INTRODUCTIONIn the last decade, countries have turned to international financial institutions (IFIs) more often than ever, to fund their projects, ask advice for reform in the economic models, among others.
The development of this research is to meet a scheduled activity in the department of financial institutions, mainly to gain experience of international financial institutions, which are of great help to the socioeconomic development of the regions most vulnerable in the area of health, education, infrastructure, roads, and other issues affecting the world population.
It is essential that a business manager know about the financing options with which countries have to develop their economic activities. As well as make them aware of the projects undertaken by his country with the support of international financial institutions.
Each of these institutions has its own characteristics that must be known to the people to understand their goals. The following will explain each of these institutions.
INTER-AMERICAN DEVELOPMENT BANK (IDB)
The IDB is the oldest and largest regional development institution. It was established in December 1959 in order to help boost economic and social progress in Latin America and the Caribbean. The creation of the Bank represented a response to Latin American nations for many years had expressed their desire to have a development agency to address the overwhelming problems of the region. Initially the Bank was formed by 19 countries in Latin America and the Caribbean and the United States. Then came other eight countries in the hemisphere, including Canada. Since its inception, the IDB has been linked with many industrialized nations, whose entry into the Bank was formalized in 1974 with the signing of the Declaration of Madrid. Between 1976 and 1993 entered 18 countries outside the region. Today members of the Bank added 46.
Within the IDB Group include the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF). The IIC was established to contribute to the development of Latin America through financial support to private small and medium scale enterprises. The MIF was established in 1992 to promote the viability of market economies in the region.
In its 42 years of activities, the Bank has become a major catalyst for mobilizing resources for the region. Its charter states that the main functions of the institution are to utilize its own capital, the resources it obtains in the financial markets and other funds available to finance the development of its borrowing member countries, to supplement private investment when private capital is not available on reasonable terms and conditions, and provide technical assistance for the preparation, financing and implementing development programs. The Evaluation Office (EVO) is responsible for the assessment of strategies, policies, programs, projects, including those running, or systems, and the spread within the Bank of results and lessons learned. In its pages you can find the Annual Reports of Assessment (and abstracts), an article entitled "Evaluation: a management tool to improve project performance", we find from an explanation of the importance of evaluation as learning to The different steps of the assessment cycle, a bibliography and annexes to the matrix of the Logical Framework Approach Planning and Monitoring and Evaluation Procedures.
Also, there is also the synthesis of American Roundtable on Evaluation and Performance Management, 1995, in which department heads attended by ten South American countries. As a result of this round table was the Regional Advisory Group Evaluation (RecG). The website aims to facilitate the sharing of experiences and reflections on the evaluation and performance measurement.
In fulfilling its mission, the Bank has mobilized funding for projects involving a total investment of U.S. $ 273,000 million. Annual lending activity has increased dramatically from U.S. $ 294 million in loans approved in 1961 to U.S. $ 10,063 million in 1998 and U.S. $ 4,550 million in 2002.
The Bank's operations cover the entire spectrum of economic and social development. In the past, the Bank emphasized the productive sectors like agriculture and industry sectors of physical infrastructure such as energy and transport, and social sectors, including environmental and public health, education and urban development . Currently, funding priorities include social equity and poverty reduction, modernization and integration and the environment.
In recent years, the Bank has approved loans for sector reforms and debt reduction programs. Since 1995, the Bank began lending directly to the private sector without government guarantees up to 5% of its ordinary capital resources.
To meet its loan and technical cooperation, the Bank has its ordinary shares comprising the share capital, reserves and funds raised through loans, plus the funds under management, which are special contributions from its member countries. The Bank also has a Special Operations Fund provides loans on concessional terms for projects in economically less developed countries.
The Bank has borrowed funds from capital markets in Latin America and the Caribbean, United States, Europe and Japan. Its debt is rated AAA by the three major rating services U.S., equivalent to that awarded in other major markets.
The highest authority is the Bank's Board of Governors, which represents all member countries. Usually governors are ministers of finance or finance, central bank presidents or other officials in positions of comparable rank. The Board of Governors has delegated many of its powers to the Executive Board, which is responsible for directing the operations of the Bank.
The Bank has offices in all member countries in Latin America, and in Paris and Tokyo. Its headquarters are in Washington.
Bank's financial resources consist of Ordinary Capital (OC), the Fund for Special Operations (FSO), and trust funds. The CO totals U.S. $ 101,000 million. The cash portion paid subscriptions to CO is 4.3 percent, the remainder subscribed capital, next to the preferred creditor status granted by the IDB member countries, serves as support for the Bank's borrowings on financial markets . The IDB bond between U.S. $ 6,000 million and U.S. $ 9,000 million per year. Except for emergency loans, the repayment period of loans provided with funds from the CO ranging from 15 to 25 years interest rates reflect the costs incurred by the Bank in its loans, more charges and margins.
Intermediate Financing Facility is used to reduce the interest rate on certain loans from the CO to a group of low-income countries: Ecuador, El Salvador, Guatemala, Jamaica, Paraguay, Dominican Republic and Suriname.
The FSO, which has U.S. $ 10,000 million in cash contributions from all member countries, provides financing exclusively to the poorest countries in the region: Bolivia, Guyana, Haiti, Honduras and Nicaragua. The interest rate on loans from the FSO to 40 years, with 10 of grace, is almost 2 percent annually.
The IDB administers trust funds established by many countries and multinational institutions to provide financing and technical assistance for a wide range of activities. It also promotes and participates in multilateral and bilateral co-financing for their projects for public and private sectors.
In 2002, the Bank approved a loan to Venezuela. On a cumulative basis, the Bank has made 74 loans totaling U.S. $ 3,855 million, with disbursements reaching $ 3,420 million.
Priorities
The Bank has a lending capacity of over U.S. $ 8,000 million per year to finance public and private investment, economic policy reforms and social support emergency operations in case of financial crises or natural disasters. Loans by sector evolve according to the needs of the region. The current priorities are competitiveness, social equity and poverty reduction, modernization of the state and regional integration. The Bank has a mandate to spend at least half of its operations and 40 percent of its resources to social programs that benefit primarily the poor.
Public entities that qualify for credit from the IDB is the national, provincial, state, and municipal and autonomous public institutions. The civil society organizations are also eligible. The Bank finances a proportion of total project costs of investment that is inverse to the size of the economy of the countries, the borrower finances the remainder. Up to 10 percent of the portfolio of loans and guarantees may be referred directly to private companies without government guarantees for infrastructure projects and development of capital markets at a cost based on market conditions.
The Bank provides grants for technical cooperation and institutional strengthening measures critical to the design and preparation of projects. It also organizes and participates in financial support groups that help countries or groups of countries recover from natural disasters or external shocks.
Research and studies:
The IDB promotes dialogue on social, economic and institutional borrowing countries and regional groups of countries. It also encourages consultations on the development agenda of a country between government, civil society and the private sector. Supports this work with research, publications and training programs for their departments for Research, Development, Integration and Regional Programs.
Acquisitions
Only companies IDB member countries can provide goods and services for Bank projects. Although acquisitions are the sole responsibility of the borrower, the Bank supervises the process.
Monitoring and evaluation
External auditors selected by the IDB governors discussed the financial statements of the Bank. The Office of the Auditor General evaluates the adequacy, effectiveness and efficiency of Bank supervision, controls and the use of resources. System Management Assessment reviews and evaluates the performance of projects and programs during the year as well as the cycles of projects and programs. The Office of Evaluation and Oversight, which responds to the Board and is independent of management, evaluates projects and examine strategies, policies and procedures to verify compliance with the objectives and mandates of the Bank.
Inter-American Investment Corporation
The Inter-American Investment Corporation (IIC) supports the establishment and modernization of small and medium enterprises in Latin America and the Caribbean through loans, equity investments and other financial and technical means. Has 41 members, all also members of the IDB. Its authorized capital is U.S. $ 700 million, and its ability to take total credit increases the operational resources to approximately U.S. $ 3,000 million. The IIC can pass about 45 operations a year for a total of U.S. $ 300 million.
Multilateral Investment Fund
The MIF, administered by the IDB, is the main source of grants for private sector development in Latin America and the Caribbean. Supports innovative pilot projects to institutional reform, legal and regulatory, job training, and development of small and micro enterprises. He has received contributions from 26 countries totaling U.S. $ 1,300 million to provide grants, loans and capital investments. The MIF approved about 100 projects per year for a total of U.S. $ 100 million.
Public sector projects
Most of the loans that the Bank grants annually to fund programs serving the public sector, including investment projects, sectoral reform programs and policy, and emergency operations for natural disasters and financial crises. The Bank also manages the resources donated to various technical cooperation programs.
The sectors that target the resources of the IDB in the public sector vary according to the changing needs of the region's development. Current priorities for loans include supporting programs that foster global competitiveness, social equity and poverty reduction, modernization and state reform and economic integration.
The private sector
The IDB program for the private sector to help meet the growing demand for capital to support private sector initiatives in Latin America and the Caribbean in terms of infrastructure and capital markets. In partnership with leading investors, financial institutions and project sponsors in Europe, Japan, North America and Latin America, the program mobilizes private financing for infrastructure projects. As an international financial institution, the IDB can provide financing long term infrastructure projects suitable for large-scale, which usually require a considerable initial capital investment and repayment plans are required for the long term. In order to attract private sector partners and facilitate investment, the Bank offers a wide range of financial products and services, including loans for projects and companies, and credit guarantees and political risk. These products and services, along with the vast network of contacts of the Bank and its long experience in the region, the IDB made an invaluable partner. Many of the largest institutional investors and financial institutions around the world have worked with the Private Sector Department of the Bank.
Besides the support to infrastructure projects, the Bank also works to generate more volume and quality of financing for the development of local capital markets. These efforts recognize the importance of mobilizing domestic savings in the region, reducing reliance on funding of projects with foreign currency and generating additional liquidity into the sources of long-term financing in local currency.
ANDEAN DEVELOPMENT CORPORATION (CAN)
The Corporacion Andina de Fomento (CAF) is a multilateral financial institution whose mission is to support the sustainable development of its shareholder countries and regional integration. It serves public and private sectors, providing multiple financial products and services to a broad customer base, consisting of the governments of shareholder countries, financial institutions and public and private companies. In its management policies integrates social and environmental variables in their operations and includes eco-efficiency and sustainability criteria.
CAF has maintained a permanent presence in their countries has allowed shareholders to consolidate its regional leadership in the effective mobilization of resources. Currently, the main source of multilateral financing for the Andean Community countries, giving them in the last decade more than 40% of the resources that were awarded by the multilateral agencies.
The CAF is currently made up of sixteen countries of Latin America and the Caribbean. Its principal shareholders are the five countries of the Andean Community of Nations (CAN): Bolivia, Colombia, Ecuador, Peru and Venezuela, shareholders of the series "A" and "B" plus eleven partners: Argentina, Brazil, Chile, Costa Rica, Spain, Jamaica, Mexico, Panama, Paraguay, Trinidad & Tobago and Uruguay, shares of Series "C" and 18 private banks in the Andean region, as well as representatives of the series "B".
Main Activities
The CAF acts as financial intermediary, mobilizing resources, preferably from industrialized countries to the region and serving as a bridge between the region and international capital markets.
Funds the development of productive infrastructure, especially those that facilitate the physical and border integration.
Promotes the development, consolidation and integration of financial markets and capital in its shareholder countries, especially in the Andean region.
Promotes trade, investment and business opportunities.
Support the business sector, from large corporations to small firms.
Supports the structural reform process being carried out its shareholders to assist in modernizing their economies and increase their competitive insertion in the globalization process.
The CAF is headquartered in Caracas, Venezuela. Additionally, it has representative offices in the capitals of its major shareholder countries: Santa Fe de Bogota, Quito, Lima and La Paz
CAF's role in the integration
The Andean Development Corporation was conceived, from its origins as the financial entity to support and encourage the integration process. Indeed, the preamble of its charter highlighted "the importance of joint efforts by the countries of the subregion to achieve balanced economic development and harmonious with other Latin American nations to form an integrated common market". In accordance with Article III of this Convention, the CAF is to "promote the subregional integration process."
This commitment to integration of the Corporation was ratified by the First Andean Presidents on several occasions. In 1990, the Andean Presidential Council stressed that the goal of the countries of the Cartagena Agreement is not staying in the Andean Group, but "advance the goal of building an integrated hemisphere of free trade." Consistently, the Presidents of the Andean Group and project decided to strengthen the institution by allowing, first, the doubling of its capital in 1990 and inviting other Latin American and Caribbean countries to participate in the equity of the Corporation, by subscription of shares of Series "C" in order to strengthen trade and investment between the Andean countries and the rest of the continent's nations.
Since the early nineties and in the context of a new international context characterized by extended economic areas and open regionalism, CAF began to expand its reach to other countries in Latin America and the Caribbean. Indeed, today the organization has among its shareholders, besides the five that make up the Andean Community, Brazil, Chile, Jamaica, Mexico, Paraguay, Panama and Trinidad & Tobago. Also, in early 1992, the CAF said his mission, restricting it to two basic pillars: sustainable development and regional integration.
The CAF, as promoter of strengthening the bonds of its shareholder countries and aimed at building and strengthening regional integration, occupies a prominent seat in the integration process in particular by expanding its shareholder base and operations. Financial and institutional strengthening of the Corporation, the experience gained in both public and private sector, its current fundraising strategy and status of institution made only by countries in Latin America and the Caribbean, the power to drive, especially in Financially, the interconnection between the major integration schemes in the region.
In this context of open regional integration, the CAF seeks to play a increasingly important role, serving as a pragmatic and timely communicating vessel between the Andean Community and other integration schemes in Latin America and the Caribbean, which are partners, in particular the MERCOSUR, the Group of Three and CARICOM.
CAF also acts as a hub for linking its shareholder countries and other regions of the world, strengthening economic, financial, trade and investment mainly to USA, Canada, the European Union and Japan, among others.
Priority areas for action
Promote and finance projects aimed at the integration of its shareholders among themselves and with the rest of the region, mainly through the provision of sustainable infrastructure addresses the sectors of roads, energy, telecommunications and river, and the development of integration border.
Support the strengthening of regional integration.
Activities
Initiative for the Integration of Regional Infrastructure IIRSA. The Andean Development Corporation is committed to this ambitious program, approved in September 2000 in Brasilia as a mandate of the presidents of South America. The aim is to create a period of 10 years a network of railways, waterways, roads, telecommunications and energy to conquer the domestic market in the region and catapult the competitiveness of each of the economies. The Technical Coordination Committee (CCT) is made by CAF, IDB and Fonplata, institutions that did a job that defined the 12 axes of integration and development, each of which will include roads, energy and telecommunications .
Sustainable physical infrastructure
Since 1992 CAF has developed an ambitious strategic program to equip the Andean Community countries and to its other shareholders of sustainable physical infrastructure required to promote integration and economic growth. In that sense, we developed an "Action Plan for the Participation of the CAF in physical infrastructure projects and Border Integration" aimed especially at the areas of roads, energy, telecommunications and more recently, to integrate Latin American river.
The objectives of this plan have been presented in four books published by the CAF: Andean Integration Viable Projects (January 1993), updated in the report Sustainable Infrastructure priority projects that was presented at the XI Andean Presidential Summit, Cartagena de Indias, May 1999 Energetic Andean Integration Project (May 1993), Telecommunications and Informatics Andina (June 1995) and Los Rios Join us - Integration Latin American River (November 1998).
The leaders of large global corporations agree that the most important challenges they will face during this millennium will be associated with environmental sustainability. Also, many analysts predict a "resource revolution", where the financial efficiency is not the only indicator of progress of nations in the world and the criterion of effectiveness of the economies will not be determined by the stock exchanges or cash reserves, but the quality of its natural capital.
One of the cornerstones in the CAF's mission is to support the sustainable development of its shareholder countries. This was created in July 1995, the Office for the Coordination of Sustainable Development, which today is called Sustainable Development Division (SDD) and is part of the Vice President of Development Strategies. Its main objective is to promote sustainable development as a challenge to the entire Corporation and thus achieve real integration of economic variables, environmental and social development planning and operations. In this way contributes to CAF shareholder countries and responsibly sustainable natural capital, so that these resources are also available for future generations. This approach leads to better protection and utilization of natural resources, greater social equity and greater efficiency, profitability and quality in the projects it supports.
The CAF includes in its methods of evaluating projects, criteria for long-term sustainability in the economic, social and ecological way of ensuring that all activities and operations financed by the Corporation to be profitable and sustainable.
Objectives of the CAF
The activities of the Sustainable Development Division are part of a command that has the following objectives:
Strengthening the capacity of environmental and social management of the Corporation at all organizational levels to ensure that their operations are economically viable, environmentally sustainable and socially responsible.
Promote the concept of sustainable development project to the CAF looking internationally as a leader in this field.
Promote greater equity in its member countries, defined as access to the most disadvantaged social and economic opportunities generated by society as a whole, such as organization, production, education and other social services.
Create opportunities for environmental businesses and actively participate in the emerging markets for environmental services.
Main Activities
To strengthen environmental and social management of the region, CAF has been developing a series of programs, activities and products, among which are:
Latin American Carbon Program (PLAC)
As an alternative to reducing emissions of greenhouse gases, CAF, with the support of the Center for Sustainable Development in the Americas (CEDS), established in May 1999, the Latin American Carbon Program (PLAC) for the purpose of support the participation of its shareholders in the development of emerging carbon market, based on the principles of the Framework Convention United Nations Climate Change.
BIO Biodiversity Programme - CAF
In recent decades, particularly biodiversity and genetic resources, have been valued in an increasingly economically due to the confluence of several factors among which are: 1) High rates of extinction that have become a scarce resource for international market and 2) Developing new technologies mainly modern biotechnology and Information Technology, which surprisingly have expanded the potential use of genetic resources.
Modern biotechnology has created the possibility of transferring genetic material between distant species, without the restrictions of natural reproductive systems and the ability to identify, characterize and manipulate molecular processes from which it is possible to design new systems for genetic improvement of diagnosis of disease and production of a wide number of commodities for the pharmaceutical, food and agribusiness.
Companies in developed countries especially the large multinationals, have been positioned in these markets through massive investment and various mechanisms of private appropriation of new technologies, why are formed simultaneously in the major markets of global biodiversity and exclusive suppliers of knowledge and technologies needed for their use.
Conventional processes of technological innovation in agriculture and industry, and markets natural raw materials, remain very important markets for the use of biodiversity through traditional systems of production and extraction, which have different impacts on the welfare of local and regional economies.
Transforming potential of the natural biodiversity in a real advantage for developing countries requires an overall policy that combines two dimensions: on one hand that seek to expand the business and scientific capabilities to take advantage of opportunities endogenous offering existing and emerging markets for the supply of goods and services derived from biodiversity and on the other hand, that aims to create a legal and institutional enabling environment to facilitate the appreciation of conservation activities, supply and sustainable use of resources and provide clear ground rules and competitive domestic and foreign investments.
Considering the functions of the CAF as an entity of commercial banks, and cooperation for sustainable development and regional integration, as well as the wide range of operating mechanisms, the use of Biodiversity may represent a promising line of business and an area of support for more sustainable development.
The overall objective of Bio-CAF is to promote the conservation and sustainable use of strategic ecosystems, biodiversity and genetic resources, by promoting investment and trade in goods and services to contribute to sustainable development of countries and improve the welfare of the population.
More specifically, the program is primarily designed to develop a series of regional-level activities, which allow countries to exploit comparative and competitive advantages because of the wealth that each of our countries have, through the promotion i) the development of markets derived from sustainable use of strategic ecosystems, biodiversity and genetic resources conservation initiatives of ecosystems and species directly related to operations financed by the CAF.
In this context, the CAF has supported a number of initiatives in this area at the regional level, including BioTrade Program CAN / CAF / UNTACDA; addition, the CAF is a shareholder and board member and investment committee that EcoEnterprises Fund operates from Costa Rica and was established in Panama by The Nature Conservancen 2000.
Sustainable Development Programme Industry and Financial Institutions
To the extent that it consolidates, the paradigm of sustainable development, both private and public sectors, has been developing mechanisms to include within the value creation process elements of environmental and social. It is not conceivable or permissible corporate value creation at the expense of natural capital or other common goods. On the contrary, as a result of increased environmental awareness in the community, industry and regulators, there are new opportunities and threats for companies, which may materialize in the form of profitability and / or risk. The industry has realized that environmental issues can generate well-managed corporate value, and either by reducing risk, reducing operating costs or increasing revenues. It is also clear that the ignorance or worse, the deliberate detriment of the environment or communities or other interested parties and stake holders, corporate value generates loss and whether the increased risk, or increased costs other operating expenses.
In the same measure, the financial sector worldwide has been aware that the positive or negative environmental and social issues might have on the risk / profitability are transferred directly into the value chain to investors or financiers. Consequently, it has responded by developing a) mechanisms to identify and punish those lending or investment that might pose environmental risks and social high, b) financial products to meet the growing and thriving development of environmental services and green business.
These opportunities and environmental and social threats have catalyzed the development of new markets for environmental services that respond to this new order or regulatory environment, institutional, cultural and global. It is for these to meet these new environmental markets and social responsibility that emerge with significant growth, both the financial industry as the region has to be prepared to provide a timely and competitive.
Given the global context and recognizing the obvious deficiency that vitiates the industrial and financial sectors in the region, the CAF creates the Sustainable Development Programme Industry and Financial Institutions (PDSIIF), which aims to help promote, develop and strengthen principles of sustainable development in these important sectors, with particular emphasis on the recognition and promotion of markets for technologies and cleaner production. Through PDSIIF, CAF ensures that industrial and financial sectors in the region, meet and benefit from these global trends, first capitalizing on technological advances to increase their own profitability, and otherwise preparing to enter timely and competitively available funding sources at the international level, thus promoting social, environmental and financially sustainable.
The hinge PDSIIF cross emerges as seeking to develop financial mechanisms for emerging environmental services markets in general, including but not limited to pleasure and BIO-CAF program, but expands to other sectors associated with the promotion and consolidation of the model sustainable development through other markets and environmental services / social services, such as cleaner production, environmental and recycling technologies, SRI, corporate social responsibility, social investment, among others.
The PDSIIF-for executives of the Vice President of Industrial and Financial Systems (VISF) of the CAF and industries and regional and international financial institutions-is to promote both externally and within the CAF the importance of sustainable development issue industrial and financial sectors, both the risks posed by ignorance, as the opportunities offered by new markets and emerging environmental and social services.
More specifically, the activities of this program is aimed at establishing an international leadership, generation and dissemination of knowledge / information, promotion of an adequate regulatory framework, and identification and funding of projects / pilot products to help develop a market for services and environmental businesses, including but not limited to clean production, socially responsible investment (Socially Responsible Investment - SRI), environmental technologies, among others.
To date, the activities of this program have focused activities associated with the establishment of international leadership, generation and dissemination of knowledge / information.
The Corporation is an active member of the Financial Institutions Initiative of UNEP, and has co-sponsored this initiative with a series of events, including the fifth and seventh overall roundtables Financial Institutions Initiative and the Environment respectively titled "New Roles for Finance in the Race to Sustainability "and" Financing a Sustainable Future: Strategies, Partnerships, and Opportunities "held in September 1999 at the Kellogg Graduate School of Management at Northwestern University in Chicago, USA in March 2002 in Rio de Janeiro, Brazil, the latter in conjunction with the BNDES.
Note that in the first meeting in Chicago, CAF signed the UNEP Statement on Environment and Sustainable Development Financial Institutions (UNEP Statement by Financial Institutions on the Environment and Sustainable Development), becoming the first multilateral development bank that adheres to this initiative. Also, together with Latin American Future Foundation organized the first Latin American Dialogue on Banking and Sustainable Development, aimed specifically to discuss environmental risks, opportunities, constraints and challenges that financial institutions face the region as promoters of development.
In this effort, the CAF has supported a number of publications on these topics and issues an annual workshop in conjunction with the International Finance Corporation World Bank and the Inter-American Investment Corporation Inter-American Development Bank, entitled "Competitive Advantage: The promotion of a Improved Environmental Management in the Financial Sector "(IIC / IFC / CAF).
Sustainable Social Development Program
Poverty is an outcome of the unequal distribution of wealth. Latin America is the region of the world in which all inequalities are extreme. "More than 150 million Latin Americans, (...) about 33% of the population are below an income level of $ 2 per day (...) which is considered the minimum necessary to meet basic needs of consumption. "
The phenomenon is expressed in low levels of education, family disintegration, unemployment, high rates of morbidity and mortality, malnutrition, informality, poor housing, poor access to goods and services networks (water, sewer, electricity, transport telecommunications, etc.)..
Low educational attainment, the contexts of urban and rural marginality, and levels of conflict that arise from the limited capacity of governments to intervene on issues of prevention, justice and security, require the development of actions in favor of strengthening states for the management of these variables.
Products and Services
Customers of the CAF: Financing and services offered by the CAF are directed to the governments of shareholder countries, as well as public institutions and private or mixed companies operating in these nations.
Financial Services: CAF offers a variety of services similar to those of a commercial bank, development and investment, particularly those that enhance the competitive advantages of the Corporation in the areas of infrastructure, industry and financial systems, which foster the integration of public and private action in shareholder countries and strengthen its catalytic role, innovative and inclusive in the region. CAF:
It lends the short, medium and long term technical cooperation, guarantees and a shareholder in companies and investment funds.
Structure and finances projects without recourse or limited recourse (limited recourse or non recourse lending).
Make cofinancing with multilateral institutions and international banks, including loans A / B (A / B Loans).
Finances the acquisition of companies and assets in privatization processes, newly privatized companies and private companies operating state grants, to support the modernization of the state mechanisms and strengthening the role of private sector in partner countries.
Opera as second-tier bank for channeling resources to various productive sectors and particularly to small and medium enterprises (SMEs).
In the context of a comprehensive credit, CAF may also grant credit lines to financial institutions and corporations to finance foreign trade operations and working capital.
Provides financial support services and consultancy for the consolidation and sustainability of financial institutions that serve the microenterprise.
It supports companies and banks to access the local capital markets through underwriting.
Provides underwriting capital markets (Underwriting), trusts structured partial guarantees, interest rate swaps related to structured finance transactions and through its Office of Investment Banking and Capital Markets.
Provides financial advisory services to its clients, including consulting on risk rating.
Get short-term deposits and regional issues bonds medium term, internationally competitive rates.
Provides technical cooperation to facilitate the transfer of knowledge and technology to complement existing technical capacity in shareholder countries and raise the external competitiveness of the productive sectors.
Manage funds from other institutions for projects to benefit economically marginalized social sectors such as small farmers, indigenous communities and border areas underdeveloped.
Loans
Short loans (up to 1 year), medium (1 to 5 years) and long term (over 5 years) are the main mode of operation of the CAF and can be applied to all stages of project implementation. Under certain circumstances and in the context of a comprehensive credit, CAF may also grant loans to finance trade operations, especially export promotion, and working capital to companies or financial institutions.
Although the CAF can finance virtually any type of project, have particular relevance for infrastructure loans to public and private projects for roads, transport, telecommunications, power generation and transmission, water and sanitation, as well as conducive to the development of border and physical integration of shareholder countries. As for the industrial area, CAF supports projects and corporate loans to expand and modernize production capacity and the inclusion of companies from its shareholders in the regional and global markets.
In the case of loans to finance trade operations, working capital or support programs for productive sectors, operates preferably in the form of second-tier banks to provide credit lines or loans to financial institutions sector development and banking private business. Thus, the CAF provides funding to specific sectors which can not reach directly, as is the case of small and medium enterprises (SMEs). These lines can also give directly to qualified firms of various productive sectors of the region.
Limited Warranties: The CAF is actively involved in structured project financing schemes under limited warranties (limited recourse lending). This mode is used primarily to finance projects BOT (build, operate and transfer) and BOO (build, operate and own) related to the infrastructure sector, generally from concession contracts awarded by governments or to finance mining projects and oil and gas.
Loan A / B and Co-financing: CAF loans using A / B in order to supplement their financial resources to attract external resources to the region for the benefit of its shareholders. Through these loans, grants CAF A portion of the loan with their own resources and distributes the portion B between international banks and institutional investors. Before the borrower and the other participants, the CAF is the creditor (lender of record) and in that capacity represents both their own interests, as the other participants against the debtor.
In addition, CAF co operations with multilateral organizations like the Inter-American Development Bank, World Bank, the Inter-American Investment Bank, Nordic Investment Bank, International Finance Corporation and the International Fund for Agricultural Development, and private banking locally and internationally.
Shareholdings
The CAF makes equity investments in strategic areas in order to support the development and growth of companies in the shareholder countries and their interests in the securities markets, and also in order to serve as a catalyst in attracting resources to the region.
The CAF can participate through several ways:
Through investment funds aimed at the acquisition, holding, management and disposition of fixed income securities or securities of companies or infrastructure projects represented in shares or participation certificates issued by those companies.
Directly through the capital of companies that aim to produce goods or provide services.
Through quasi-equity investments, such as subordinated loans, preferred stock and option loans be converted into shares.
Among the key criteria to consider when deciding CAF an equity stake are: the successful mobilization of external resources as a result of this investment, the impact on the development of the region, the strategic nature of it, the presence of CAF in decisions of the institution in which it invests, exit mechanisms and profitability.
Investment Instruments
Deposits and Regional Bond Issues: CAF accepts deposits and makes short-term to medium term regional bonds at interest rates that compare favorably with those obtained in international markets. Both deposits and bonds are denominated in regional U.S. Dollars and are aimed at depositors and institutional investors in the shareholder countries. Both products use LIBOR as a benchmark.
In general, the timing of deposits ranging from one (1) day to twelve (12) months and the minimum is U.S. $ 1,000,000.00.
Regional bonds are issued within three (3) years with interest paid semiannually and principal payment at maturity. Usually the investor is entitled to redeem your investment every six (6) months at the time of payment of interest. The minimum denomination of regional bond is $ 50,000.00.
Operations Investment Banking
The CAF supports public sector clients and private banking operations through investment and capital markets that complement and add value to their traditional products and offer comprehensive financial services.
Among the products that the CAF offers in this area are:
Emissions subscription Capital Markets (Underwriting): The sign of debt issues, both global and local markets, in order to ensure the success of customer emissions.
Structured Trust: The trust allows the CAF to support clients in raising funds through a sale-leaseback structure posterior (sale-and-lease back) of their assets.
Partial Guarantees: The CAF provides a partial guarantee on issuance of securities to their customers to improve the quality of risk (credit enhancement) of the issue and enable profitable operating conditions. For example, the CAF can be guaranteed a share of capital and interest installment on a rotating (revolving).
Corporate Finance: The CAF aims to add value to their operations by structuring financing to meet the needs and characteristics of their clients, using its main competitive advantages. The structuring of transactions allows you to find the appropriate financing mechanisms including direct risk operations through capital markets.
Interest Rate Swaps and other derivatives: Its credit rating of investment grade (investment grade), the CAF has an excellent position to negotiate contracts with international banks swap. This allows, for example, offer fixed interest rates to customers who want but can not directly access the derivatives markets on favorable terms. Thus, the CAF offers services that allow customers greater flexibility in managing its liabilities.
Financial Advisory: The CAF provides financial advisory and ancillary services products offered in the area of investment banking and capital markets. Generally, conducted in partnership with local or international investment banks.
Political Risk Insurance: The Corporation has partnered with the American International Group, American International Group (AIG) - world-renowned company in the business of insurance, including political risk, to create the Latin American Society of Investment Guarantees - Latin American Investment Guarantee Company "(LAIGC) - which offers policies of political risk insurance and investment guarantees to foreign credit operations, foreign trade and capital investment in the countries of the region, innovative option to increase investment and foreign funding sources in its shareholder countries.
Micro Finance: The CAF supports financial institutions channel funds to microenterprises by providing expert advice and financial support to improve their technical capability and quality as financial intermediaries, and to help them formalize their operations so they can be supervised by competent authorities. Financial support can be offered in the form of equity stakes, lines of credit, subordinated loans and local emissions, among others.
Among the projects that the CAF currently supports are:
Partial funding of Transmission Investment Plan for the management of EDELCA 2001. This operation involved as co-leader Banco Santander Investment. The operation is designed to cover the growing needs of electricity in the country, and to enhance and improve the efficiency and reliability of the interconnection network of the national transmission system. The resources of the Corporation be directed to finance the Transmission System to the East, the Regional Transmission System Guiana, as well as other sectors of low voltage in the area.
Energy Integration Program Venezuela-Brazil, which is the electrical interconnection of the two countries through liaison with hydro grid Macagua of Boa Vista in northern Brazil.
The Corporation has also given financial support to the San Gaban hydroelectric plant in Peru, which will generate energy to population centers, seats mining and industries in the south of the country and facilitate links with Brazil and Bolivia, through the implementation of the integration project energy between the two countries.
The CAF is part of a diverse group of financial institutions that participate in one of the most important Latin American energy projects and energy integration in the region: the Bolivia - Brazil. In this context, the CAF played a key role in structuring the financing, providing resources to the company Petroleo Brasileiro SA (Petrobras) for the start of construction of the main line on the Bolivian side of the project, thus making better borrowing constraints external Bolivia.
The Corporation has funded several projects in the Electricity Company of Caroni CA (EDELCA) to support construction of power transmission and generation in the Northwest and Southeast of Venezuela, who have made feasible the interconnections with Colombia and Brazil, respectively.
CAF supported technical cooperation resources to the Regional Electrical Integration Commission (CIER) in a study that analyzes the possibility of creating an integrated electricity market to optimize use of available energy resources of hydropower and natural gas South America. The project is called Wholesale Markets and Interconnections and the results were presented in the book Energy Without Borders recent publication sponsored by the South American Electric Interconnection CAF. Through the attached PDF document that then is a brief description of the project and a summary of the main conclusions of this research.
Telecommunications is now a key platform to ensure a more competitive and effective inclusion in the current globalization process.
The joint telecommunications systems between countries is, therefore, vital to the strategy of economic and social development of the Andean countries in the context of regional integration.
One of the first actions that the Corporation to contribute to these objectives was sponsored in 1995, the Telecommunications and Computer Andean study, which contains an analysis of the situation of telecommunications in the region as well as the guidelines of the future development of a computer network between the Andean countries and its interrelationship with other telecommunications systems on the continent.
CAF's strategy has focused on supporting the consolidation of the telecommunications companies from its shareholders and to support projects that contribute to the expansion of its radio coverage beyond their national borders, so that they can more efficiently access the processes of regional and international interconnection.
In this sense, the CAF is supporting the company Orbitel SA of Colombia, in the execution of the project to finance the construction and development of its telecommunications network of national and international long distance.
It also supports Infonet Corporation - CA Information Networks in setting up a wireless telecommunications network in rural areas of western Venezuela and supports the Investment Plan of Telefónica of Peru.
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