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COMPANIES INVOLVEMENT IN THE WORLD BANK PROJECTS A PRIMER

By Jeremy Brown,2014-09-30 16:21
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COMPANIES INVOLVEMENT IN THE WORLD BANK PROJECTS A PRIMER

    COMPANIES INVOLVEMENT IN THE WORLD BANK PROJECTS: A PRIMER

    This is not an official document of the World Bank, but tries to contain information I have learned. All the information should be confirmed by the reader from the World Bank websites, many of which are

    contained in this document

    Israeli companies often express their interest in accessing the World Bank projects, but have no idea of how to go about doing so. This document attempts to help Israeli Companies learn how the process works,

    identify areas where they might get involved and gives specific websites where information can be gathered. To do this the document first discusses two institutions of the World Bank (the International Bank for Reconstruction and Development commonly called the IBRD and the International Finance Corporation

    commonly referred to as the IFC) and tries to highlight their differences and relevancy for Israeli Companies. It also discusses different types of loans of the IBRD which will help Israeli Companies focus on those projects which they feel will give the best return for their efforts. In addition it discusses the project cycles for each institution, who makes the Procurement decisions, and finally identifies specific websites for

    companies to use in identifying potential projects they wish to try to get involved in.

This document will proceed as follows:

    1. Discuss IBRD types of loans and the project cycle

    2. Discuss the project cycle of the IFC

    3. Discuss the advantages of each Institution

    4. Discuss the objectives of the IBRD procurement process

    5. Discuss the specific IBRD project cycle with an explanation of where to obtain

    information for potential and actual projects.

    You will find websites here. Please note that these may change with time. Also, kindly copy the website addresses into the Internet Explorer address bar to access the websites.

    Working with the World Bank group provides opportunities for Israeli companies, but there are 2 different relevant organizations in the group, the IBRD and the IFC, and each must be approached differently. The differences are as follows (note that this is my summary, more specific information can be found on the World Bank website):

IBRD TYPES OF LOANS AND PROJECT CYCLE

The IBRD loans money or gives grants to countries for either of 2 purposes:

     Investment Loan

     Adjustment loan (commonly called budget support)

    The procurement operation is different for each type of loan with implications for Israeli Companies. An Investment Loan is where the Bank loans the Country money for a specific purpose, and all the procurement

policies and procedures of the World Bank must be followed. Thus the actual process, which takes years,

    works as follows:

    1. The bank in its CAS (Country Assistance Strategy) or its CPS (Country

    Partnership Strategy) decides on a plan of investments to achieve certain specified

    objectives and targets for the coming 3 5 years. This document gives a general strategy

    for the next 5 year period.

    2. This document is approved by the World Bank Board

    3. Each strategy then needs to be translated into a specific project; along with the

    environmental impact statements etc. (preparation time for these projects typically takes

    1-3 years). This becomes the Project Information Document.

    4. This specific project is submitted to the Board for approval

    5. On Approval the Bank signs a loan agreement with the borrowing Country which

    then begins the actual process of the tender in its name. Often though, the tender is done

    before presentation to the Board on the assumption that the Board will approve the loan.

    This is done so that after a loan is approved the Investment can begin immediately.

    Alternatively there is the adjustment loan, which in IDA countries (low income countries) is generally based

    on a PRS (Poverty Reduction Strategy). It is a loan which has no specific investment (project) in mind but is

    given to the country as a form of budget support. In this case the process works as follows:

    1- The Bank with the Stakeholders create a PRS which contain

    targets which must be met. These targets tend to be somewhat general

    (eg. proportion of children in school), and not tied to any specific action.

    This is also for a 5 year period and gives a roadmap of actions for the

    country.

    2- This document is brought before the World Bank Board for

    approval

    3- On approval, a loan or grant is given to the Country for that

    year (and each year subsequently)

Note that while the country may use the funds to import various goods, the process follows the country’s

    internal procurement procedures and is rarely subject to international competitive bidding.

For a more extensive explanation of the IBRD Investment Project Cycle see:

    http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/0,,contentMDK:20120731~menuPK:41390~pag

    ePK:41367~piPK:51533~theSitePK:40941,00.html

IFC PROJECT CYCLE

The second institution which might be of interest to Israeli Companies is the IFC. In contrast to the IBRD

    which only lends to Countries, the IFC only lends or invests in private sector companies. Their criterion is

    that the project has to create development and jobs. They will lend or invest as an equity investor for up to

    30% of the project, but will often bring in additional companies/investors who provide the additional

    resources. Although the loans are at market rates of interest, a company gets the benefit of the IFC backing. This often means that the Company can obtain financing for a project that a commercial bank, without the IFC backing, might deem as too risky.

For a more extensive explanation of the IFC project cycle see:

    http://www2.ifc.org/proserv/

Thus an important distinction is as follows:

    The IBRD only lends to countries, sometimes for a specific project and this is done via tender, while the IFC lends only to companies and not by tender. This leads to some thoughts on how Israel can proceed to encourage activities for its companies in World Bank projects.

ADVANTAGES OF EACH INSTITUTION FOR ISRAELI COMPANIES

IFC

    It must be stated at the outset that the operating assumption of the IFC is that the Company will also invest in the Project, not that it will be 100% financed.

    In approaching the IFC a Company first identifies a project in a developing country, where the IFC invests. It then approaches the IFC to ascertain their interest in becoming partners in the project. If IFC is interested (before making a firm commitment IFC will require a detailed business plan), it should be possible to obtain financing not just from them but also from other banks that they can bring into the project. Note an important feature of the IFC projects there is no tender. Thus the problems of tenders (possibility of bias

    and corruption) are minimized.

    Although many IFC projects are as noted above simple investments or loans, there are situations when guarantees are given, sometimes even guaranteeing the cash flows of the project. One example is the Mexican project: Tlalnepantla Municipal Water Conservation Project, where the IFC essentially guaranteed a partial revenue stream to the project proponents. This project has 2 interesting features in that it is a public project, and that the income stream from a public entity (the municipality) was partially guaranteed. So the definition of what type of project the IFC will fund is rather broad, and I believe that if Israeli Companies are creative enough, many projects can be funded by the IFC.

    For the: Tlalnepantla Municipal Water Conservation Project see:

    http://ifcln1.ifc.org/ifcext/lac.nsf/Content/SelectedProject?OpenDocument&UNID=FBB30043380F7DEF85256CA700802692

IBRD

    For the IBRD a couple of points need to be highlighted. The project design of an Investment Loan is generally done by consultants or the government (the World Bank frequently provides oversight of the process) but the actual tender is managed by the Country. This presents some complications, but

    essentially, Israeli Companies need to market themselves (their technical expertise, exclusive technologies etc.) to the IBRD technical experts and country teams BEFORE the terms of the project is finalized [while at

times the team could persuade the Bank’s team to adopt a particular technology, most times this is being

    decided in country by the consultants and the government]. This will give the Israeli Company an ability to

    try to adjust the project to use their expertise or technology which then gives them a natural advantage in the

    Proposal Stage. AFTER the project is announced, the companies, along with the relevant Embassies, need

    to market themselves in the specific country.

PURPOSES OF PROCUREMENT:

    The Bank has 4 purposes stated in its procurement policies:

    “While in practice the specific procurement rules and procedures to be followed in the implementation of a

    project depend on the circumstances of the particular case, four considerations generally guide the Bank’s

    requirements:

     (a) the need for economy and efficiency in the implementation of the project, including the procurement of

    the goods and works involved;

    (b) the Bank’s interest in giving all eligible bidders from developed and developing countries6 the same

    information and equal opportunity to compete in providing goods and works financed by the Bank;

    (c) the Bank’s interest in encouraging the development of domestic contracting and manufacturing

    industries in the borrowing country; and

    (d) the importance of transparency in the procurement process.”

PROJECT CYCLE AND WEBSITES FOR INFORMATION

    This part will look at the project cycle from the actual project document and website backwards to the

    strategy document website. An Israeli Company can get involved at any stage of the process, however

    clearly it has a better chance BEFORE the actual Project has been announced.

IBRD:

    In this portion we will discuss where to find information. We will work backwards from the projects

    themselves, back through the Project Information Document (PID) and end with the Country Assistance

    Strategy (CAS).

    Project Database: The World Bank maintains a project database which identifies the current projects that have been approved

    by the Board and are in process. The general website is:

    www.worldbank.org/projects

    If you look along the left table, under Projects database, there are various ways to view the data, by country

    or region, or by type of project. Click on one of those and begin your search for projects currently underway.

Project Information Document Database

    The World Bank maintains a website of Project Information Documents (PID), which is the step before

    approval by the Board. It is the step when the banks management draws up the plans for the project. This is

    an important stage, as it represents the period when the Bank identifies the parameters of the project and

    specifies the approach used. This is a stage where an Israeli Company can try to impact what technology or

    approach is used in the project.

    http://www-

    wds.worldbank.org/servlet/WDS_IBank_Servlet?dt=540659&psz=20&ptype=advSrch&pcont=results

The problem is that there are no categories here, so in essence the only way to determine what types of

    projects are being implemented is by reading the titles and reading the document itself. Alternatively, a

    company can go to:

    www-wds.worldbank.org/

    This is a database of documents, and is searchable. So for example if a person were to type in MEXICO +

    WATER into the search box, s/he would receive all the documents relevant to both water and Mexico. S/he

    could then look for Project Information Document under the column Document Type to see these documents.

Country Assistance Strategy

    The first stage of the process is the Country Assistance Strategy (CAS). There is an earlier stage for low

    income countries called the PRSP, but generally the CAS (or Country Strategy Partnership CSP - in middle

    income countries) identifies the projects for the coming years. Just because a project is on the list does not

    mean that the projects will in fact occur, however a high proportion of them do in fact occur. This list will give

    an Israeli Company lead time for presenting itself to the relevant entities, lining up partners for joint ventures,

    and whatever else needs to be done. The CAS website is not categorized by topics, nor can it be as each

    CAS contains a number of projects of different types for the coming years. In order to identify potential

    projects, a company will have to go through all the CASs. There is usually a list of anticipated projects near

    the end of the document, but the explanation is contained within the body of the text. Thus a company

    should first go to the table, identify a specific project and then search the document for a greater explanation

    of the goals for that specific project.

    http://www-

    wds.worldbank.org/servlet/WDS_IBank_Servlet?ptype=advSrch&psz=20&pcont=results&dt=540613

QUESTIONS TO ANSWER BEFORE MEETING ANY WOLD BANK STAFF

After searching the database and you found some potential projects, some questions you need to address

    include:

    1- Have you been involved in similar projects?

    a. If yes, what were the similarities

    b. If yes, what were the differences

    c. What problems did you encounter and how did you solve them?

    d. Was there an analysis of the success of the project?

    e. If yes, what was it, and was it done independently

    2- Did you engage in projects in developing countries?

    a. If yes, which countries?

    b. If yes, under whose auspices (World Bank, Another Multi-Lateral

    Development Bank, Government?)

    3- Have you been involved in World Bank Projects in the past?

    a. If yes, was it a successful project?

SOME IMPORTANT POINTS FOR ISRAELI COMPANIES TO KEEP IN MIND

    1. People at the World Bank are quite busy and have requests from companies all

    over the world. Respect their time and DO NOT WASTE IT.

    2. BE PREPARED (I cannot say that too often). Pick out specific projects identify

    your strengths, how you could contribute to the project, what advice you can give to the

    project coordinator, having worked in either the country or type of project. It is always

    easier having a dialogue where you can contribute and share your experiences, and give

    specific advice for the Bank to consider.

    3. Bring relevant material about previous projects (perhaps a list of similar projects

    with multi-lateral agencies or similar countries or circumstances)

    4. You will need to translate your material into the local language, whether it be

    Spanish, French or English

Be prepared and be aware that your represent not only your specific company, but also all Israeli companies.

    Your actions have an impact on whether this person will be willing to meet with another Israeli company in

    the future. If your meeting is successful, the World Bank staff will probably let other know, which will be

    helpful to you in the future. If it is unsuccessful, you and other Israeli firms will have a harder time in the

    future.

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