FTS-DOC ITA

Moderator: Roberta Ford

August 25, 2010

12:00 pm CT

Coordinator: Welcome and thank you for standing by. At this time all participants are in a listen-only mode. During the question and answer session please press star 1 and you must record your name to ask a question. Today’s conference is being recorded. If you have any objections you may disconnect at this time. Now I would like to turn the meeting over to Roberta Ford. Ma’am you may begin.

Roberta Ford: Thank you Operator. Hello and welcome to the global design and construction team’s informational Webinar on multilateral development banks. My name is Roberta Ford and I’m director of the U.S. Commercial Service Office in Columbus, Ohio. I’m also a member of the global design and construction team which is sponsoring this seminar.

Today we are fortunate to have excellent speakers that have generously offered to share their knowledge and expertise. Today’s speakers are Mack Tadeu of the Inter-American Development Bank and David Fulton of the World Bank both located in Washington, DC.

Also on the call today is the global design and construction team’s national team leader Terri Batch. As indicated in her email to all participants this morning, copies of today’s presentations will be emailed to all participants and you will also be given access to the archived recorded version of this Webinar online.

Today’s Webinar will conclude with a generous Q&A period, so please jot down your questions or type them in the Q&A format in the toolbar at the top left hand side of your screen. If we don’t get to your question during the Webinar we will definitely provide you an answer via email.

The U.S. Commercial Service is a trade promotion agency of the U.S. Department of Commerce’s International Trade Administration. We have offices located in over 100 U.S. Cities and in over 70 countries worldwide. Our mission is to promote U.S. Commercial interests and assist companies selling U.S. products and services overseas.

Some of the services that we provide are development of an international marketing strategy; obtaining international market research; identifying strategic partners to represent your products or services in international markets; one-on-one counseling on international markets and the opportunities they hold. Tell us your needs and we can also develop customized services and programs for you. The U.S. Commercial Service is here to assist you in every stage of the export process.

Within the U.S. Commercial Service we are the global design and construction team, one of the group of industry-focused staff that serve and support the U.S. design and construction industry with its international business development. Please visit our team’s Website to find out more about events, opportunities, and market research geared especially for you.

Multilateral development banks are institutions that provide financial support and professional advice for economic and social development activities in developing countries.

The term multilateral development banks typically refers to the World Bank and four regional development banks, the Inter-American Development Bank, our Development Bank speaker today is from, and there are also three other regional banks -- the African Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development whose borrowing countries primarily consist of Eastern European countries. And they all have separate Websites which you can find more information.

Now I’m going to introduce our first speaker, Mack Tadeu. Mack is currently the Director of Business Liaison to the U.S. Executive Director to the Inter-American Development Bank, Washington, DC. Prior to the IDB he served as the commercial counselor at the U.S. Embassy in Santiago, Chile.

He served from 1999 to 2002 as acting Regional Director for the East Asia Pacific Region of the U.S. Commercial Service in Washington, DC. As the Regional Director, he supervised the work of commercial officers and their staffs in 13 countries in that region.

Mack served as Deputy Senior Commercial Officer for the U.S. Commercial Service at the U.S. Embassy in Brasilia, Brazil from 1995 to 1999. Prior to Brazil Mack was the Senior Commercial Officer in Panama for 2 years and Principal Commercial Officer for 2-1/2 years at the Consulate General in Guadalajara, Mexico.

Mack earned a B.A. from Drew University in Madison, New Jersey and an M.A. in International Affairs from the School of International Service at the American University, Washington DC. Thank you Mack.

Mack Tadeu: Thank you Roberta and also to Terri and your team for putting all this together and for my invitation to speak to you today. I will cover several things. For many of you who don’t - have not worked with the IDB in the past I would like to offer a brief background on the IDB, its mission, and development projects which might offer commercial opportunities for your firms.

As the principal commercial liaison here at the IDB, I meet numerous countries - companies from across a myriad of sectors and industries who are looking to access the IDB programs and procurement opportunities that reach all of the 26 borrowing Latin American and Caribbean markets.

My core objectives are to identify commercial opportunities for you, introduce you to the right professionals here in the IDB network both corporate in Washington, DC as well as in country, and to assure that you’re given a fair opportunity to pursue your business activities here with the bank.

The IDB was founded about 50 years ago and is the largest source of multilateral lending to Latin America and the Caribbean. While the IDB shares many similarities with other credit institutions such as commercial banks -- for example when it approves a loan it expects to be repaid -- the IDB does operate to make a profit since its actions are accountable to the 47 country shareholders.

But the core objective which is different than a regular commercial bank is not necessarily getting the highest return on capital but rather to promote economic and social development among its borrowing members.

The IDB is composed of the IDB Bank, the Inter-American Investment Corporation, and the Multilateral Investment Fund. The IIC focuses on support for smaller and medium size businesses while the Multilateral Investment Fund promotes private sector growth through grants and other investments with an emphasis on microenterprise. Besides loans and grants it also provides technical assistance as well as research to guide its programming and consultation with the borrowing countries.

In the Countries section of the IDB Website you can locate the country strategy report which outlines the principal themes between the IDB and the country in question. The U.S. government’s participation in the IDB is based on the principal that economic and social development of the region will offer greater security, stability, investment in prosperity, not only for the peoples of Latin America and the Caribbean but also for the United States.

Here you see a chart with the voting power of each member country at the bank. Its base - its shareholding power is based on the IDB’s ordinary capital. You’ll see that the U.S. is by far the largest shareholder with slightly more than 30% of voting power. The 26 Latin American and Caribbean countries that are borrowers have 50.2%, the theory being that ultimately the fate of the bank rests with its borrowers.

The IDB has a AAA credit rating which allows it to borrow cheaply and lend at competitive rates. At the bank’s annual conference in April of this year the Board of Governors of the bank agreed in principle to increase the bank’s capital in order to double lending capacity also maintaining its excellent rating. So it’s looking to approve this year around $12 billion of loans. The $15.6 billion approved you see for last year was facilitated by an infusion of temporary capital in order to address the global financial crisis.

In order to achieve a greater impact on development in Latin America and the Caribbean, the IDB has identified priority areas for its action and launched new initiatives aimed at emerging challenges facing the region. You see examples such as opportunities for the majority, sustainable energy and climate change initiative, water and sanitation initiative, and the education initiative.

The IDB partners with countries to combat poverty and promote social equity through programs tailored to local conditions. Working with governments as well as with the private sector, the bank seeks to achieve sustainable economic growth, increase its competitiveness, modernize its public institutions, and foster free trade and regional integration.

The bank’s programming is spread among a wide range of industries and development activities from investments in infrastructure projects such as roads and highways to less visible but credible projects that promote the modernization of government. One can find construction opportunities in most of these principal sectors.

In the case of procurement opportunities, you can get started by visiting the bank’s Website that you see on your screen. The procurement page provides information on how to pursue business opportunities at the bank and its affiliates. You can sign up or what I call register for electronic alerts that provide timely information on the categories, countries, and sectors that you are most interested in.

By clicking on a particular project you will get access to all of the relevant information that you need to submit your proposal. You will see detailed information on the project description giving you a full summary of the project, the intent of the project, where the project is within the project pipeline, is it in the design preparation, has it already been implemented or completed.

Other basic information is what type of direct participation does the IDB have with the project. Is there a loan, a grant, some capacity building research. Also the value of the project, who is its partner in country so that you’ll see something called the executing agency or ministry which is usually the in country recipient of the loan or grant.

And then you’ll see a slew of PDF files that offer other feasibility, engineering, and environmental studies that either need to be let out or have already been done for your review.

Here is a picture of a snapshot of the construction opportunities there. When searching for projects on the IDB Website particularly regarding construction, you will need to search other related projects. These are just some of the probably I think it was 80 or 90 projects that came up when I looked under - searched under construction.

Look under also infrastructure, architecture, engineering, energy, healthcare, etc. and the bank project will describe its construction needs or the procurement of environmental equipment, etc. as applicable.

You can see the variety of projects here, where they are among the borrowing countries. I’m having trouble clicking here. I’m sorry, it jumped forward. This one on infrastructure gives you another view of what’s available. You can look under water and sanitation, road construction, agricultural reforestation, natural disaster and relief efforts among others.

I wanted since many of my clients are looking at opportunities at Haiti and since the earthquake on January 12 the bank has upped its share of providing grants to Haiti. It has for many years been the leading source of long term financing in Haiti and it is looking now to look at about 40% of the financing and infrastructure projects, 20% in agriculture and environment, 25% in basic services, and 15% in governance and institutional capacity building to strengthen the Haitian public sector.

In addition to the IDB shareholders to these grants I just mentioned, there are other such opportunities for research as well as environmental and other engineering studies that are needed.

The IDB established the Haiti Response Group headed by (Augustina Guerra) here at the corporate headquarters and it works hand in hand with the Haiti Reconstruction and Development Agency in country to develop proposals for projects as per the assessment plan that was presented to the UN group in March. If you need more specific information outside of what the IDB is doing with Haiti you can find information on www.haiticonference.org.

Here it shows you the construction opportunities. The IDB is looking to work in housing, transportation, water, education, disaster prevention in a big way, and then private sector and budget support. On the private sector side, restarting or expanding the competitive capabilities on the part of the Haiti export sector so they’re looking to partner with U.S. Companies.

They’re also looking for cash for work programs as well as assistance in reforestation projects. They’re looking to foster economic development beyond the capital city. There are about nine such economic centers that they’re looking to establish and expand throughout the country as well as boost proposals and projects that are going to generate sustainable economic activity and job creation.

Through the Multilateral Investment Fund and the Inter-American Investment Corporation the IDB is helping Haitian businesses get back on their feet by providing support through the financial system. The method is particularly active in assuring that microfinance institutions can continue making loans to their clients and distributing remittances especially in the countryside.

So how do you make this all happen? To succeed in doing business with any member country at the IDB, I suggest the following building your strategic team. It’s imperative for you to work with the contacts you already have in region.

In the case of construction, note that there are a myriad of very competitive local companies in country such as Brazil, Chile, Argentina, Mexico, and Columbia.

They happen to be the five largest borrowing countries here with the IDB group, and given that the local borrowers are interested in local content and players particularly when it comes to construction, architectural engineering services, your strategy is to get to know those players in country and to offer to them value added through your specialty service or product or expertise which that local player might not have in its portfolio.

You can partner with them or become a subcontractor once these bids have been won by these local companies in many cases and then offering your services at the subcontractor level.

If you have worked in a Latin American or Caribbean country, start there, start in that country. Check the IDB Website, see what projects already being - are in process, are in the pipeline for you to participate in. Here is my contact information. I’ll be around for questions and answers after David’s presentation. Talk to you soon.

Roberta Ford: Thank you Mack and all questions for Mack will be handled at the end of the Webinar which we should have plenty of time for questions. Next is David Fulton. He’s currently Advisor and Director of Business Liaison, Office of the U.S. Executive Director of the World Bank Group where he directs a program to assist U.S. Companies doing business with the World Bank and its clients. The World Bank lends billions of dollars to developing countries each year.

Prior to the World Bank he served for two years as Director of Strategic Planning for the International Trade Administration in Washington, DC. David served as commercial counselor for the U.S. Commercial Service at the U.S. Embassy in Manila, the Philippines, from 2006 to 2008 and prior to the Philippines David was a commercial counselor for the U.S. Commercial Service at the U.S. Embassy at Warsaw, Poland for three years.

Mr. Fulton has a law degree from the College of William and Mary and a Masters Degree in Foreign Affairs from the University of Virginia. Thank you David.

David Fulton: Thank you very much and good afternoon everyone. I’m delighted to be here. I’m going to follow Mack’s presentation with something slightly different focusing on the World Bank’s procurement and project cycle. This is going to be a very practical presentation and hopefully by the end you will have learned enough to be able to identify and track projects that might have biddable components not just in World Bank funded projects but in the other multilateral banks as well.

I call this presentation Engaging With the MDBs because the multilateral development banks have more or less harmonized their project and procurement processes. The idea is that the borrowers, the client countries that seek funding from these banks, won’t have to learn dramatically different systems for borrowing the money.

I call it PID, PAD, Procure because of all the documentation that you’ll find on the World Bank’s Website about projects and procurements and contracts, there’s really only three documents that you need to focus on from a business perspective. The PID is a concept paper, the Project Information Document it’s called, that sets out in five to seven pages the basic design and goal of any particular project.

The Project Appraisal Document, the PAD, is a much longer document, anywhere from 100 to 200 pages long that sets out in great detail what the loan will be used for and what the goals and design of the project are. It includes a procurement plan for the first 18 months of the project so that after the loan has been approved by the World Bank’s Board of Directors the borrower, the host country government, will start to spend the money according to the procurement plan.

So you’ll know quite far in advance in most cases what contracts are going to be signed by the host country government and this will enable you to focus on the opportunities that are most appropriate for your products or services.

Procure in PID, PAD, Procure refers to the procurement notices that are published by the borrowers as they start to spend the money down. The rule of thumb to keep in mind is that if you borrow the bank’s money you have to spend it according to the bank’s rules and the bank’s procurement rules require public notification, public advertising for most kinds of contracts that you will be interested in. So by the end of this presentation if you remember nothing else you will remember PID, PAD, Procure.

Now there’s four basic product lines at the multilaterals. I’m going to speak using the World Bank as the example because that’s where I happen to be assigned right now but this applies in large measure to the other MDBs as well.

What we’ll spend most of the time on, all of the time today is on bank funded procurement where a foreign government is borrowing money from the World Bank to buy goods and services that it needs to implement a particular project. It might be a health project, a road project, a power project. The bank lends money, the foreign government spends it.

There’s also corporate procurement which is a much smaller amount of money where the bank buys goods and services for its own account that probably amounts to maybe $800 million a year compared to last year’s lending which was over $70 billion in response to the economic crisis. There’s also trade finance products, carbon finance, and political risk insurance for investors. We’ll spend the time today speaking about the bank funded procurement because that’s where the bulk of the money is.

This is what the project cycle looks like. It can be a very long project cycle. You have to have patience. I find that business development people appreciate the time they’ve got to develop the customer relationships they need. The folks that have a quarterly sales goal find this very frustrating because the projects can take quite a bit of time to develop. It’s a long sales cycle.

It all starts with the country assistance strategy which is the bank’s five year plan for lending to a particular country. The bank’s staff will work with the borrower to identify the development gaps in that country. It might be lack of roads, a bad airport, a health system that needs work.

Once that country assistance strategy has been put together and published then the bank’s staff will start identifying particular projects. And when I say project you should think lending project, what are they going to loan the money for. And it’s at that stage that you’ll see the first publicly available information about any particular loan, the project information document is published on the World Bank’s Website. That’s the PID.

The bank staff then starts to prepare a very detailed description of the project, the PAD, that will be provided to the Board of Directors for approval. Once the Board of Directors has approved that project, that lending project, the project appraisal document with the procurement plan will be published. And at that point the borrower, the host country government starts spending the money.

Now at each stage of this process you see these little red stars here. Those indicate points in the process where they may be procurement opportunities available that you can take a look at.

Implementation gets the biggest star, because that’s where the bulk of the money is spent. In the early and late stages of the process the contracts tend to be small consulting engagements as the bank staff tries to develop the scope of the project and address any particular issues they might find.

This is another way of looking at the project cycle. You have the same stages here on the left from concept to preparation to implementation and post evaluation. Implementation is in red because that’s where the bulk of the money is spent.

In the second column you see the type of opportunity that’s typically available. In the early stages it’s going to be short term consulting, later stages it’s short term consulting, the implementation phase is where you find the larger contracts.

The buyer or the customer is shown in the third column. Typically the World Bank is the customer for some of these smaller consulting contracts but the borrowing country is the customer during the implementation phase. This is where you want to concentrate your sales effort.

Lots of different sources of information but from a business perspective the PID, the PAD, the procurement plan, the general procurement notice, and the specific procurement notice are the most important documents that you want to take a look at.

Here is another way of looking at how the money flows and this also illustrates how you can get into this money flow as a vendor, as a supplier of equipment or services. The bank lends money to a foreign government which then uses and implementing agency, usually part of a government ministry, as the buyer.

The buyer will spend the money for consultants, goods, and services and civil works that are needed to implement the project that they have agreed upon with the World Bank and all the contracts that will be spent are listed in the procurement plan.

As a private company there’s three places you can get into this money flow. The first is as provider of technical assistance funded by the World Bank. These are those smaller consulting contracts that I mentioned earlier. In this case the bank is your customer and the government is the beneficiary of the work that you do.

The second place is as a direct contractor to the implementing agency providing consulting, equipment, or civil works, the bricks and mortar. That’s where the bulk of the money is. It’s in the implementation phase.

These contracts are put out for competition under the World Bank’s rules which have been harmonized with the other multilaterals as well so that the process is as transparent as possible and the World Bank staff looks over the shoulder of the borrower as that implementing agency is spending the money so that helps level the playing field.

The third place you can get into the money flow is as a sub supplier to someone else who is in that direct contractual relationship, the prime contractor. The simplest example is if you manufacture bulldozers and there’s a road project funded by the World Bank, you’re not going to sell the bulldozers directly to the government ministry, you’ll sell them to the construction company that has won the contract to actually build the road.

Now with that in mind, here are the key contacts that you need to address. And Mack foreshadowed this when he talked about the strategic team you need to build. The customers will be the government ministry or the prime contractor in most cases. The bank is not your customer. The bank is financing the project, the government ministry will spend the money under the World Bank’s procurement rules, or the prime contractor will select vendors and equipment providers by whatever system the contractor is using.

U.S. Commercial Service and the Department of Commerce’s Advocacy Center and Mack and me and our colleagues at the other multilateral development banks, we’re also a part of your team as is the multilateral development bank’s task team leader.

The task team leader is responsible for putting that project together with the ministry, shepherding it through the project appraisal process, getting it approved by the Board of Directors, then monitoring implementation and the progress of that project as the government spends through the money and implements the agreed upon project.

So keep this in mind. The customer is going to be the government or the contractor who has won a contract from the government and these folks are part of the team, part of the process.

Here is how the PID, PAD, procure pipeline looks. You start with the concept paper being released and after anywhere from three months to three years depending on the country and the complexity of the project the Board of Directors will vote.

And 9 times out of 10 or should I say 99 times out of 100 if a concept paper is released the board will probably be approving the project because the bank staff doesn’t send forward projects that are going to be shot down at the board level.

Once the board has approved it, that project appraisal document is released. It has the procurement plan in it so you’ll be able to see what kind of contracts are going to be coming available so that you might be able to bid on. Once the borrower has received the go-ahead to start spending they will publish a general procurement notice and then an explosion of specific procurement notices that will be used to advertise the particular contracts that are up for competition.

And I have additional information available on how the competitive process works. We can talk at great length about the procurement process itself. And just as a general rule I find that the companies that are most successful at this sort of thing at the multilateral segment are companies that are already familiar with government procurement. So the system is not something that is alien to them and they’re able to follow the rules and to submit the bid on time and meet the requirements of the bid.

And companies that have good international experience or can partner with another firm that has international experience. Those are the companies that are probably the most successful in at least the World Bank and probably the other banks as well in competing for those contracts.

So to track these projects, what I find is that companies often go into the concept paper database which is on the World Bank Website and they will try to read all these project information documents to figure out where an opportunity might arise but there’s hundreds of them so how do you focus on the ones that are most likely for you.

So what I found is that if you start at the other end and look at the procurement notices that have been published in the past then go backwards through the pipeline to the concept papers that produced those procurement opportunities, then you’re able to focus on the projects most likely to be of interest to you.

So let me give you an example of that. Now I’ve drawn this one from the information technology arena simply because I think it’s probably the best example of this that I have found.

This is a procurement notice that was published in March of 2009 with a deadline of April 29 and I brought this to the attention of a company that I thought would be able to pursue it and they were very excited because it was just what they were able to do, information technology, e-government services. But they were disappointed because they only had 30 days to prepare a proposal and you’re simply not going to prepare a competitive proposal for a contract in Vietnam with 30 days notice.

So I pointed out to them that if they had been paying attention to the pipeline they would have seen the PAD, the project appraisal document, published two years earlier which specifically identified the contracts that were being put out for bidding.

So when we’re looking at the procurement notice in terms of PID, PAD, Procure, we’re at the procure end of the pipeline. Now we see two years earlier the PAD was published very specifically identifying these e-government and ICT infrastructure contracts.

And even better, if they had gone to the PID phase they would have had additional two years to engage with the customer, get to find a partner in Vietnam if they needed one, and they would have had a long time to work on this particular project to prepare for the contracts that would be signed by the ministry in this case.

I will caveat this by saying Vietnam is a little bit slower than most of the countries. It doesn’t take four years in most cases for contracts to emerge from that PID, PAD, Procure pipeline. Sometimes yes, Vietnam happens to be a little slow.

But using the information that we were able to gather they could go in and identify almost a dozen projects that would have potential biddable opportunities for them. So starting at the procurement end of the PID, PAD, Procure pipeline enables you to identify the projects going forward that may have opportunities for you.

And here is where you find all these documents. The PIDs and the PADs are available on the World Bank’s Website and the other multilaterals also publish the concept papers and the detailed appraisal documents on their Websites. They’re fairly easy to find and now that you know these are the documents that are most important for you.

In the case of the World Bank, the borrowers publish procurement notices in a local newspaper or a local Website and in a United Nations database called UN Development Business. Now this is a subscription database and if you’re interested I can talk to you a little bit more about that and we can schedule something separate. I can take you into the database and you can look to see if there are the type of opportunities that your company can provide.

The other multilaterals, not the World Bank but the Inter-American Development Bank, Asian Development Bank, etc., they publish the procurement notices on their own open Website. So in terms of PID, PAD, Procure the Inter-American Development Bank, Asian, African, European, you get the full pipeline right there on their Website.

The World Bank is a little bit behind the times. They only publish the PIDs and the PADs. They have not yet begun to publish the procurement notices. You still have to get those from UN Development Business.

But once you are in there and you look to see what kind of notices and most importantly how many are available that you could have pursued or might pursue in the future, you’ll get a good idea of whether this particular market segment is appropriate for your company and that’s a very important determination that you need to make.

Is there a business opportunity and how big is that business opportunity, and then you can make the decision whether you’re going to devote the time and resources to pursuing that business opportunity.

Now I’ll close here with this is just a sample of a procurement notice funded by the World Bank, a transport sector project in Tanzania. In this case they are going to be rehabilitating three airports in Tanzania and they’re looking for someone to carry out supervision of the implementation of works for the rehabilitation of that airport.

The deadline for this was in July. I don’t think they’ve made an award yet but I use this just as an example. This is not a live one because the deadline is already passed. But as you can imagine, there will be other contract opportunities flowing from this particular project.

You can take this project number, T055120, plug that into the World Bank’s Website, it will take you right to the PIDs and the PADs and you can learn all about that project. So I’m going to stop there and turn it back over to Roberta.

Roberta Ford: Great, thank you David. (Rudy) at this time would you please instruct our attendees on the procedure for asking questions?

Coordinator: Thank you. To ask a question please press star 1 and you must record your name. Once again, to ask a question press star 1 and record your name. One moment please.

Roberta Ford: So the next steps for you is if - this free seminar has been brought to you as a series of Webinars that were offered by the U.S. Commercial Service to introduce our agency to new companies. If you were referred to us by one of our partners at UPS, FedEx, or the U.S. Postal Service, you will be contacted by your local trade specialist.

If you joined us today via another source and have not worked with a local office yet, please visit our Website export.gov and click on Find a Local U.S. Office to locate your domestic office trade specialist by zip code. Our Website export.gov contains a wealth of information so we hope you will take some time to familiarize yourself with it. (Rudy) do we have any questions?

Coordinator: There are no questions at this time.

Roberta Ford: Okay Terri, do we have any typed in questions?

Terri Batch: There are none at this time.

Roberta Ford: None, okay. All right I have a question David and Mack. Do the banks require developing countries to privatize their industries and assets in order to receive funding?

Mack Tadeu: On the part of the IDB, no. Again in terms of most of the lending from the IDB it is public sector lending, so it goes to individual country ministries or public agencies or institutions.

Roberta Ford: Okay thanks Mack, anything to add David?

David Fulton: On the World Bank side the answer is roughly the same. The bank doesn’t require them to privatize industries or for example utilities or state owned companies but they encourage it because they believe that the private sector runs these things a lot more efficiently than the government does.

And so in order to assist in that process they offer not just loans and financing for projects related to those particular companies, but there is a part of the bank called the International Finance Corporation which offers business advisory services and they will assist in the privatization of those companies. But as far as requiring it, no they don’t.

Mack Tadeu: And the International Finance Corporation, IFCN, the World Bank, the IDB equivalent is the Multilateral Investment Fund, pretty much the same modus of operandi.

Roberta Ford: Okay thank you. (Rudy) any questions yet?

Coordinator: Yes, one moment please. (Jay Procosh Ukala), your line is open.

(Jay Procosh Ukala): Good afternoon ladies and gentlemen. It’s been a very educational Webinar today but I have a couple of questions. I have some contacts in West African countries like Nigeria and also (Santa Lofical) Republic and Ivory Coast. They have major projects like infrastructure, local housing, etc. and I have some connections here in the U.S. for solar energy for either the residential or commercial projects.

How would we - and one of the government I know the country I’m going to mention has a very bad reputation but it’s Nigeria. And through one of my partners in Nigeria he’s dealing with the governor of one of the states and they are looking for financing for some of this infrastructure and housing projects for that state. And they are also willing to offer sovereign guarantee.

Now pardon my knowledge but I’m not familiar what sovereign guarantee means. How would that help in getting loans from say World Bank, INF, or in fact maybe even OPEC? Also private investment corporation may be able to get involved in this project. How do I go about this?

David Fulton: Well first of all there’s two possibilities, the World Bank and/or the African Development Bank and then you have to divide the customer into two categories. One is the government customer and the other is the private sector customer. If the customer for that particular project is the government of Nigeria then the government of Nigeria probably through the Ministry of Finance approaches the World Bank or the African Development Bank and asks to - for a loan for a particular project.

If the customer is a private sector entity, a private company, then that customer can approach the IFC which is part of the World Bank or the equivalent in the African Development Bank, I don’t recall the name off the top of my head. But the IFC would look at the project as a possible equity investment or a loan just as any other private bank.

You have to remember that the World Bank, the African Development Bank, they are banks. There is a certain amount of money that’s available for grants but for the most part they are lending or investing and they expect to earn a return on their funds.

The mistake many companies make in dealing with governments in the developing countries I think is when the government tells that company go to the World Bank and see if you can get a loan for me. The World Bank will not talk to you. The World Bank will talk to their customer which is the government of Nigeria.

So when you’re talking to government officials in any country and they tell you they can get a sovereign guarantee for a particular project, they’re referring to a sovereign guarantee for a private loan from Citi or J.P. Morgan, whoever, that you might be able to arrange. And so you have to be able to distinguish among the different types of loans and investments that are available.

But for the most part keep in mind that the government is going to have to go to the World Bank if they are seeking money for an infrastructure project, not you.

(Jay Procosh Ukala): Right, okay. And so when the World Bank - after the country has gone through the PID and PAD and procurement and all that sort of stuff, and when the government is ready to loan the money to that country for a specific project, do they expect any kind of collateral from the country or not?

David Fulton: No, the bank lends the money to the government, the government then spends the money. The bank does not require collateral for its loans to sovereign governments. They sign a loan agreement in which the government agrees to repay the loan over 20 or 30 years at a particular interest rate.

If the government defaults on the loan that is a very bad thing for their ability to borrow money on the open capital markets and so governments tend not to default on their multilateral development bank loans although of course it has happened in the past.

(Jay Procosh Ukala): Okay.

Mack Tadeu: Keep in mind that oftentimes the multilateral development banks are the ones that come in and what are projects or countries that are deemed to - or be perceived at high risk which in many cases the private sector banks are unwilling to lend because of the level of risk.

So that you’re looking at the multilateral development banks coming in and providing those loans and securing those loans in many areas which oftentimes will open up other commercial lines knowing that the multilateral development banks are part of the project.

(Jay Procosh Ukala): Okay. If I may just ask one more question, time permits?

Roberta Ford: Okay go ahead, we have ten minutes.

(Jay Procosh Ukala): We all know about some corruption and things like that in different countries especially in the African countries where at the government level there are problems. How do we get over that? How do we make sure that - well I know it’s not your money or my money but it’s the government’s money. How is that protected as far as the corruption and things like that are concerned? And if we do find something, what do we do about that?

David Fulton: The World Bank’s project appraisal document for any particular loan will include a section in which they assess the ability of the borrower to implement the procurement and that directly addresses the possibility for fraud and corruption. The ability to implement a project and to do the procurement properly is not just a question of will the money be lost to corruption. It’s also can that particular implementation agency select the right equipment.

If the agency for example in a construction project has been involved in the building of playgrounds and driveways and has never done the work required for a multilane highway, then they will need assistance so that they don’t do the wrong thing and the bank will provide that assistance to them.

In terms of what can you do when you uncover or you come across evidence of corruption, often a good place to start is going to be with the U.S. Embassy in that country because not wiping out corruption but assisting governments in the fight against corruption is something that the U.S. government is very involved in.

The multilateral development banks also have very robust anti-corruption programs but they tend to be not particularly helpful when it comes to specific corruption issues on particular cases. So I would say start with the U.S. Embassy.

Roberta Ford: And your local trade specialist can give you the contact information for our embassy in Lagos.

(Jay Procosh Ukala): I have that.

Roberta Ford: Okay great. Thank you.

Mack Tadeu: Keep in mind also with the World Bank, David obviously covers the entire globe and again, when you’re looking at a country look at the regional development bank, what it’s doing there as well as the World Bank so you have two parts of this portfolio that you should look at in any country market.

David Fulton: Yes and the banks work together. They try not to step on each other’s toes so if you look at the World Bank and they don’t seem to be active in a particular sector in a particular country, then look at the Inter-American Development Bank. Maybe that’s the bank that’s funding work in that particular sector.

(Jay Procosh Ukala): Okay great, beautiful.

Roberta Ford: Okay thank you.

(Jay Procosh Ukala): Thank you so much.

Roberta Ford: Terri would you read a typed in question please?

Terri Batch: Yes we have two questions, one comes from (Brent Ritzel). He says that they are a renewable energy company that designs and builds sustainable power plants and manufacturing facilities. They have a large scale project for Haiti at about $409 billion with financing but they are in need of a loan guarantee. Who has loan guarantee programs for such a product, especially one that is located in Haiti?

Mack Tadeu: In this case it would be the Inter-American Development Bank for this reason. At the New York City conference, the UN conference in March, there were the principal donors as far as the World Bank, the Inter-American Development Bank, and then the governments of the U.S. primarily U.S., France, and Canada who pledged the bulk of trust funds that the World Bank will be holding for the reconstruction of Haiti.

Now there was a separate agency set up in Haiti called the HIRC which is the reconstruction executive agency co-led by former president Clinton as well as the Prime Minister of Haiti.

All projects are being approved through this central unit for the main purpose of looking at what monies are available, which ones the government can guarantee or certainly work with the foreign lenders to guarantee, and make sure that across the spectrum of activity that needs to happen in Haiti in rebuilding the country that there’s a good amount of activity in each of the principal areas of development like the ones I mentioned in a couple of slides that I offered to you.

So check with your local contact. Check here with the IDB. Give me a call later on or an email and let me know specifically what project this is and see if the IDB is working on that project. In several instances there may be other donors who are doing it directly and so you’d have to probably work with that donor government for the guarantee.

Terri Batch: Okay we have one more question that was typed in. This question is from (Bruce Anderson) and he asks if the World Bank loans to governments. Does the IDB finance private projects? Can you answer that Mack as well?

Mack Tadeu: Okay as far as the World Bank will provide loans not only to the government but also to the private sector through the IFC and the IDB does the same thing. Both principally public sector lending but then private projects either through the multilateral investment fund or more on the micro trade capacity building side with the Inter-American Investment Corporation which is part of that bank group.

Roberta Ford: Great. (Rudy) do we have any more called in questions?

Coordinator: Yes, one moment please. T-Bone Industries, your line is open.

Ray Aldrich: Thank you. Are you - am I coming through?

Roberta Ford: Yes sir, go ahead.

Ray Aldrich: Okay. This is Ray Aldrich with T-Bone Industries. The question I had was like the project in Chile, our plans are to go down, we have a multitude of green technologies that involves everything from airports and roadways and bridges to houses, prophylactic centers, green factories, and hospitals.

Our new green geospatial building technology is second to none in the world. We need funding to put this together so we can be ready for the tour coming up on October 12 I think it is in Chile.

And what our plan is to go down there, introduce the technology to them, talk to them, take our engineers with us, and let them see what we have to offer. Then if we go down there and do that not only will we help them begin to get over the hump of rebuilding but our new technologies will allow them to build somewhat earthquake proof buildings.

Roberta Ford: And so your question is how do you accomplish this by October 12?

Ray Aldrich: Yeah.

Roberta Ford: Okay. Gentlemen do you want to handle this or should I?

Mack Tadeu: Well what I know of, are you referring sir to the trade or show exhibition that the commercial section in Santiago is working?

Ray Aldrich: Yes.

Mack Tadeu: Okay so you’re - have you already registered as an exhibitor?

Ray Aldrich: I believe I did, yes.

Mack Tadeu: Okay well I would say work primarily with (Mitch Larson) who is David’s and my counterpart at the U.S. Embassy there. He has someone on staff who is spearheading all of that and the show organizer happens to be (Culman) International. What I do know too is the importance with a country like Chile, I served there for 4 years, 4-1/2 years, there are a lot of local companies with the expertise you’re talking about.

Keep in mind that again at the other end of the continuum as far as what happened with the earthquake in Chile as opposed to the one in Haiti, the one in Chile being that much more powerful with less than 700, less than 1000 people being killed and then you have a less powerful one in Haiti where over 200,000 people were killed.

You look at there are - they have one of the most stringent earthquake proof building codes in the world. It rivals western United States and Japan as far as that is concerned. So what they’re going to be looking for is what other type of information you might be providing or service.

The key here is finding a local partner. Construction firms are quite strong in Chile so most of the money is actually the government of Chile is not asking for outside lenders. They’re handling it themselves in country so they do have an active private banking sector as well as the government has trust funds available for the reconstruction. So most of your contacts will be in country. The IDB is doing very little in this regard.

Ray Aldrich: Also what we’re going to do is not only help them rebuild but to actually build the factories down there to where they can have their own territory to - these are composite type building systems.

Roberta Ford: Right so you can work with our office there in Santiago, or they can help you partner with local firms in order to accomplish that.

Ray Aldrich: Okay.

Roberta Ford: Okay.

Mack Tadeu: That show there is a great start in October.

Roberta Ford: And your local trade specialist can get you access to the commercial officer there or any other countries where we have offices. Thank you.

Ray Aldrich: Thank you.

Roberta Ford: Operator do we have any more called in questions?

Coordinator: There are no more questions at this time.

Roberta Ford: Okay great, we are right at an hour so we’ll call this conclusion to our Webinar and thank you all for joining us. Goodbye.

David Fulton: Good day.

Mack Tadeu: Thank you, goodbye.

Coordinator: Thank you for participating in today’s conference call. You may disconnect at this time.

END