Export, Innovate, Invest - The Canadian Trade Commissioner Service
Inter-American Development Bank
*The following content has been prepared by the Office of Liaison with the Inter-American Development Bank, located at our Embassy of Canada to the United States of America.
The Inter-American Development Bank (IDB) is the largest regional development bank in Latin America and the Caribbean, and is the region's major source of long-term financing and expertise for sustainable economic, social and institutional development.
The IDB consists of 48 members, 26 of which are borrowing member countries. In January 2009, the IDB accepted China as its 48th member. Canada holds 4 percent of the IDB's voting power and is the third-largest, non-borrowing shareholder after the United States (30 percent of votes) and Japan (5 percent of votes).
The IDB's principal goal is poverty reduction and improved social equity. To attain these objectives, the Bank concentrates on four major development areas:
- the "Opportunities for the Majority" initiative;
- water and sanitation;
- sustainable energy and climate change; and
- education and innovation.
The IDB provides support for public and private investment projects and for policy reforms, and helps countries cope with disasters or financial crises. It delivers this support in the form of loans, grants and guarantees, which it provides to national, provincial, state and municipal governments, and to autonomous public institutions.
IDB-financed projects generate more than 12,000 contracts per year. In FY 2009 the Bank approved over US$15.5 billion in lending, an increase of 38% over FY 2008. Current sector priorities for the IDB include:
- sustainable energy and climate change;
- water and sanitation;
- education and innovation; and
The IDB Group includes the Multilateral Investment Fund (MIF), which promotes private-sector growth through grants and investments, with an emphasis on microenterprise. The Inter-American Investment Corporation (IIC) is also part of the IDB Group and focuses on supporting small to medium-sized businesses.
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- Country Strategies
- Project Cycle
- Procurement Process
- Private Sector Lending
- Trust Funds
- Business Approach
The IDB staff and the borrowing member country work together to determine how the borrower's priorities coincide with the IDB's development strategies. The resulting Country Strategy document contains the expected program for the country for the ensuing two to four years. IDB Country Strategies can be accessed through the individual country pages of the IDB website.
The IDB recently reduced the number of stages in its project cycle to four steps, which are preparation, approval, implementation, and completion/evaluation. Its project cycle thus differs somewhat from that of other MDBs.
Preparation: The development of new projects is based on the priorities laid down in the Country Strategy. If proposed projects align with these priorities, they will be included in the official program of operations - called the "pipeline" - and initial documents will be drafted for Board approval.
Documents available during the preparation stage include:
- The Country Strategy: This was described in the previous section.
- Project Profiles: These furnish basic information on proposed projects, including:
- justification and objectives;
- technical issues;
- related sector knowledge;
- proposed environmental and social safeguards;
- indicative funding and requests for technical cooperation resources for project preparation; and
- an initial timetable.
- Environmental Assessments: These identify and assess the potential environmental and social impacts of the project, contain measures to mitigate those impacts and propose alternative solutions for accomplishing project objectives. They are required for projects that:
- may pose substantial environmental risks;
- are based on extraction of natural resources;
- may affect protected areas, critical cultural sites or internationally recognized fragile or unique ecosystems; and
- may pose risks to human health and safety.
Approval: The preparation process culminates with the production of a Proposal for Loan Approval (PAL), or a Plan of Operations in the case of technical cooperation (TC) projects.
Documents available during this stage include:
- Proposals for Loan Approval/Plans of Operations: These are disclosed to the public after Board approval of the loan, and contain background information on:
- the borrowing country and the executing agency it is using to implement the project;
- donor coordination and IDB strategies relating to the project;
- a detailed description of the project's objectives, activities and budget;
- the implementation plan and timetable; and
- the project's viability and risks; and
- its expected environmental and social impacts.
- Results Framework: Usually included as an annex to the PAL document, this details the specific goals and the expected results and outputs for each project component. It also lists any assumptions the project team has made and provides specific indicators for evaluating the project's results.
- Procurement Plan: This is part of the PAL and contains:
- a brief description of the procurement anticipated for the first 18 months of the project;
- an estimated budget for the various bid tenders into which the procurement will be organized;
- sources of financing and methods of procurement for each bid; and
- estimated dates for bidding notices or prequalification, if applicable.
Implementation: The borrower is wholly responsible for project implementation, including procurement. However, the IDB Country Office will supervise the process according to the instructions in the loan proposal and the procurement contracts. This ensures that the project stays on schedule and that IDB procedures are followed during project implementation.
Documents available during this stage include:
- Procurement Plan Updates: Procurement plans are updated at least once per year during project implementation, and the updates published on the IDB's website.
- General Procurement Notices (GPNs): GPNs are published within 30 days of the loan approval. A GPN contains:
- information about the amount and purpose of the loan;
- the scope of procurement;
- the name and contact details for the executing; and
- the address of the website where specific procurement notices will be posted.
- Specific Procurement Notices (SPNs): SPNs are invitations to prequalify, submit expressions of interest, or bid. SPNs for contracts that are subject to International Competitive Bidding (ICB) are advertised on the IDB's website and on UN Development Business Online. If the National Competitive Bidding (NCB) method is used, SPNs are published in newspapers with national circulation in the borrowing country, or via an electronic portal with no access charge.
Completion and Evaluation: Evaluation activities take place during every phase of the project cycle until the project is completely implemented. Measures for improvement and indicators for examination are built into the entire process.
IDB procurement procedures are almost identical to those used by the World Bank and other MDBs. The basic difference is that bidding eligibility is restricted to IDB member countries, and the goods procured must originate in member countries.
Project and Procurement Information
The IDB applies strict procedures to advertising and to information access. This ensures that all prospective bidders have an equal opportunity to participate, that there is an adequate level of competition and that the procurement process is impartial, equitable and transparent.
Invitations to bid on goods procurement, or requests for Expressions of Interest for consulting procurement, are subject to ICB procedures and must be published on both the IDB website and in UN Development Business Online. Firms will find most of the information they need through the IDB Project Procurement Information Portal. Besides detailed project information and all public project documents, the portal provides:
- Procurement Policies and Procedures, Standard Bidding Documents, GPNs and SPNs;
- the "RSS Procurement Notice Alert," a tracking tool that emails GPN and SPN alerts to a firm according to the sector(s) in which it operates; and
- Awarded Contracts Information, which is especially useful for firms that want to check out potential competition or that are searching for suitable partner.
Note that some project documentation may only be in the language of the borrowing country.
Suppliers of Goods, Works and Non-Consulting Services
The IDB has established thresholds of up to US$5 million for works and up to US$350,000 for goods. Procurement equal to or above these thresholds is subject to ICB procedures. Procurement of goods and works below these limits is done by other methods, usually NCB. Such procurement is governed by local legislation, provided that it does not conflict with IDB policies. Contracts are awarded to the bidder with the lowest evaluated bid, that is substantially responsive to the bidding documents.
Consultants and Consulting Services
The IDB uses several different selection methods for procuring consulting services. For assignements over US$200,000 IDB procedures are used. Contracts for consulting services are awarded to the firm or individual with the best evaluated proposal in accordance with the applicable selection method. Generally this means that less emphasis is placed on price and more on technical competence, capacity and qualifications.
The first opportunities for consultants usually arise in the early stages of the preparation phase, when contracts may be issued for activities such as feasibility studies, environmental assessments, project analysis, and engineering and design studies. The borrower usually engages the consultant directly; however, if the project is large and the borrower's capacity limited, the IDB may hire consultants on the borrower's behalf.
During the implementation and supervision phase, consultants may be used for project and procurement management, various types of studies, advisory services, training, capacity building and institutional strengthening.
The IDB Group's private-sector operations, such as the IIC and the Bank's Structured and Corporate Finance Department (CFS), also generate opportunities for consultants. These include due-diligence contracts in the areas of environment, engineering, insurance and legal issues.
Corporate and Institutional Procurement
In addition to operational procurement performed by the borrower, the IDB purchases a broad array of goods and services for its headquarters, its 26 country offices and its offices in Paris and Tokyo. This purchasing is managed by the IDB's Administrative Services and Corporate Procurement Division.
These goods and services include:
- construction and related design and engineering services;
- computer software and hardware;
- office furnishings and supplies;
- the purchase and/or lease of real property; and
- a broad variety of consulting assignments.
Contracts for goods or services worth more than US$50,000 are subject to competitive bidding or proposal processes. Public notices for corporate procurement appear on the IDB website.
A potential supplier must complete the Supplier Registration Form, which requires data on the supplier's organization and its capacity, experience, performance and financial condition. Receipt of registration by the IDB does not imply that the registrant meets the IDB's eligibility or qualification criteria, nor does it guarantee assignments. Firms are advised to review the IDB Supplier Guide for more detailed information on doing business with the IDB.
Since 1994, the IDB has been actively engaged in lending to the private sector, with operations totalling US$1.38 billion in 2009. With the launch of its Private Sector Development Strategy, the IDB articulated the important role to be played by the private sector in catalyzing economic growth and reducing poverty.
The IDB Group has four windows through which it provides financing to the private sector:
- Structured and Corporate Finance (SCF) Department: providing financing opportunities for large companies and commercial banks as well as, public and mixed-capital entities (for example, major projects with high developmental impact sponsored by corporations);
- Inter-American Investment Corporation (IIC): offering support to small and medium-sized enterprises and banks;
- Multilateral Investment Fund (MIF): focused on supporting micro and small enterprises and microfinance institutions; and
- Opportunities for the Majority (OMJ) Initiative: focusing on private sector initiatives that benefit poor and low-income communities.
The Bank is also engaged in Non-Sovereign Guarantee (NSG) lending operations to facilitate private sector investment in creditworthy and eligible projects, all while ensuring a positive impact on development. These operations are undertaken without government guarantees or, government counter guarantees. The IDB recently experienced a decline in its NSG operations due to the global economic crisis but, approvals are expected to rebound from US$1.5 billion to US$2.8 billion by 2015.
The Private Sector Development Strategy is being revised in 2011 and, during the course of its latest General Capital Increase, the IDB has made a commitment to double its ceiling for NSG lending from 10% of the Bank's aggregate outstanding amount of loans and guarantees, to 20% through December 31, 2012.
The IDB administers trust fund programs that provide another source of consulting opportunities. These programs are capitalized by its non-borrowing members and together include about 50 funds in three categories:
- consultant trust funds that take advantage of international technical expertise;
- programmatic trust funds to hone skills and methodology in specific program areas; and
- partnership funds to deliver development assistance jointly with other institutions.
Two programs warrant special mention:
Technical Cooperation (TC) Program: This program is largely financed by trust funds. It supports activities that:
- strengthen the institutional capacity of public agencies;
- transfer knowledge and expertise; and
- carry out diagnostic, pre-investment and sector studies that support research and training, and project design and preparation.
These activities can be specific to a single country or can be targeted to trade, integration or regional initiatives.
Sustainable Energy and Climate Change Initiative (SECCI): This helps countries in the Latin American and Caribbean region find economically and environmentally sound energy options. Its objectives are to expand the development and use of renewable energy sources, energy-efficiency technologies and practices, and carbon financing. It also promotes and finances adaptation strategies to reduce the region's vulnerability to climate change.
The following tips and tactics can be useful to companies pursuing IDB-funded contracts in the region.
Although English is one of the official working languages at the IDB, proficiency in Spanish or Portuguese is essential in most of the region.
Companies should focus on countries, sectors and projects where their expertise, experience and local partnerships afford them the best chance of winning bids.
Your firm may not need to register to be eligible to bid, but you should still get to know Bank staff and procurement officials in borrowing countries where there may be opportunities.
You should be aware that IDB specialists ask each other to recommend individual consultants and consulting firms, so it is important to cultivate a good reputation with the Bank.
When visiting a country, take time to learn about future opportunities that may arise in Bank-financed projects. Contact the Bank's country office and seek information on projects in specific sectors of interest, particularly projects in the implementation phase.
Engage a local representative who knows the language and the local situation. This is an effective way to keep track of a project. Also, try to include local staff in your team when preparing a proposal.
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