary level,
through indicators such as number of jobs created, or the increase in exports or imports; (iv) at
the program level, through indicators such as the regional or income group distribution of
7
transactions. IFC also plans to prepare an annual GTFP Development Impact Report. Given
their distinctive nature, IFC does not include individual trade transactions under its Expanded
Project Supervision Report (XPSR) system, and so no transaction-level evaluations have been
conducted. IEG and IFC are currently discussing the methodology by which such assessments
might be conducted. To date, IEG has not conducted a program-level assessment of IFC’s trade
finance activities.
Purpose, Objectives, and Audience
10.
Board members have requested an IEG review of IFC’s trade finance activities. In
its most recent strategy documents, the Road Map FY12-14 and Road Map FY13-15, IFC has
indicated that it plans to expand its short-term finance activities, including requesting an increase
in the authorized ceiling of the GTFP.9 Due to the rapid growth of IFC’s trade finance activities,
their current composition of 40 percent of IFC’s total annual commitments, and their expected
continued growth, members of the Board have asked IEG to undertake an independent evaluation
of these activities. This proposed evaluation will review IFC’s trade finance activities since
2006; assess their relevance, efficacy, and efficiency; and provide an overall assessment of their
development effectiveness. The evaluation will draw lessons from experience and make
recommendations to help enhance the achievement of IFC’s development mission. The
evaluation report is expected to inform the discussion of the extent and nature of IFC’s future
engagement in short-term trade finance activities.
11.
While the Board is the primary audience, the evaluation also seeks to inform a
broader range of stakeholders (Figure 2). In seeking to inform the Board on the development
effectiveness of IFC’s trade finance activities, the evaluation expects to develop findings that are
directly relevant to IFC program management and staff. The evaluation will also indirectly
address the broader role of multilateral development banks (MDBs) in the provision of shortterm trade finance products. Various MDBs have active trade finance programs, including
EBRD, the Asian Development Bank (ADB), the Inter-American Development Bank (IADB),
the Islamic Development Bank (IsDB), and the African Development Bank (AfDB). Some of the
evaluation units of these institutions have expressed strong interest in the methodology and
findings of this evaluation. International and local private financial institutions are the primary
clients of IFC’s trade finance products and are therefore also stakeholders of the evaluation. The
evaluation will also address issues raised by international agencies and regulatory authorities.
For example, several international bodies, including The World Trade Organization (WTO), the
Berne Union, and the G20 have each called for MDBs to enhance their trade finance activities.
IFC, “Road Map FY12-14—Impact, Innovation, and Partnership,” May 2011 and IFC, Road Map,
FY13-15 – Creating Innovative Solutions in Challenging Times, March 8 2012.
9
8
Figure 2. Key Stakeholders of the Evaluation of IFC
IFC’s Trade Finance Activities
Source: IEG
Evaluation Questions and Coverage
12.
The evaluation will seek to answer the following questions:10
Overall question: What is the development contribution of IFC through the use of shortshort
term trade finance instruments?
Relevance: What is the rationale for IFC to offer trade finance products
products??
a.
b.
c.
d.
What market failures are being addressed by IFC’s trade finance products?
product
Is IFC competing with other players in trade finance?
To what extent do trade finance products support achievement of IFC’s
IFC mission?
What are the opportunity costs of trade finance products for IFC?
Efficacy: To what extent have IFC’s trade finance programs
rams met their objectives?
a. To what extent have the programs met their primary goal of facilitating trade in
underserved markets?
Detailed evaluation questions, together with descriptions of the information required,
collection methods, and analytic approaches are in the evaluation design matrix in Attachment
B.
10
9
b. To what extent have the programs met secondary goals, such as helping IFC enter
new markets, engage in fragile and conflict-affected states, and support key economic
sectors?
c. To what extent have the programs helped alleviate the effects of the global financial
crisis in participating banks?
d. Are there other benefits or shortcomings of the programs that are not generally
recognized?
Efficiency: Are the trade finance programs efficient instruments, from both a program
and institutional perspective?
a. What is the financial viability of IFC’s trade finance programs?
b. What are the capital usage and risk exposure implications of trade finance products
for IFC?
IFC Work Quality: Is IFC effectively managing factors within its control?
a. Do IFC’s trade finance programs meet industry service standards for the delivery of
trade finance products (response time, information technology platform, speed of
decision-making, adequacy of tenure and limits)?
13.
The evaluation will focus on two specific programs and IFC’s trade finance
Advisory Services and cover the period 2006-11. This evaluation proposes to cover the GTFP,
the GTLP, and IFC’s trade finance Advisory Services. The other trade finance programs were
introduced only recently, and therefore offer limited data and experience to inform the
evaluation. Nevertheless, the underlying principles of the more recent programs are modeled on
the GTFP. Thus, even through the evaluation questions will be largely answered through the
experience of the GTFP, GTLP, and the Advisory Services, the findings can inform a discussion
of IFC’s broader short-term trade finance programs. The period of coverage shall be 2006-2011.
IFC introduced its current model of trade finance in 2006, when the GTFP was established. The
period allows the evaluation to be informed by an approximate division of pre-crisis years
(FY06-08) and crisis years (FY09-11).
Evaluation Design and Evaluability Assessment
14.
The proposed evaluation will build on IFC’s previous evaluation of the GTFP. The
2009 evaluation of GTFP commissioned by IFC (see footnote 8, above) made a positive overall
assessment based on the program’s successful performance in several areas: networks and
partnerships, facilitating trade in underserved markets, development of banks in emerging
markets, operation efficiency and effectiveness, financial performance, program responsiveness
in times of crisis, training and advisory services, and strategic relevance and fit. The proposed
evaluation will build on the GTFP evaluation and will include all the assessment criteria of that
evaluation. It includes a more explicit framework of relevance, efficacy, efficiency, and
institutional performance. The proposed evaluation also aims to further understand the nature of
demand for trade finance programs, benchmark trade finance program indicators against those of
other providers, assess the longer-term benefits of the programs, and examine the effects of the
programs on all stakeholders (importers, exporters, issuing banks, and correspondent banks).
10
15.
The AsDB and EBRD have also conducted assessments of their trade finance
programs. The Real-time Evaluation of the Asian Development Bank’s Response to the Global
Economic Crisis of 2008–2009 assessed the rationale, consistency, and design of ADB’s
economic crisis support; responsiveness in terms of preparedness and how ADB implemented its
support; and results in terms of achieving program outputs and anticipated outcomes sustainably.
It found ADB’s trade finance program to be highly relevant and responsive and successful in
achieving its objectives. The evaluation concluded that trade finance programs were an excellent
crisis-response tool, particularly in Asia, where trade intensity was high; and for smaller
developing countries that rely on foreign trade and are more vulnerable to global crises. EBRD’s
Evaluation of Trade Facilitation Program (TFP) (August 2010) assessed the relevance, efficacy,
efficiency and impact of the trade finance programs. It rated the overall outcome of the
programs as partially successful. Relevance was assessed to have declined as EBRD’s products
became less responsive to market demand.
16.
Several recent IEG evaluations also covered aspects of the trade finance programs.
IEG’s evaluation on The World Bank Group’s Response to the Global Economic Crisis (Phase I
and II) found that both the GTFP and GTLP have had broad reach, including among SMEs and
in the Africa region, and had high leverage of IFC resources. The evaluation found that is was
likely that the initiatives helped small businesses whose needs may not otherwise have been met.
However, both the Phase I and II reports cited weaknesses in the M&E framework of the IFC’s
short-term finance programs. IEG’s internal “Evaluability Assessment of Trade Finance
Operation” found that the XPSR methodology has the potential to assess development outcome,
investment outcome and IFC work quality of the GTFP projects. However, at present inadequate
information existed on trade finance clients and transactions in order to apply the XPSR
framework.
17.
The proposed evaluation’s underlying criteria for assessing the development
effectiveness of IFC’s short-term finance programs will be their relevance, efficacy, and
efficiency. The evaluation will be designed to address the core criteria of (i) Relevance: Is IFC
doing the right things? (ii) Efficacy: Is IFC doing them well; and (iii) Efficiency: Is IFC doping
them efficiently? In addition, the evaluation will assess IFC’s performance with respect to its
management of factors within its control. Key criteria for assessments in each area are as
follows:
•
Relevance/Additionality. In assessing relevance, the evaluation will seek to discern the
market failures that the program seeks to address. This is IFC’s additionality in the
provision of short-term finance products. The main criterion is whether IFC is competing
with other players in the provision of these products or filling a need that would
otherwise be unmet. IFC’s pricing will be sampled to determine if it is at, above, or
below markets. Consideration will be given to trade-offs in terms of IFC’s resource usage
in trade finance operations vis-à-vis other IFC interventions.
•
Efficacy. In assessing the efficacy of the program the evaluation will review the extent to
which the trade finance programs contribute to their primary objective of supporting trade
in underserved markets. This reflects the private sector evaluation criteria of an
11
intervention’s contribution to private sector development.11 This will be gauged in the
immediate term through reach in underserved markets and creation of new relationships
(see Figure 3), such as support for SMEs, south-south trade, fragile and conflict-affected
countries, high risk countries and regions, and critical economic sectors. Effects in the
longer-term will also be gauged, such as through creation of lasting relationships between
financial institutions, trade transactions occurring without IFC guarantees, and
development of trade finance products and markets among participating banks.
Achievements will be benchmarked against those of other players, where appropriate.
IEG will also assess the degree to which secondary stated objectives are being achieved,
such as enabling IFC to enter and develop business in difficult countries. The evaluation
will draw on existing research and evidence to establish the links between increased
access to trade finance and increased trade and between increased trade and increased
economic growth and development.
Figure 3. Expected Development Outcomes of Trade Finance Programs
IFC Inputs
Intermediate Outputs
Due diligence appraisal
Expanded Bank network
Systems & hardware
Number of transactions
Economic capital
Volume of guarantees
AAA rating
People Trained
Training services
Expected Development Outcomes
Short-term
Medium
Longer-term
Access to trade finance in
new markets (South-South,
IDA, SSA, Frontier, SME,
agribusiness)
Reduced risk perceptions
More trade finance available
to issuing banks without IFC
guarantees
More competitive trade
finance markets
Improved capacity in
More accessible and lower
Lasting relationships between
developing country banks to
costs of finance for
financial institutions
beneficiaries
manage trade transactions
New bank relationships
Anti-cyclical role in times of
crisis
Goals that the
Programs Seeks
to Contribute to
Reduced collateral, longer
tenor, larger size
More trade, economic
growth, and poverty
reduction.
Demonstration effects
Existing relationships
Marketing
Source: IEG
•
Efficiency. Efficiency of the trade finance programs will be assessed by their profitability
to IFC. This reflects the private sector evaluation criteria of the investment outcome of an
operation. The premise is that if the programs are relevant and effective but are running at
a loss, then they are unsustainable. IEG will aim to calculate IFC revenue streams and
cost allocations at the program level. IFC efficiency indicators will be benchmarked
against other providers and industry standards, as appropriate.
•
IFC work quality. Work quality will be assessed by the degree to which IFC is
successfully managing factors within its control. This will include whether the operation
of the programs meets service standards in the industry. Indicators include appraisal
standards, response time; information technology platform, speed of decision-making;
adequacy of tenure and limits. IFC work quality indicators will be benchmarked against
other providers and industry standards, where appropriate.
To the extent relevant, other criteria, such as project business success, environmental and social
effects, and economic sustainability, will also be applied.
11
12
18.
A range of different information sources and methods of analysis will be used in the
evaluation. The methodology used to answer each evaluation question is described in detail in
the Evaluation Design Matrix in Attachment B. The evaluation builds on extensive work IEG has
done on preparing a project-level evaluability assessment for trade finance. The main sources of
evidence to address the evaluation questions will include: IFC program information; external
literature on trade finance; information from other providers of trade finance programs in both
the public and private sectors; information from program clients including local issuing banks,
international correspondent banks, importers and exporters; and information from trade finance
professionals and global institutions. In obtaining and analyzing information, the evaluation will
use the following means:
•
External literature review. The evaluation will review relevant literature to identify the
theoretical underpinnings of trade finance in supporting trade, identify market failures,
compare the nature of trade finance before and after the global financial crisis, identify
regulations pertinent to trade finance, identify international trade finance providers and
practices, and map IFC trade finance programs in the industry.
•
IFC document review. Relevant IFC documents will be reviewed to gain a clear
understanding of the trade finance programs and their implementation and evolution. The
documentary evidence will be the primary source material to address the evaluation
questions, identify statements and findings to be validated, and establish hypotheses for
further analysis. An analysis of the initial goals set out by IFC will serve as a benchmark
to assess the achievements of the trade finance programs and assess their relevance and
efficiency within the overall context of IFC’s mission and the institution’s resource
allocation. IFC self-evaluations will be taken into consideration when appropriate.
•
IFC database analysis. The evaluation will undertake analysis of IFC program
databases, which represent the comprehensive set of transactions under each program.
Analysis will inform the evaluation of the demand, usage, and reach of the trade finance
programs. The evaluation will also use the Development Outcome Tracking System.
DOTS data (collected over the past year) will provide bank-level data to assess the
contributions of the programs.
•
External database analysis. External databases from sources such as the World Bank,
MDBs, the Berne Union, WTO, and International Monetary Fund will be used to add
context and create benchmarks for IFC’s programs. WTO data on trade and trade finance
will provide the evaluation with statistics to illustrate the context in which the GTFP
operates. Data from the Berne Union members and MDBs will be used to benchmark
indicators of reach and efficiency of IFCs trade finance programs.
•
Original survey administration and analysis. IFC has recently commissioned a survey
of new participating issuing banks as well 20 percent of existing client banks. IEG will
work with IFC to develop original surveys of other issuing banks, correspondent banks,
and a sample of beneficiary firms. These instruments will elicit views of key
stakeholders as to the relevance, effectiveness, and efficiency of the trade finance
programs. This information will supplement data from existing trade finance surveys
13
such as those administered by the World Bank, IMF/Bankers’ Association for Finance
and Trade, and the International Chamber of Commerce.
•
IFC staff interviews. Additional data for the evaluation will be obtained through
interviews with the IFC staff. Discussions will serve as a source of opinions, insights, and
hypotheses on the effectiveness of trade finance programs, their role in global trade
finance, and the role of short-term finance within IFC operations.
•
Stakeholder interviews. Opinions and insights will be sought from other major
stakeholders of IFC’s trade finance programs including client banks, non-client banks
with characteristics similar to the participating banks (in selected case studies), trade
finance professionals, international agencies and regulatory bodies, private and public
providers of trade finance products, and government officials (in selected case studies).
•
Illustrative client-level case studies. To supplement IFC and survey data, a purposeful
sample of client-level case studies will be selected and conducted in which the costs and
benefits of IFC’s trade finance programs on each client—issuing banks, local banks,
importers and exporters will be examined. Criteria for selection of case studies will
include the frequency of participating bank use of IFC facilities, the tier of the developing
country bank, south-south transactions, and the direction of trade (that is, import to and
from developing countries).
•
Illustrative country-level case studies. A small, purposeful sample of country case
studies will be undertaken to supplement survey data and inform the evaluation of
broader effects of the trade finance programs in a country, including demonstration
effects, reduction of risk perceptions, and access to trade finance for underserved
markets. Criteria for selection of the sample will include fragile and conflict-affected
countries, a less developed region in a middle-income country, the Africa and Middle
East and North Africa regions, countries without other IFC business, and countries with
relatively high or low risk ratings.
19.
The study will utilize several counterfactuals to help inform assessments of the
development contributions of IFC’s programs. Counterfactuals will be developed to inform
assessments of the extent to which IFC programs helped: (i) enhance trade finance capacity and
operations in issuing banks; (ii) build long-term relationships between banks; (iii) correspondent
banks expand their trade finance networks and business; (iv) beneficiary firms gain access to
finance; (v) address negative effects of the global finance crisis among participating banks. The
counterfactuals will be based on bank and firm level data obtained during structured interviews
during client and country case studies. At the bank level, non-participating banks in the country
with similar characteristics as participating banks (such as tier, trade finance products, and
market) will be identified and an assessment will be made the evolution of their trade finance
capacity, operations, and relationships over the same period as the participating banks. This
analysis will help understand the particular contributions of IFC’s programs on participating
issuing banks, controlling for broader factors in the country environment. At the correspondent
bank level, a sample of international or regional banks that do not participate in IFC’s programs
will be interviewed to understand the evolution of their trade finance business over similar
periods as correspondent banks that use IFC’s programs. This will allow some inferences on the
14
nature of the demand for IFC’s products and how obstacles to expanding trade finance might be
overcome in the absence of IFC’s programs. At the firm level, during the country case studies,
IEG will identify non-beneficiary firms that are in the same industry and have similar
characteristics as the beneficiary firm of a transaction in order to understand if and how they
conducted similar transactions without the benefit of IFC’s programs.
20.
Information gathering and analysis through these steps will be largely sequential.
The study will begin with a literature and document review and IFC staff interviews that will
provide a foundation for the evaluation. Initial hypotheses will be formed at this stage. This will
be followed by an analysis of IFC databases that will shed light on program-specific trends. The
study will commission surveys early in the evaluation as experience has shown that results take
time to acquire. Interviews with stakeholders and case studies will follow and be tailored to
supplement material previously gathered and illustrate key points to be made in the evaluation.
The literature review and data analysis will be followed by extensive interviews with IFC staff
engaged in both the operational and Advisory Services aspects of the trade finance programs.
Following the interviews with staff, client and country-level case studies will then be conducted
in order to validate assessments based on desk reviews, further test hypotheses, establish new
finding, and illustrate findings and experience. The material from the various sources will be
assimilated into background papers on specific topics, which will then be integrated into the
main report.
21.
The evaluation of IFC’s short-term trade finance programs will be constrained by
several factors. Due to their distinct nature, short-term trade finance transactions have not been
included in the XPSR framework to date and the evaluation will therefore not be able to draw on
project level evaluations. The availability of information is also severely constrained in some
areas. For example, recent literature indentifies limited data on global and country-level trade
finance flows as a key obstacle to research and better understanding of the industry. Given that
the industry is in the private domain, key information such as pricing levels and market
information may be not available or disclosable. Ease of access to participating issuing and
correspondent banks as well as to non-participating banks is likely to vary substantially. These
constraints will be accommodated during the evaluation process in various means. For example,
proxy indicators will be used, where relevant; client and case studies will be modified according
to the receptivity and willingness to share information on the part of participating banks. In
these and other areas, IEG expects to rely on the full support and facilities of IFC management
and staff to ensure the availability of quality information to inform the evaluation.
Quality Assurance Process
22.
The draft evaluation report and any related working papers will be peer reviewed to
ensure accurateness, credibility, and impartiality of the findings and recommendations.
Peer reviewers for the evaluation will be Bernard Hoekman, Director of the World Bank’s
International Trade Department, and Marc A. Babin, former Director of IFC’s Corporate
Portfolio Management Department. The quality assurance process for the evaluation will also
include an external technical advisory panel that will convene at critical points in the evaluation
to advise the team on their research, findings, and recommendations.
15
Outputs and Dissemination Plan
23.
The primary output of the evaluation will be the report to the Board’s Committee
on Development Effectiveness (CODE) that will contain the main findings and
recommendations. The report will be submitted to CODE in time to inform the discussion of
IFC’s expected request for an increase in the authorized capital of the GTFP in December 2012.
Beyond the primary output, IEG will develop briefs, presentations, and other output formats as
appropriate to reach other audiences for the evaluation. Beyond the Board of Directors and IFC
staff and management, key stakeholders include private banks and insurers engaged in trade
finance, multilateral and bilateral agencies with trade finance programs, evaluation agencies, and
global trade policy and regulatory institutions.
24.
Continuous stakeholder interaction will be sought to enhance the evaluation
process. Outreach and dissemination for this study will be conducted in two phases: a) Outreach
during the evaluation process and b) Outreach after the study is complete. Phase I of the
outreach will focus on soliciting feedback and comments from stakeholders and building interest
in the study. The goal is to make the evaluative process transparent and participatory by inviting
stakeholders to share their knowledge and experiences and by keeping stakeholders informed
about the evaluation progress. This interaction will help gather information and qualitative data
to triangulate data obtained through other research and information gathering methods. The
process also aims to develop a core group of stakeholders through which the evaluation
recommendations and findings can be channeled when the evaluation is complete.
25.
Several online means will be used to engage stakeholders during the evaluation
process. A key means of interaction with stakeholders will be a dedicated webpage that will
describe the evaluation scope and goals, report on evaluation progress, and seek ongoing
feedback and commentary from interested parties. IEG will use IFC’s internal collaboration
platform, iCollaborate, to raise key questions and communicate with IFC staff. IEG will also use
its existing Facebook page to tap the existing membership of over 7,700 individuals and
institutions. IEG will also set up a study-specific Facebook page to reach target groups with key
messages and questions. IEG will leverage LinkedIn trade finance groups to attract the attention
of trade finance professionals from around the world. Identified groups and individuals will be
invited to participate in discussions held on the main webpage and on Facebook. IEG also aims
to interact with most influential tweeters on trade finance issues, connecting with IFC’s accounts
that will help reach IFC staff who follow such accounts.
26.
In addition to outreach during the evaluation process, IEG will also implement an
outreach plan once the evaluation is complete. Phase II of the outreach will start once the
report is complete and publicly launched. IEG will plan to publish and disseminate the main
messages of the evaluation within the WBG and externally. To achieve this, IEG will use a
variety of means, including face-to-face meetings, seminars, conferences, and online social
media and web forums. The effort will target key stakeholders, particularly IFC staff and
relevant international bodies. Dissemination will include presentations to staff at headquarters
and country offices; presentations at relevant events organized by evaluation networks and
MDBs; dissemination of findings on social media channels and relevant online networks;
contribution of online pieces in the form of blogs and/or videos with key messages from the
study; and other outreach activities to increase awareness and use IEG findings. The evaluation
16
team intends to connect with international conferences and seminars concerned with trade
finance these events to bring the evaluation to the attention of attendees and seek opportunities
to present its findings and recommendations (Table 3).
Table 3. Potential Dissemination Events for the Trade Finance Evaluation
Event name
International Chamber of Commerce Banking Commission Meeting
IFC Spring Meetings
G20 Meetings
Exporta 9th Annual Innovations in Trade and Export Finance
Conference
WTO Trade Finance Expert Group Meeting
Date
Location
March, 2013
April, 2013
June, 2013
June, 2013
Washington, DC
Moscow
New York
May, 2013
Geneva
Resources
27.
Timeline. The evaluation will be submitted to the Board of Directors in December 2012,
ahead of IFC’s expected request for an increase in the GTFP’s authorized ceiling.
28.
Budget. The budget for the study is estimated at $720,000, an amount consistent with
other major IEG sector studies.
29.
Team and skills mix. The skill mix required to complete this evaluation include (i)
evaluation experience and knowledge of IEG methods and practices; (ii) familiarity with the
policies, procedures, and operations of IFC; (iii) knowledge of WBG and external information
sources; and (iv) practical, policy, and academic expertise in the trade finance, banking, and
trade sectors. The evaluation will be prepared by a team led by Asita De Silva (Task Team
Leader) consisting of Bahar Salimova (Information Officer), Chau Pham (Program Assistant),
Donald Smith (Consultant), Maria Kopyta (Research Analyst), Melvin Vaz (Evaluation Officer)
Michael Pomerleano (Advisor), Nestor Ntungwanayo (Consultant), Richard Kraus (Program
Assistant), Thierry Senechal (Consultant), Unur Demberel (Research Analyst), and William
Hurlbut (Senior Policy Writer). Other senior external consultants will be engaged during the
evaluation. The evaluation will also seek to partner with local consulting firms to conduct some
of the case studies. The report will be prepared under the direction of Stoyan Tenev, Manager,
IEGPE and Marvin Taylor-Dormond, Director, IEGPE.
17
Attachment A. Bibliography
Ahn, JaeBin. 2011. A Theory of Domestic and International Trade Finance. Washington, DC: IMF.
Asmundson, Irena, Thomas Dorsey, Armine Khachatryan, Ioana Niculcea, Mika Saito. 2010. Trade and
Trade Finance in the 2008-09 Financial Crisis. Strategy Policy and Review Department.
Washington, DC: IMF.
Auboin, Marc, Moritz Meier-Ewert. 2003. Improving the Availability of Trade Finance during Financial
Crises. Geneva: WTO.
Auboin, Marc. 2009. “Boosting the Availability of Trade Finance in the Current Crisis: Background
Analysis for Substantial G20 Package.” Center for Economic Policy Research Policy Insight No.
35. Geneva: WTO.
Auboin, Marc. 2009. “Restoring Trade Finance During a Period of Financial Crisis: Stock-taking of
Recent Initiatives.” Economic Research and Statistics Division. Geneva: WTO.
Cadot, Olivier, Ana M. Fernandes, Julien Gourdon, Aaditya Mattoo. 2011. Impact Evaluation of Trade
Interventions: Paving the Way. Policy Research Working Paper. Washington, DC: World Bank.
Chauffour, Jean-Pierre, Mariem Malouche. 2011. “Trade Finance during the 2008-9 Trade Collapse: Key
Takeaways.” Economic Premise 2011:66, 1-6.
Chauffour, Jean-Pierre, Mariem Malouche (eds.). 2011. Trade Finance during the Great Collapse.
Washington, DC: World Bank.
Cornford, Andrew. 2010. Basel 2 and the Availability and Terms of Trade Finance. Global Commodities
Forum. Geneva.
EBRD Evaluation Department. 2003. “Special Study—Regional Trade Facilitation Programme: Fostering
Transition through Documentary Credit.” London: EBRD.
EBRD Evaluation Department. 2010. “Special Study—Trade Facilitation Programme Regional.” London:
EBRD.
Grath, Anders. Jan 28, 2012. The Handbook of International Trade and Finance: The Complete Guide to
Risk Management, International Payments and Currency Management, Bonds and Guarantees,
Credit Insurance and Trade Finance. Kogan Page.
Hageboeck, Molly. 2010. From Aid to Trade: Delivering Results. A Cross- Country Evaluation of USAID
Trade Capacity Building. Washington, DC: USAID.
ICC. 2010. Rethinking Trade Finance. ICC Banking Commission Market Intelligence Report. Paris.
ICC. 2011. Global Risks—Trade Finance 2011. Paris.
ICC. 2011. Global Survey on Trade and Finance. Paris.
IMF. 2009. “Survey of Private Sector Trade Credit Developments.” Strategy, Policy, Review Department.
Washington, DC.
18
International Finance Corporation. 2011. “IFC Short Term Finance Strategy.” Washington, DC. May 5,
2011.
International Finance Corporation. 2004. World Region: Proposed Investment in Global Trade Finance
Program. Washington, DC.
International Finance Corporation. 2005. Update on World Region: Global Trade Finance Program
(GTFP). Washington, DC.
International Finance Corporation. 2006. World Region: Proposed IFC Contribution for Technical
Assistance and Capacity-Building in Africa Region in Support of IFC’s Global Trade Finance
Program (GTFP). Washington, DC.
International Finance Corporation. 2006. World Region: Proposed IFC Contribution for Technical
Assistance and Capacity-Building in Africa Region in Support of IFC’s Global Trade Finance
Program (GTLP). Washington, DC.
International Finance Corporation. 2007. World Region: Proposed Increase and Modification of
Investment in Global Trade Finance Program (GTFP II). Washington, DC.
International Finance Corporation. 2008. Global Trade Finance Program: Opportunities in Financial
Markets. Washington, DC.
International Finance Corporation. 2008. World Region: Proposed Increase and Modification of
Investment in Global Trade Finance Program (GTFP III). Washington, DC.
International Finance Corporation. 2008. World Region: Proposed Increase and Modification of
Investment in Global Trade Finance Program (GTFP IV) to Provide Emergency Relief in
Response to the Global Finance Crisis. Washington, DC.
International Finance Corporation. 2009. World Region: Proposed Investment in Global Trade Liquidity
Program. Washington, DC.
International Finance Corporation. 2010. IFC FY10 Annual Report on Financial Risk Management and
Capital Adequacy. Washington, DC.
International Finance Corporation. 2010. Report on an Audit of the Activities of the IFC’s Global Trade
Finance Program (GTFP). Washington, DC.
International Finance Corporation. 2010. World Region: Proposed Investment in Global Trade Supplier
Finance and Global Warehouse Finance Program. Washington, DC.
International Finance Corporation. 2011. IFC Road Map FY12-14: Impact, Innovation, and Partnership.
Washington, DC.
International Finance Corporation. July 2010. IFC Bulletin: Global Trade Liquidity Program (No.3).
Washington, DC.
International Finance Corporation. January 12, 2012. “IFC Extension of Global Trade Liquidity Program
(GTLP) and Proposed Investment in the Critical Commodities Finance Program (CCFP), Wells
Fargo Mena, and SocGen/Rabobank.” International Finance Corporation. Washington, DC.
19
International Finance Corporation. January 12, 2012. “World Region: IFC Crisis Response: Proposed
Extension of Investment in the Global Trade Liquidity and Proposed Investment in the Critical
Commodities Finance Program.” International Finance Corporation. Washington, DC.
International Finance Corporation. January 12, 2012 “World Region: Proposed Investment in Global
Trade Liquidity Program-Wells Fargo.” International Finance Corporation. Washington, DC.
International Financial Consulting. 2009. Evaluation of Global Trade Finance Program. Ottawa.
International Financial Consulting. 2011. Short Term Finance: Design of a Development Outcome
Tracking System (DOTS). Ottawa.
Korinek, J., J. Le Cocguic and P. Sourdin. 2010. “The Availability and Cost of Short-Term Trade Finance
and its Impact on Trade.” OECD Trade Policy Working Papers, No. 98. Paris: OECD Publishing.
OECD. 2010. Trade and Economic Effects of Responses to the Economic Crisis. Paris.
OECD/WTO. 2011. Aid for Trade at a Glance 2011: Showing Results. Paris.
Razzaque, Mohammad, Selim Raihan. 2008. How does Trade Lead to Development and Poverty
Reduction? Evidence from the Field. CUTS International.
Schmidt-Eisenlohr, Tim. 2011. Towards a Theory of Trade Finance. CESifo.
United States Government Accountability Office. 2011. Report to Congressional Requesters. Foreign
Assistance: The United States Provides Wide-ranging Trade Capacity Building Assistance, but
Better Reporting and Evaluation are Needed. Washington, DC.
US Department of Commerce, International Trade Administration. 2008. Trade Finance Guide: A Quick
Reference for US Exporters. Washington, DC.
20
Attachment B. Evaluation Design Matrix
Evaluation
question
Evaluation subquestion
Information required
Information
source(s)
Data collection methods
Data analysis
methods
Part I. What has been IFC’s engagement in trade finance since 2005? (Descriptive)
What are IFC’s
trade finance
products?
Description of programs,
theory, objectives, features,
instruments, and practice
IFC documents, other
relevant literature
Document retrieval
Review of program
documents
How and where
has GTFP/GTLP
been used?
Description of trends by
region, type, market, product
IFC documents, other
relevant literature, IFC
databases
Document retrieval, data
extraction
Review of program
documents,
descriptive
statistics
Part II. Should IFC be in the trade finance business? (Relevance/Additionality)
What market
failures are being
addressed by
IFC’s trade
finance
products?
What is the nature of
the trade finance
insurance market?
Size of the market: trade $$$,
trade finance $$$ (versus
open account), trade finance
insurance, GTFP, by region,
etc.; origins of demand for
trade finance and how it is
met in the market; crisis
versus non-crisis
Relevant literature,
trade finance databases
Literature review, data
extraction
Qualitative
analysis,
descriptive
statistics
What is the market
failure in the
provision of trade
finance that the IFC
programs are
addressing, and does
this justify public
(MDB) intervention?
Description of market
failure—Why does it exist and
what is being done to meet
previously unmet needs? Are
MDBs the only institutions
that can fill the gap? How
does it meet issuing bank and
correspondent bank needs?
Crisis versus non-crisis
Relevant literature, IFC
and MDB staff,
correspondent banks
Document retrieval,
structured interviews, bottomup study
Qualitative
analysis,
descriptive
statistics
21
Strengths and
Limitations
Evaluation
question
Is IFC competing
with other
players in trade
finance?
To what extent
do trade finance
programs
support
achievement of
IFC’s underlying
mission?
What are the
opportunity
costs of trade
finance products
for IFC?
Evaluation subquestion
Information required
Information
source(s)
Who are the private
providers of trade
finance insurance?
Do they compete
with IFC programs or
are there synergies?
What is the size, nature,
advantages of private
providers? Why do they not
pick up the business that IFC is
doing? Comparison of their
offerings versus IFC
Relevant literature,
trade and trade finance
databases, trade finance
banks and private
insurers, Berne Union
members, IFC staff
Literature review, structured
interviews with banks and
insurers, Berne Union data
Qualitative
analysis and
judgment,
descriptive
statistics
Access to data,
interviewee bias
Who are the public
providers of trade
finance insurance?
Do they compete
with IFC programs or
are there synergies?
List of MDBs, export credit
agencies. Size, nature,
advantages, disadvantages,
who their customers are;
comparison of their offerings
versus IFC and evidence
Relevant literature,
trade and trade finance
databases, MDBs (ADB,
IaDB, IsDB, EBRD), ECA
staff, IFC staff, Berne
Union members
Literature review, structured
interviews with MDBs, MDB
data, Berne Union data
Qualitative
analysis and
judgment,
descriptive
statistics
Access to data,
interviewee bias
Is the price of IFC
guarantees above,
below, or at market?
Pricing structure of IFC and of
other financial institutions and
reasoning behind it; other
MDB and private provider
data
IFC documents, other
relevant documents,
databases, IFC staff,
correspondent banks,
other MDBs and private
providers
Literature review, data
extraction, structured
interviews, structured surveys
Review of pricing,
qualitative analysis
Access to data,
data reliability
How does addressing
market failures in the
provision of shortterm trade finance
support IFC’s goals?
Theory and logframe of access
to trade finance in
contributing to trade, growth,
and development
World Bank and IFC
documents, external
literature
Literature review
Qualitative
judgment
What is IFC giving up
by putting resources
into the trade
finance activities?
IFC resources for this program
versus others? Long-term
investments?
IFC staff, databases,
documents
Document retrieval, data
extraction, structured
interviews
Qualitative
analysis,
descriptive
statistics
22
Data collection methods
Data analysis
methods
Strengths and
Limitations
Evaluation
question
Evaluation subquestion
Information required
Information
source(s)
Data collection methods
Data analysis
methods
Strengths and
Limitations
Part III. To what extent have trade finance programs met their objectives? (Efficacy)
To what extent
have trade
finance
programs met
their primary
objective of
facilitating trade
in underserved
markets?
Sample IFC trade
finance banks and firms,
sample non-IFC trade
finance banks and firms
Data collected by IFC, direct
collection from sample banks
and firms, case study
interviews, surveys
Sample-based
statistical and
qualitative
analysis;
counterfactual
where appropriate
Limited
applicability of
counterfactual
Reach of the programs—lowtier banks, difficult countries,
conflict situations, SMEs,
critical inputs, south-south,
developing country exports;
other MDB and other private
providers’ comparative data
IFC databases,
documents, IFC staff,
trade finance banks,
other MDB and other
private provider data
Data collected by IFC, direct
collection from sample banks
and firms, case study
interviews, surveys, other
MDB and other private
provider interviews and data
collection
Program-level
statistical analysis,
sample-based
qualitative
analysis,
benchmark against
other MDB and
other private
providers
Definition of
underserved
markets,
comparability with
other MDBs and
private providers
Number of trade finance
products; no of trade finance
clients: (before/after), ways
in which IFC enable business
growth
IFC databases,
documents, IFC staff,
trade finance banks,
country data,
counterfactual: non- IFC
banks, country level
data on access to trade
finance: with/without
IFC
Data collected by IFC, direct
collection from sample banks
and firms, case study
interviews, surveys
Sample-based
qualitative
analysis, statistical
analysis based on
survey data,
counterfactual
analysis
Generalization
based on limited
sample
What markets are
not being served due
to the market failure
in the provision of
trade finance?
Bank and firm-level data on
effect of IFC trade finance
programs, financial and
qualitative data
To what extent have
the programs
reached underserved
markets?
Did access to IFC's
programs help
develop the trade
finance business in
participating banks?
23
Evaluation
question
To what extent
have trade
finance
programs met
secondary goals,
such as helping
IFC enter new
markets, engage
in difficult fragile
and conflict
Evaluation subquestion
Information required
Information
source(s)
Data analysis
methods
Strengths and
Limitations
To what extent have
the programs
facilitated trade by
building long-term
relationships
between issuing
banks and
correspondent
banks?
How effective and inclusive is
the network of banks? Are
relationships long lasting? To
what extent has trade
business increased among
participating banks? Nature of
graduated banks
Data collected by IFC, direct
collection from sample banks
and firms, case study
interviews, surveys
Sample-based
qualitative
analysis, statistical
analysis based on
survey data,
benchmarking
(limited),
counterfactual
analysis
Generalization
based on limited
sample, adequacy
of data for
benchmarking
To what extent have
the programs
facilitated trade by
building traderelated capacity in
issuing banks?
Trade Advisory Program
offerings, who is interested in
advisory services and why,
and how has it affected their
business?
Structured interviews,
structured surveys, case study
Sample-based
qualitative
analysis, statistical
analysis based on
survey data,
counterfactual
analysis
Determining
measurement of
effectiveness,
heavy reliance on
interview findings,
interviewee bias
IFC staff, banking clients,
counterfactual: non-IFC
banks
To what extent have
TF programs helped
improve developing
country firms access
to finance?
Description of firms reached,
reasons for which use
programs, growth patterns in
trade related business
IFC staff, country firms,
counterfactual: non-IFC
firms, other TF
stakeholders not
involved with IFC
Structured interviews,
structured surveys, case study
Qualitative
analysis,
counterfactual
analysis
Generalization
based on limited
sample,
interviewee bias,
heavy reliance on
interview findings
To what extent have
trade finance
activities enabled IFC
to enter new
markets that it had
not accessed before
and subsequently
developed other
business in these
countries?
Analysis of which countries
IFC operated in without GTFP
versus now, nature of
business in these new
countries. Has it enabled entry
into difficult (post-conflict,
etc.) countries?
IFC databases, IFC staff
Data extraction, case study,
structured interviews
Descriptive
statistics,
qualitative analysis
IFC databases,
documents, IFC staff,
trade finance banks,
country data,
counterfactual: non- IFC
banks
24
Data collection methods
Evaluation
question
states, and
support key
economic
sectors?
To what extent
have trade
finance
programs helped
alleviate the
effects of the
global financial
crisis?
Evaluation subquestion
Information required
Information
source(s)
To what extent have
trade finance
programs served as a
means for IFC to get
to know lower-tier
banks, build capacity
in them, and do
business with them?
Number of lower-tier banks
involved in program,
description of work done with
these banks and impact
IFC databases, IFC staff,
trade finance banks
Data extraction, structured
interviews, structured survey
Descriptive
statistics,
qualitative analysis
Did the sources of
demand for trade
finance change
during the crisis?
Sources of demand before
and after crisis and analysis,
factors driving demand and
changes in demand
Relevant literature, IFC
documents, IFC
database, trade finance
databases
Document retrieval, data
extraction, structured
interviews, structured surveys
Descriptive
statistics,
qualitative analysis
Nature of program before and
after crisis and analysis of
changes
IFC documents, relevant
literature, database, IFC
staff, trade finance
program banks,
counterfactual: non-IFC
banks
Document retrieval, data
extraction, structured
interviews
Descriptive
statistics,
qualitative
analysis,
counterfactual
analysis
Negative effects of the crisis
on trade finance and GTFP’s
role in alleviating
IFC documents, IFC staff,
relevant literature,
databases
Document retrieval,
structured interviews
Sample-based
qualitative analysis
What were the main factors
that alleviated trade and trade
finance during the financial
crisis? Survey of how
important stakeholder view
GTFP
IFC staff, stakeholders,
trade finance
professionals
Structured interviews,
structured surveys
Qualitative
analysis
Attribution
problem,
interviewee bias
List of other potential benefits
and shortcomings of the
programs
IFC staff, databases, IFC
documents,
stakeholders
Document retrieval, data
extraction, structure
interviews, structured surveys
Qualitative
analysis,
descriptive
statistics
Interviewee bias
How did the program
change during the
crisis? trade finance
pre-crisis: 2006-08
versus during crisis
08-10
What particular
negative effects of
the crisis did GTFP/
GTLP help address?
What are the main
implications of trade
finance insurance
provision in crisis
versus non-crisis
times?
Are there other
benefits or
shortcomings of
the trade finance
programs that
are not
recognized in
25
Data collection methods
Data analysis
methods
Strengths and
Limitations
Data quality and
reliability
Evaluation
question
Evaluation subquestion
Information required
Information
source(s)
Data collection methods
Data analysis
methods
Strengths and
Limitations
IFC’s reporting?
Part IV. Is IFC delivering programs efficiently? (Efficiency)
What is the
utilization rate of
trade finance
activities among
approved banks?
Does the rapid
rate of expansion
of IFC's progams
have any tradeoff?
What is the
financial viability
of IFC’s
programs?
What are the
capital usage and
risk exposure
implications of
trade finance
programs for
Calculations and analysis of
the utilization rate
Is there a trade-off
between extending
coverage to more
banks in one country
vs extending
coverage to a new
country?
What is IFC’s risk
exposure due to
trade finance
activities, and what
could trigger calls?
What have been the
capital usage
implications of trade
finance activities?
IFC databases, IFC
documents
Document retrieval, data
extraction
Descriptive
statistics, literature
review, benchmark
Data reliability
Data extraction, structured
interviews
Analysis of risk
exposure,
qualitative analysis
Access to data,
barriers to
accurate
quantitative
analysis
Data extraction, structured
interviews, document retrieval
Review of capital
usage for
programs,
qualitative
analysis, literature
review
Access to data,
barriers to
accurate
quantitative
analysis
Cost of appraisal of additional
bank in known country vs
unknown country
Calculations and analysis of
risk exposure, threshold to
trigger calls
Amount of capital used,
comparison with other IFC
programs
IFC databases, IFC staff
IFC databases, IFC staff,
IFC documents
26
Evaluation
question
Evaluation subquestion
Information required
Information
source(s)
Data collection methods
Data analysis
methods
Data extraction, structured
interviews, document retrieval
Review of used
resources in
programs,
qualitative
analysis, literature
review
Access to data
Data extraction, structured
interviews, document retrieval
Review of profits
in programs,
qualitative
analysis, literature
review
Access to data
IFC?
What are IFC’s
resources allocated
to trade finance
activities?
Capital, staff? Are most costs
fixed or variable?
Proportions?
What is the profit
contribution of trade
finance activities?
Return on Capital Employed;
comparison with other IFC
programs
IFC databases, IFC staff,
IFC documents
IFC databases, IFC staff,
IFC documents
Strengths and
Limitations
Part V. Is IFC effectively managing factors within its control? (IFC Work Quality)
Have IFC's
products evolved
with market
needs?
Description of product
evolution and market needs
Are IFC's
monitoring and
reporting
standards for its
TFP adequate?
Is IFC effectively
managing factors
within its
control?
Quality of current M &E and
reporting
Do IFC’s programs
meet industry
service standards in
the delivery of trade
finance products?
Comparisons of response
time; information technology
platform, speed of decisionmaking; adequacy of tenure
and limits
IFC documents, IFC staff,
relevant literature,
relevant stakeholders
Data extraction, structured
interviews, document retrieval
IFC documents, IFC staff,
relevant literature
Structured interviews,
document retrieval
Databases, IFC
documents, other
relevant documents, IFC
staff, trade finance
professionals
Document retrieval, data
extraction, structured
interviews, structured surveys
27
Review of IFC
products and
others in market,
evolution of TF
market, qualitative
analysis
Qualitative
analysis, literature
review
Literature review,
descriptive
statistics,
qualitative analysis
Access to data,
interviewee bias,
generalization
based on limited
sample