Financial Institutions

ACC Global Airport Business Development Toolkit

Financial Institutions

Development banks are generally focused on institutional strengthening as well as small and partial lending. The International Finance Corporation (IFC) is an exception because it grants major loans to private airport operators and developers. While each institution has its own unique practices, most require that companies become ‘registered.’ Descriptions of the programs of each institution and current contact information is available via the links below:

World Bank

The World Bank is a source of financial and technical assistance to developing countries around the world.   It is not a bank in the common sense, but is made up of development institutions owned by 185 member countries, including:

  • The International Bank for Reconstruction and Development (IBRD)
  • The International Development Association (IDA)
  • The International Finance Corporation (IFC)

Each institution plays a different but collaborative role to advance the vision of an inclusive and sustainable globalization.  Together they provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.

The International Development Association (IDA)

The International Development Association (IDA) focuses on the poorest countries in the world.   The following is excerpted from the IDA web site:

The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries.  Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.

IDA complements the World Bank’s other lending arm–the International Bank for Reconstruction and Development (IBRD)–which serves middle-income countries with capital investment and advisory services.  IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards.

IDA is one of the largest sources of assistance for the world’s 78 poorest countries, 39 of which are in Africa.  It is the single largest source of donor funds for basic social services in the poorest countries.

IDA lends money (known as credits) on concessional terms.   This means that IDA credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period.  IDA also provides grants to countries at risk of debt distress.

Since its inception, IDA credits and grants have totaled US $193 billion, averaging US $10 billion a year in recent years and directing the largest share, about 50 percent, to Africa.

Inter-American Development Bank (IDB)

The Inter-American Development Bank (IDB) provides solutions to development challenges in 26 countries of Latin America and the Caribbean, partnering with governments, companies, and civil society organizations.

The IDB lends money and provides grants.   It also offers research, advice, and technical assistance to improve key areas like education, poverty reduction, and agriculture.   Clients range from central governments to city authorities and small businesses. The Bank also seeks to take a lead role on cross-border issues like trade, infrastructure, and energy.

The IDB Group is composed of the Inter-American Development Bank, the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF). The IIC focuses on support for small and medium-sized businesses, while the MIF promotes private sector growth through grants and investments, with an emphasis on microenterprise.

Caribbean Development Bank (CDB)

The Caribbean Development Bank (CDB) is a regional financial institution which was established by an Agreement signed on October 18, 1969, in Kingston, Jamaica, and entered into force on January 26, 1970.   The Bank came into existence for the purpose of contributing to the harmonious economic growth and development of the member countries in the Caribbean and promoting economic cooperation and integration among them, having special and urgent regard to the needs of the less developed members of the region. Members of the CDB include Belize, Colombia, Mexico, Venezuela, four non-regional nations, and most Caribbean island nations except Cuba.

A recommendation was made after a Canada/Commonwealth Caribbean Conference in 1966 that a study be conducted to investigate the possibility of establishing a financial institution to serve the Commonwealth Caribbean countries and territories.   The report, submitted by a team of experts in July 1967, recommended the establishment of a Caribbean development bank with an initial capital of $50 million.   This report was considered and accepted at a meeting of officials in Georgetown, Guyana in August of the same year and a committee formed to prepare the draft agreement and finalize the details for the bank’s establishment.   This draft agreement was submitted in 1968 and adopted after meetings held at the ministerial level.

A preparatory committee for the bank’s establishment was set up and a project director appointed.   Assistance was received from the International Bank for Reconstruction and Development (World Bank), the Inter-American Development Bank (IDB) and the United Nations Development Programme (UNDP).

The permanent headquarters of the bank is located at Wildey, St. Michael, Barbados.   There are no other offices of the bank.  The headquarters serves all regional borrowing member countries with staff recruited from its members.

The Bank’s functions include:

  • to assist the borrowing member countries to optimize the use of their resources, develop their economies and expand production and trade
  • to promote private and public investment, encourage the development of the financial upturn in the region and facilitate business activity and expansion
  • to mobilize financial resources from both within and outside the region for development
  • to provide technical assistance to its regional borrowing members
  • to support regional and local financial institutions and a regional market for credit and savings
  • to support and stimulate the development of capital markets in the region

European Investment Bank (EIB)

The European Investment Bank (EIB) was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union.  The task of the Bank is to contribute towards the integration, balanced development, and economic and social cohesion of the EU Member States.

The EIB raises substantial volumes of funds on the capital markets which it lends on favorable terms to projects furthering EU policy objectives.  The EIB continuously adapts its activity to developments in EU policies.

The EIB:

  • Enjoys its own legal personality and financial autonomy within the EU
  • Operates in keeping with strict banking practice and in close collaboration with the wider banking community, both when borrowing on the capital markets and when financing capital projects

The operational strategy of the Bank is:

  • To finance viable capital projects which further EU objectives
  • To borrow on the capital markets to finance these projects

Within the EU the EIB has 6 priority objectives for its lending activity which are set out in the Bank’s business plan, the Corporate Operational Plan (COP)

  • Cohesion and Convergence
  • Support for small and medium-sized enterprises (SMEs)
  • Environmental sustainability
  • Implementation of the Innovation 2010 Initiative (i2i)
  • Development of Trans-European Networks of transport and energy (TENs)
  • Sustainable, competitive, and secure energy

The COP is approved by the Board of Directors and defines medium-term policy and operational priorities for objectives given to the Bank by its Governors.  It is also an instrument evaluating the EIB’s activities.  This rolling plan spans three years, with the strategic projections adapted annually to take account of new mandates and changes in the economic climate.

Outside the EU EIB lending is based on EU external cooperation and development policies.  EU Mandates are:

  • Pre-Accession:
          Candidate and Potential Candidate countries in the Enlargement region
  • European Neighborhood:
          Mediterranean Neighborhood
          Russia and Eastern Neighbors
  • Development:
          Africa, Pacific, and Caribbean (ACP)
          Republic of South Africa
  • Economic Cooperation:
          Asia and Latin America (ALA)

Lending under these mandates focuses on:

  • Private sector development
  • Infrastructure development
  • Security of energy supply
  • Environmental sustainability

European Development Bank (CEB)

CEB, the Council of Europe Development Bank, is the social development bank in Europe.  This bank is the oldest international financial institution in Europe (European development bank), and the only one to have a purely social vocation.   The CEB is the financial instrument behind the Council of Europe’s solidarity policy.

A multilateral development bank, the CEB is placed under the supreme authority of the Council of Europe and is financially autonomous.  Via the granting of loans, the bank participates in the financing of social projects and responds to emergency situations across the European continent.  The Council of Europe Development Bank intervenes in the following areas:

  • Strengthening of social integration
  • Environmental management
  • The developing of human capital
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