Post on 10-Feb-2016
description
Private Sector Private Sector Development:Development:Cooperation Cooperation
OpportunitiesOpportunities
Introduction OPSM’s commitment to holistic, vertically
integrated development to complement growth in its lending and investment activities
OPSM has met its mandates for growth, and is increasingly seeking to enhance its products with better development support
In addition to vertical development integration, OPSM is pursuing syndicated and A/B loans modalities to recycle capital risk and increase lending in Africa
OPSM Portfolio Growth (2007-09)
2009 Activities at-a-glance
Co-financing Investment Operations
AfDB’s Private Sector now aims to attract capital for co-investment into projects in Africa
OPSM’s Co-Financing Platform includes: B-Loans with Commercial Banks African Financing Partnership (AFP) Parallel Financing Bilateral Agreements Asset Sales
Massive potential could be yielded by a first-loss guarantee scheme for OPSM’s portfolio
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A/B Loan Structure Commercial Banks can co-finance projects under AfDB’s B-
Loan AfDB acts as Lender-of-Record
Keeps part of the loan (the A-loan) at least 25% of total loan Sells participations to B-loan participants
B-loan participants benefit from AfDB’s Preferred Creditor Status (“PCS”) as a Multilateral Development Bank which offers: currency conversion / remittance of interest Repatriation of principal Exemption from withholding tax Deterrent effect on : nationalisation, interference
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A/B Lending Eligibility Viable and commercially operated financial institutions Institutions NOT eligible:
Banks incorporated or with head office in the country where the borrower is incorporated or the project is located
Export credit agencies (ECAs) Governmental, quasi-governmental, or multilateral agencies Project sponsors and off-takers
Eligible participants require an investment grade rating In exceptional cases the AfDB may accept lower-rated or unrated
participants
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African Financing Partnership
The AFP is a collaborative co-financing platform for Private Sector project financing initially among 8 DFIs for Africa.
Each DFI will make its own independent decision on participation while maximizing synergies in co-financing.
Target Operations: complex, large projects in infrastructure, industries with efficiency gains via DFI harmonization.
An MOU has been signed endorsing ‘enhanced collaboration’ by the AFP Partners.
AFP Operational Guidelines are being formalized to create framework for DFI collaboration on project financing.
AFP website is under development
Parallel Co-Financing AfDB Private Sector invites DFIs and other financial
institutions to co-finance projects in Africa AfDB is pleased to lead or to participate in transactions
originated by others Investment and discussions with other DFI’s have included:
China Development Bank Japan International Cooperation Agency (JICA) Japan Bank for International Cooperation (JBIC) The OPEC Fund for International Development (OFID) Oesterreichische Entwicklungsbank AG (OeEB) Austria Islamic Development Bank Group And Others
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Bilateral Agreements In order to enhance efficiency of operations, AfDB
can consider entering into Bilateral Agreements with DFI’s for co-financing Private Sector projects.
Eligible to partners willing to co-finance similar projects in Africa.
Open to both AFP and non AFP partners who wish to form a closer relationship with AfDB.
Based on applying “commercial syndication practices” to DFIs
Benefits to the Borrower by aligning DFI practices with commercial practices.
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Sale of Assets In future AfDB likely to be more involved in
partial sales of existing assets due to; Need to fulfill the mandate of catalysing financing into Africa Achievement of role in initial project financing - project can
be commercially financed following the initial role of the Bank
Financial capacity constraints overall or in specific countries
Sales may be achieved by; Participation by other commercial parties DFI interest Swaps in country/ sector or other exposure between DFI’s
and commercial parties
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First Loss Guarantee Leveraging the AfDB’s private sector
operations portfolio in low income countries to catalyze more private sector development
Two guarantee schemes: Portfolio guarantee Performance guarantee
PSO Portfolio Risk Profile
Portfolio guarantee covers first 10% of losses on ADB’s portfolio of private sector operations (e.g. UA 200 million on a projected PSO portfolio of UA 2 billion)
By taking “first loss” the guarantee dramatically reduces the effective risk of the portfolio and thus enables the ADB to scale up its private sector operations in LICs by 3x-4x.
The “first-loss” concept successfully used by TCX, EAIF
Size of Loss
“Expected Loss”
Firs
t Los
s
Firs
t Los
s Gu
aran
tee
Guar
ante
e
Residual AfDB RiskResidual AfDB Risk
Portfolio Guarantee to Expand LIC
Transactions
Performance Guarantee
Guarantee covers payments from public off-taker to a private sector infrastructure project
The performance guarantee would dramatically reduce the effective risk on the project Lenders thus enabled to finance what appear to be
“unbankable” PSOs IDA has successfully used this scheme
ProjectCompany
PublicOff-takerLenders $$
ADFGuarantee
Enhanced Private Sector Enhanced Private Sector Assistance for AfricaAssistance for Africa
Enhanced Private Sector Assistance Initiative
Launched in 2005 Partnership with the
Government of Japan
Three components: Fund for African
Private Sector Assistance (FAPA)
Accelerated Co-financing Facility for Africa (ACFA)
Loan for Non-sovereign Operations (NSL)
FAPA Approvals
Achievements to-date
Approx $42 million contributed with $26.55 million committed and $8.7 million earmarked for pipeline 31 projects throughout Africa are receiving
support
62% of approved FAPA grants are linked to other AfDB instruments/projects
42% of FAPA commitments to LICs, 45% to multinational projects and 13% to MICs
Donor & AfDB Support
Japan has contributed $32 million AfDB Board of Governors has contributed UA
7 million AfDB Board of Directors has shown continued
and growing support for FAPA’s achievements Indicative commitment from Austria
conditional upon Multi-donor conversion
FAPA Portfolio at-a-glance
Objectives & Targets for 2010
20 projects committed to in 2010 for $17 million Multi-donor conversion complete Additional donors committed to financial
support FAPA extended beyond original five year term
(2006-2010) Projects with first disbursements before 31
October 2010 will have at least one supervision mission
Obstacles & Needs $8.7 million of FAPA’s $42 million remains
uncommitted and un-earmarked for pipeline If 2010 objective of $17 million in projects is
achieved, all available funding will be committed
Further commitments required to meaningfully extend FAPA beyond 2010
Growth in volume of projects may require further human resources, particularly for supervision Many FAPA projects are reaching mid-term
implementation and require proper supervision
African Guarantee African Guarantee FundFund
Introduction & Background
SMEs are key players for poverty reduction and meeting the MDGs in Africa They contribute about 60% of GDP and 55% of
employment To fulfill their developmental role SMEs need
increased access to finance, particularly bank credit Strong case for scaling up aid for SME development
while increasing its effectiveness 2009: Africa Commission, appointed by Danish
Prime Minister and with AfDB President Kaberuka as a member, recommended establishment of AGF to address this situation Founding partners: AfDB, Danish Government, and IFC
Achievements to-date
Joint preparation process from September 2009 with AfDB as lead partner, involving Oversight Committee, Focal Point, Advisory Panel
Instruments designed: Guarantees
Partial loan guarantees: guarantees provided to lenders to cover part of the net losses incurred on SME loans. Delivered through a portfolio approach
Portable guarantees: letters of guarantee commitment issued to lenders to raise long-term finance for SMEs. To translate into loan guarantees
Capacity development support For financial institutions: TA to enhance lenders’ ability to do
business with SMEs For SMEs: TA to improve borrowers’ business management
skills
Major Thrusts Expected capital at start-up: USD 40 million
Envisaged capital after 5 years: USD 300 – 500 million
New partners needed to reach this: Donors for junior/first-loss capital Development finance institutions for mezzanine capital Private investors and foundations for senior capital
Initial countries of operation: Cameroun, Ghana, Kenya, Mali, Mozambique, Senegal, Tanzania, Uganda and Zambia.
Gradual roll-out to all African countries
Objectives & Targets for 2010
Registration of company expected in 2nd half 2010
Set-up of AGF office with CEO and key staff: 2nd half 2010
First guarantees signed: Before end 2010 Capital increases and new partners : From
2011 onwards
Coming InitiativesComing Initiatives
Microfinance Capacity Building Trust Fund
Background July 2009: establishment
as a bilateral trust fund in Partnership with the Government of Spain
Oct – Dec 2009: Implementation guidelines, three year business plan and first annual work plan were drafted. UNCDF expressed interest in joining the Fund
Partners designed Liberia intervention program
Action Plan Finalization and Board
approval of Multi-donor Framework
Map interventions for activities after Liberia program is underway
First activities in Liberia undertaken and disbursed
Launch of an Inclusive Financial System -
Liberia Financial inclusion identified as key objective
by AfDB & Government of Liberia LIFS initially designed by UNDP & UNCDF LIFS II designed to focus on micro and meso
level intervention Will partner with MCBTF Resource needs valued at USD 30.25 million
Migration & Development Initiative
Background Established as a Multi-donor
Partnership with the Government of France/Ministry of Migration and Integration and IFAD.
Initial Focus on North and West Africa
Areas of Intervention Knowledge management of
migrant fund flows Improve regulations related
to fund transfers Develop new and innovative
financial products Promote Investments and
Local Development
Objectives Map fund transfers
throughout Africa.
Disseminate information to citizens of African countries abroad
Assist reform of regulatory frameworks
Fund and mobilize innovative financial products and intermediaries
Promote productive investment in domestic SMEs
Sustainable Energy Fund for Africa
Background Sustainable Energy identified in
2009 by Africa Commission as key contributor to private sector-led growth in Africa
Initial partnership agreed between Denmark and AfDB
Established to stimulate emerging sustainable energy market in Africa, particularly for SMEs Production, distribution and
consumption of SE Focus on rural and peri-urban
areas Seeks to leverage additional
financing
Action Plan SEFA operational by end
of Q3 2010 Danida Board approval
in Q2 2010 Danida appraisal
currently underway AfDB Board approval in
Q3 2010
SEFA administrative team established by end of Q2 2010
Stakeholder workshop in Q2 2010